Amidst a landscape of uncertainty and volatility, business leaders are increasingly recognising the paramount importance of ensuring business resilience.
The Global Economy today is experiencing cross-cutting forces. On the one hand, exports are back on the rise, supply chain pressures are disappearing, AI-driven technological disruptions are accelerating and the post-pandemic recovery is well underway (1). At the same time, our globalised economy is facing significant headwinds from geopolitical tension, economic uncertainties, increased cost of borrowing and a tight labour market across advanced economies that constrain increasingly globalised organisations. While we seem to have escaped the risk of a strong downturn in advanced economies, consumer confidence is at its lowest levels since 2008 and a slowdown is increasingly likely. Meanwhile, M&A activity and major investments by firms are at a slowdown globally as higher interest rates in advanced economies take effect (2).
As we enter Q4, boards and executives are faced with the challenging task of navigating this uncertain climate and plan for 2024. They have the opportunity to identify strategic priorities to foster innovation, build business resilience, identify competitive advantages and prepare for the next growth phase in the business cycle.
Investing for tomorrow: assuring that your business leaps ahead of the competition
Once the economy recovers from current headwinds, companies that invested in growth levers will benefit from the early-movers effect and outpace competition. This is why it is essential for business leaders to focus on long-term growth as they may be tempted in cutting costs and funds for expensive investments. While the levers for growth vary by industry and region, here are some common themes to look at:
1. Building business resilience: Embracing digital transformations and AI
Despite the current global economic difficulties, Generative AI tools have emerged as an innovative disruption, bringing powerful new abilities and boosting employee productivity.
The impressive early results of Gen AI products have awed the wider public and garnered substantial attention across industries, particularly top executives, with a strong focus now on its revenue-generating potential, and increasing the value of current product offerings in value-add from offerings in addition to its cost-reduction potential. Generative AI has applications across business functions, from helping Marketing write targeted content and assisting Customer Services in generating responses to customer claims to reviewing developer’s code. These opportunities will require significant investments as companies need to recruit AI talent and acquire new technologies while also helping reskill their workforce as Gen AI gets implemented.
However, business leaders need to remain cognizant of the risks associated with Gen AI, from risks for Intellectual Property, fallacies resulting from AI responses and systemic biases. Organisations should proceed with Generative AI projects with caution, leveraging their best talent and establishing clear frameworks and guidelines. Executives need to also continue to support and invest in more traditional digital transformations, from Order-to-Cash applications and Cloud data migration optimisation to the embedment of data analytics in all business capabilities. Pursuing these transformations will empower even greater returns for Generative AI-induced changes.
2. Creating innovative, sustainable and resilient business models
Businesses today are facing more challenges than ever before. The world is changing at a rapid pace, and new technologies and trends are emerging all the time. To stay ahead of the curve, businesses need to be innovative and resilient.
So, what does it take to create an innovative and resilient business model? Here are a few tips:
- Be customer-obsessed. The best way to create a successful business model is to understand your customers’ needs and wants better than anyone else. What are their pain points? What are their goals? What are they looking for in a product or service like yours? How can your products and services and brand be loved, not liked?
- Embrace experimentation and failure. Innovation is all about trying new things and seeing what works. Don’t be afraid to experiment with different business models and strategies. Even if you fail, you’ll learn something from the experience. The important thing is to keep trying and learning until you find a business model that works for your business and your customers.
- Be agile and adaptable. The business world is constantly changing, so businesses need to be able to adapt quickly. If you’re not willing to change, you’ll get left behind. Be open to new ideas and be willing to pivot your business model if necessary.
- Focus on sustainability. Sustainability is no longer a luxury – it’s a necessity. Customers and investors are demanding ever so strongly. Businesses that want to be successful in the long term need to focus on building sustainable business models. This means using resources efficiently, reducing environmental impact, and creating social value.
3. Fostering supply chain resilience in business
The disruptions caused by Covid restrictions and supply chain bottlenecks showcased the vulnerabilities within global supply chains. Companies realised the need to diversify suppliers, localise production, and establish contingency plans to ensure uninterrupted operations. This shift toward supply chain resilience has prompted a rethink of major suppliers and outsourcing, increased collaboration with partners, coupling forward planning with real-time inventory tracking, and an emphasis on risk assessment. Moving forward, business leaders need to continue and consolidate these efforts, in order to have robust supply chains capable of meeting customer demand.
Optimising efficiency and costs for business resilience
Business executives also need to ensure efficiency gains and enable cost reductions to maintain business profitability as inflation and increases in wages threaten to affect margins. However, it is important for executives to ensure that any cost reduction measure is tailored and does not impact the long-term growth ambitions of the business. Reducing costs through efficiency gains is therefore preferable to radical layoffs, as tight labour markets mean firms would struggle to hire once the outlook clears.
As such, analysing current business processes from your project management processes, financial reporting processes, Order-to-Cash processes, becomes just as important. Operational efficiency through process optimisation can reveal hidden opportunities that can lead to long-lasting results and significant value. Business leaders therefore need to find new ways to unleash the potential of their organisations and improve overall efficiency.
Conclusion
Successfully navigating the current economic slowdown will require agility in approaches. The themes and strategies addressed above are not isolated but interconnected, with technology and innovation serving as enablers for achieving business resilience, agility, sustainability, and strategic growth. Business leaders need to balance cost-efficiency initiatives with long-term growth objectives that will require investments in technology and people.
As businesses navigate this evolving landscape, it is imperative to remain vigilant, agile, and forward-thinking. Continuously monitoring market trends, consumer preferences, and technological advancements will be crucial in staying ahead of the curve and capitalizing on emerging opportunities.
