What are Australian business leaders really concerned about when they look forward to 2019?
Certainly, there’s no shortage of theories.
In fact, scan the news on any given day and you’ll find dozens of voices exclaiming how a particular issue is absolutely the most pressing concern weighing upon the nation’s business community.
The problem with this noise is it’s hard to draw a neat line between self interest and fact.
We hear an awful lot of declarations about what’s worrying ‘business leaders,’ but rarely see any rigorous attempt to ask or verify them.
We wanted to challenge this.
So our research practice, KPMG Acuity, engaged a broad spectrum of C-level leaders from a diversity of industries to think about the main issues exercising them when they consider 2019.
220 leaders – some with fewer than 50 employees, some running companies with revenues of over $1 billion a year – took time out to respond. Most were from the private sector, but the public sector is represented as well.
Digital transformation is the number one priority. The dual challenges of innovation and disruption take second place, while concerns over dealing with regulation and Australia’s political paralysis place third and fourth.
The need to make their businesses truly customer – and citizen – centric came fifth in the list of business challenges, closely followed by concerns over cost competitiveness.
Trust is undoubtedly the other key permeating issue this year. No longer some woolly discussion point, trust has burned its way into the consciousness of senior leaders and is increasingly being recognised as the license to operate. As a result, organisations are asking themselves fundamental questions about their purpose, their culture, and how they present themselves to the world.
In order of importance the top 5 issues are.
- Digital Transformation
Just about every CEO has ‘digital transformation’ at top of mind. In 2018, the term ‘digital transformation’ means so many things there is a very real risk that this lack of clarity is causing confusion, leading to diverse agendas and ultimately missed opportunities.
Digital transformation includes investments in digital technologies, but also spans the modification of an organisation’s functions, its ways of working, its back office technologies, and occasionally forging a completely new business model. True transformation should also include culture – often the poor cousin behind the more visible technology investment.”
- Innovation and disruption
The fear of disruption, on its most elemental level, is straightforward: the constant worry that your competition will use new tech and methods to do what you are not. But as we look toward 2019, we see the dilemma is actually more immediate, more tangible, and more complex.”
One reason for this is the current global marketplace has made it abundantly clear that the network effects of the innovation race tend toward winner-takes-all. There are spectacularly outsized growth opportunities for the lucky few – and the potential to get left in the dust for everyone else. This raises the stakes enormously.
This included both the sector-specific regulations facing the financial services industry and the broader challenges of harmonising business regulation; cutting red tape; and concerns over the capacity/capability of Australia’s regulators.
While we don’t wish to see needlessly bureaucratic demands on business, there is a danger of seeing new regulation as purely negative. Reporting can be a strong discipline to get things done, so we would urge businesses not to take their eyes off the ball and get into a defensive mindset if additional regulations are introduced in their sectors, or generally in 2019.
- Political paralysis
Fourth on the list of issues worrying business leaders was the ongoing political log jam at Canberra. There was uncertainty over the prospect of significant reforms or necessary changes, and a lack of belief that Australia’s major parties can work cohesively on national agenda items.
Many CEOs referred to energy policy as an indicia of political paralysis. The problem was a trilemma – price, stability, environment – but political discourse could not deal with the three issues and it drifted to one of the three depending on the political perspective. As a country we have to overcome this problem and start relying on evidence-based policy.
- Customer centricity
Customer not only came fifth in our list – but was the issue that permeated almost every other answer. It came up in responses ranging from regulation – where it needs to be seen through a lens of driving a closer connection of trust with your customers – to big data, where the real issue, said respondents, was ensuring every sector in the business has a plan to collect and deploy its data to create real value for customers.
The companies that truly get it are those who understand there is no silver bullet. These companies understand they need to have engaged, helpful people delivering outstanding service. That these people need to be working in alignment with a great digital experience. And that it is this combination that drives loyalty, advocacy, and commercial performance.