Every new year brings unexpected challenges. We ask three experts what they and their peers will need to confront in 2017.
CEO and founder of Director Institute
With the rapid pace of business change and the ability for competitors to appear so quickly, the biggest issue for business leaders in 2017 is disruption.
Businesses that were not on the radar two or three years ago are now major contenders in certain markets. Competitors are able to launch very quickly and with few barriers and minimal infrastructure assets.
It creates an environment in which all businesses, no matter their size, must be disrupters themselves. But how do you do that when your business is not as nimble as it needs to be?
Organisations must tap into competitive intelligence, meaning an important board position is a futurist – somebody who is skilled at analysing trends.
There shouldn’t be any surprises if you’re working with universities and early-stage businesses, the places where disruption usually begins.
Leaders will be thinking about becoming a lot more connected with innovation communities. Often innovation can’t really fire up within the business, so it is better to invest in innovation labs or incubate ideas outside of the business.
Disruption requires an escape from the old way of thinking.
Those prepared to take risks and not be afraid of failure – all those things you hear about in the entrepreneurial world – are more likely to succeed.
Dr Joshua Healy
Senior research fellow at the Centre for Workplace Leadership
We have conducted a large piece of research – the Study of Australian Leadership – with 2500 business leaders, in which we asked an open-ended question about future challenges.
The top response, mentioned by 47 per cent of respondents, is about market and competitive pressures.
Business leaders are very concerned about their competition, about the pace of technological disruption and about getting ahead of changing market needs.
A lot of industries are seeing new, upstart players that weren’t in the market a couple of years ago. They’re able to set up quickly, get in contact with customers and make themselves known via web or app. That’s influencing the thinking about the need to always be on your toes competitively. This is top of mind for a broad sample of Australian leaders.
There is also a story developing around consumer confidence. Wage growth over the past few years has been very low, as has the inflation rate. It has left us in a confidence trap economically. Credit is cheap, but people are worried about household budgets; they don’t feel they have a lot of discretionary income.
This is going to be important for businesses in 2017, because it’s going to be difficult to entice people to spend.
Businesses must convince people that they have a quality product or service – something that people really need to purchase – or they’re going to be in trouble.
CEO of MYOB
We recently conducted some research with SMEs that told us that the overwhelming majority of small business leaders will leave 2016 in a reasonably positive frame of mind.
If you think about Brexit, surprise US election results, protectionist trade policies, interest rates potentially rising etc., there are many reasons a small business owner could be pessimistic. But the research points to their amazing resilience.
They are optimistic, but there are still things they will be looking out for. The first is what the government does with the instant asset write-off, which two years ago was increased to A$20,000. Many SMEs think it was a permanent change, but it’s actually due to expire on 30 June 2017.
This has been leveraged by small business owners to invest more in their businesses, so I think that will be number one.
Number two is cash flow. There is a growing need to develop a prompt payment protocol whereby all businesses sign up to be good, on-time bill payers. Small businesses face enormous pain when unreasonable payment terms are forced upon them.
The final issue is red tape, in particular around BAS. BAS documentation is incredibly challenging for small business owners. Our research showed that it costs small businesses A$13 billion a year in lost time to collect and report GST. This year, the ATO trialled a radically simpler process. Any businesses that are aware of that trial will be hoping it will lead to permanent change.
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Kylie Hammond is a leading management consultant in the field of board talent and executive search. She is CEO and founder of Director Institute, which provides current and aspiring board directors with tools, resources and training to begin or expand a board portfolio. In the past 12 months, Hammond has personally mentored more than 500 senior executives and CEOs, and has completed more than 2500 board placements in the Australian market.
Dr Joshua Healy
Dr Joshua Healy is a senior research fellow at the Centre for Workplace Leadership at the University of Melbourne. He has longstanding research interests in employment relations, labour studies and applied economics. A frequent commentator on Australian employment and labour market issues, Healy has led or taken part in many research consultancies for the Australian Government, employers, unions and research organisations.
Tim Reed is executive director and CEO of the MYOB Group. He joined the organisation in 2004 and was appointed CEO in 2008 after spending more than four years in management roles. Prior to joining the MYOB Group, Reed worked in Silicon Valley within a number of companies in global technology and internet markets. He is a member of the Business Council of Australia and the Business Advisory Panel of the Australian Minister for Small Business.
These are the key issues for managers in 2017