Business Brain: Businesses need to step back and ask the tough questions
Following several years of adjustments and, notwithstanding remaining challenges, Ireland's economic outlook is now the most positive we have seen since 2008.
With the US economy growing at a reasonable pace and the UK also doing well, our trading partners are now in a better place and we should see a gradual return to more robust health. The eurozone economic recovery, however, remains modest and fragile. Provided the external environment avoids further shocks, Ireland is in a good place to grow.
Business leaders also have growth firmly on the agenda and are feeling more positive about future prospects for their organisations.
Irish companies have typically relied on export markets closer to home. But as global economic power shifts from west to east, they'll need to look where the growth is and focus on emerging markets, including those in Asia and South America.
Companies will have to consider these markets if they are to achieve growth. However, these new markets will be a slow burn. Lots of effort will be required in building relationships and it's likely that any reasonable return will not begin to flow for another six or seven years.
A recent PWC business conference that examined priorities for 2014, highlighted that costs have become less of an issue while streamlining and standardising operating processes has come under sharper focus.
In the search for greater efficiencies and getting to market faster, business models will completely change, driven by new technologies and changing customer demands. New technologies, such as mobile, cloud and social media will have enormous implications for Irish businesses and will change how companies are structured and redefine the workforce. These changes will result in leaner organisations, with fewer layers, and more decisions being pushed down the line.
To survive, organisations will need to become more agile and responsive as the workforce becomes even more tech savvy. A different type of customer is emerging who will demand new approaches and a faster delivery of products and services. Serving the customer anywhere, anytime, will become the norm. Being competitive and very responsive to consumer needs will be critical in this fast-changing environment.
The winners will be those businesses which fully embrace decisions in the following key areas:
Businesses need to pay attention to their digital strategy, moving beyond static websites and using them to drive growth. A defined social media strategy will cater for changes in customer behaviours.
Having the power to be transformative, organisations across all sectors will need to invest in data analytics if they are to stay ahead. By 2017, for example, the Big Data market is forecast to be worth $53.4bn compared to $5.1bn today. But transforming Big Data into actionable insights requires sophisticated analytics tools. The emergence of such tools are enabling organisations analyse vast stores of Big Data more easily and quickly, using fewer resources. These software tools enable organisations to engage predictive and deep analytics and allow organisations to become more competitive and resilient.
Innovation has become mainstream. A recent PwC report highlighted that companies globally expect a $250bn revenue boost over the next five years by delivering on innovative projects and driving a culture of innovation throughout their organisation.
Nowadays, while organisations are still keen to expand their reach, they are increasingly concerned about how to improve what they do and are looking to innovation as a way to maximise their financial return.
It is important that leaders promote thoughtful exploration of the best innovation.
With a greater sense of optimism, now is the time to take a hard look at your business. This includes asking some basic questions about what products and services and which customers are most profitable.
The organisation needs to be reviewed from a structural perspective.
Outsourcing or consolidating currently distributed services into a shared services centre, for example, might be a better option for some.
Performance and talent management are other key areas that need consideration.
Do your people understand what is expected of them and are they measured and rewarded against that? Does the leadership know who are the best people and are they put in front of the customers? Businesses need to take a step back and ask searching questions if they are to take advantage of the up-swing in the economic cycle.
Kevin Egan is Assurance Leader at PwC. www.pwc.ied