As an organisation with a strong focus on the skills and knowledge that managers and leaders need to thrive in the fast-changing, transformational workplace, we’re well aware of the potential that technology has to enable new business models, disrupt existing practices and shift the balance of power.
But how widespread is that understanding among business leaders generally – and how willing are they to effectively embrace new technology in their business models and practices?
A report published earlier this year by regional accountants and business advisers Price Bailey revealed that technology was indeed at the very forefront of most business leaders’ thinking – although not always for positive reasons.
The Inside the Minds of Business Leaders report draws on the survey responses of 400 leading decision makers at owner-managed firms across London and East Anglia, all with reported sales above £1 million. And it was clear from the report that for many businesses, technological change represented something of a double-edged sword. Viewed as a potential threat – particularly to slower moving, less-aware business – it was also recognised as a source of huge opportunities for those willing to embrace and adapt to new technology, as well as for the fast-moving start-ups and newcomers whose operating model is based around the advantages that new tech brings.
The report found that many businesses had already identified the significant developmental benefits that technology could deliver. For example, cloud services and online sales were viewed as current opportunities by 80% and 74% of business leaders respectively, while artificial intelligence (AI) was already in use by more than two-thirds of respondents (particularly smart learning software such as ‘chatbots), and automation (67%) and outsourcing (62%) were cited as major opportunities for improving businesses over the next three years. However, 76% of respondents also viewed the rising threat of technological disruption as currently the main barrier preventing business growth – and a more pressing concern than Brexit uncertainty. Looking ahead, almost two-thirds of firms (64%) predicted fierce competition deriving from technology would hit profitability in the next there years, with 72% viewing outsourcing and 67% seeing AI as the main threats.
So is technology the main enabler, or the toughest barrier? And how can managers and leaders help to ensure their business reaps the rewards rather the pitfalls of new technology? The report identified a clear divide between high-growth businesses (those with growth of more than 10% in the past year) and the rest on a number of key issues regarding business development and technology.
Investment in people rather than processes
Employees are such a hugely underrated element of technological change, and there is no point in investing in new technologies if your people cannot adapt to the new ones and leave outdated ones behind.
Most firms struggle to find the right people with the right skill sets. Two-thirds (66%) cite recruiting managers as a top talent challenge, followed by up-skilling existing managers (62%) and recruiting staff (60%). But the reluctance to increase wages, or to invest in training, seems to be at odds with the importance owner-managers say they place on skills, retention and training. Three-quarters (74%) respond to talent scarcity through more flexible and attractive working conditions; only 55% pay more, and 46% offer training in response to talent shortages.
High and low-growth firms’ differing emphasis on skills is telling. Those with higher growth identify skilling up staff as a challenge more than those with lower growth. More skilled staff, after all, should be more engaged, more productive and more willing to stick around. Perhaps more businesses would benefit from seeing this as a challenge and a key priority to address.
Leaders who listen and learn
The report also reveals that the most successful business leaders are open to new ideas, listen to their employees, and learn from other experienced business leaders.
High-growth firms are more likely to engage with their employees in the search for new ideas. The results show that a significantly larger proportion (61%) of high-growth firms seek innovation through formal internal strategy days than lower-growth ones (49%).
The planning sweet spot
The approach of high-growth companies to planning varies hugely from that of slower growing firms. The former have formal plans focusing tightly on the next two years, and revisit their plans annually. Lower growth firms are more likely to revisit their business plan every few months, and express less confidence in their ability to execute.
As the time horizon of around two years correlates to faster growth, could it be that in today’s fast-evolving business environment, in which technology is driving change, a three or five-year plan is now too long?
A time frame of around two years looks very much like the sweet spot for working to a realistic plan that a management team can execute, while also taking account of the existing competitive landscape and being able to exploit emerging technology to best effect.
Technology is forcing the pace of change in business and, given the toll that technological change has taken on high street brand names in the past 20 years, it isn’t surprising that misgivings about the impact of technology are pervasive.
Yet growth businesses are more confident about their ability to wield technology, rather than become victims of it. The message for managers and leaders would seem to be that by adopting the behaviours of those high-growth firms – investing in people as much as technology, upskilling the employees you already have, listening to your staff, and focusing your plans over timescales which enable you to adapt – you have a much better chance of encountering technological change as an enabler rather than a barrier.