Pictured: Leo Clancy, CEO, Enterprise Ireland
We are in a time of unprecedented change for our global population and for business. Leo Clancy, CEO, Enterprise Ireland here writes how, despite these challenges, a sweeping digital revolution has enabled many businesses to continue to thrive, particularly those in the knowledge economy.
Note: This piece was originally published in Business & Finance magazine, vol. 59, no. 1, available to read, with compliments, here.
We are in a time of unprecedented change for our global population and for business. As I write this the COVID-19 pandemic is taking a new and worrying direction with the emergence of the Omnicron variant. We have also seen a COP 26 summit in recent weeks that saw growing determination despite real concerns about concessions being made to achieve consensus and the increasingly visible implications of climate change. In parallel, the global economy is in flux, with inflation re-emergent and deglobalisation a growing threat.
Despite the challenges, a sweeping digital revolution has enabled many businesses to continue to thrive, particularly those in the knowledge economy. Manufacturing has adapted to COVID and supply chain related threats to continue producing food, consumer goods, industrial products and other items that our modern economy depends on. Government has proven its ability to respond quickly and effectively in health, economic and other matters, working faster than ever anticipated with business whether in drug delivery, wage supports or other areas.
As we look at this global landscape, the implications for business have been significant and the responses have shown the flexibility of our modern economy and system of Government. But I would contend this is just the tip of the iceberg in terms of what we will have to achieve in the coming years.
Justin Trudeau’s keynote comment from Davos in 2018 “The pace of change has never been this fast, yet it will never be this slow again” is so often quoted it risks becoming a cliché. However, it was made two years before a period of change that none of us could imagine.
I believe business will need to change faster than ever in the coming years in response to increased challenge, risk, and opportunity.
In my opinion, there are three key factors that business needs to be aware of as the forces for change:- competition, sustainability and talent.
Competition
We live in an increasingly flat world. Irish firms now compete globally, whether they know it or not. Those companies who can’t compete successfully will be left behind, and much faster than they might expect. Three key components of competitiveness for me are: – operational excellence, innovation and digitalisation / technology adoption.
Focusing on ensuring your day to day operations are effective is a priority for all businesses. A simple focus on sales, margin, cash and quality can be game changing when combined with a lean and continuous improvement culture.
Next, innovating in your field and adapting your products and services for new markets is the way to stay competitive and grow a defensible, high margin, export-oriented business. We saw in a 2017 review that companies with higher levels of innovation over the prior sixteen years had disproportionately higher sales and exports.
Once you have both an excellent, in-control process and an innovation strategy, applying digital is now a must-do. If the pandemic has shown anything it is how quickly digital platforms levelled the world. These technologies are available in every country on the planet. My one caution on digital is to start with the end in mind. Too many organisations have reflexively moved to AI / Cloud / digital without understanding the problem being solved.
Manufacturing has adapted to COVID and supply chain related threats to continue producing food, consumer goods, industrial products and other items that our modern economy depends on.
Sustainability
Sustainability has many facets, the most obvious one being management of carbon emissions. Looking at this aspect alone, the trajectory of global change is in one direction only – towards net zero.
We are already seeing buyers requiring sustainability statements when they are tendering for business in private and in public markets. To date many of these requirements have been benign and capable of being answered with an aspirational or loose commitment. I believe this is changing fast and that change is coming from consumers, investors, and regulators.
The economic imperative is weak for many firms, with carbon taxes and incentives not yet making the business cases positive for investment in decarbonisation. I think this may or may not change enough to matter but long-term modelling for all firms would be wise. In any event the inability to sell into your market may well trump the more basic economic considerations and I think adding a sales risk premium might well edge a marginal business case into the green.
Companies need credible plans and need them fast. The business of sustainability is the key to a sustainable business in the future.
Talent
The increasingly complex world I have described above depends on excellent people to maintain competitiveness of their companies and meet emerging challenges.
Employers need to recognise that, particularly in a highly productive, digitised and increasingly flat world, people are the secret sauce in achieving results. Attracting the best, keeping them interested and motivated and continuously developing the organisational and individual skill base are key to success.
But top talent is a scarce and precious resource. This means companies, in addition to setting out job requirements, must convince people of the purpose and meaning of the organisation and the work itself. Firms must also ensure that they fully embody a commitment to Equality, Diversity, and Inclusion, not just to attract people but because doing so brings a competitive business edge. And it helps that these are just the right things to do.
Success in this war for talent means diversifying our pathways to work, competing globally for top talent, developing lifelong learning models and above all putting people at the heart of strategy.
We live in a world that is growing fast, with a trajectory to 10 billion people. The opportunities are huge for companies that can be competitive, position themselves for a sustainable future and attract and develop the brightest and the best.
At Enterprise Ireland, we focus on helping our clients to be the best they can be. The areas above are those we will increasingly focus on in the coming years to ensure Ireland continues to lead in a changing world.