What will keep business leaders awake in 2023?
From supply chain disruptions to a talent crunch, there is no shortage of concerns facing companies in the new year
THE world has become a more difficult place for businesses in the past year as they deal with challenges on multiple fronts. The war in Ukraine will have wider implications for US-China relations already troubled by trade, technology and governance issues, while Covid-19 disruptions continue to affect global supply chains.
Concerns over inflation and labour shortages will also persist into the new year. Unsurprisingly, the uncertain landscape is weighing on the minds of business leaders today, as they attempt to chart a path towards growth over the next 12-18 months.
“The top worries for organisations and businesses include geopolitical contestations and their impact on globalisation and international trade, which have been massive in terms of driving growth and prosperity across economies,” says Max Loh, Singapore divisional president, CPA Australia. Another key concern is the potential for an economic recession, and the ability of central banks and governments to engineer a “soft landing”, even as they work towards taming inflation, he adds.
Meanwhile, Dennis Lui, chief executive at VITAL (Ministry of Finance), is losing sleep over the possibility of being disrupted by new business models arising from rapid technological change. Established as a department under the Ministry of Finance in 2006, VITAL aggregates common corporate services in areas such as human resources, finance and procurement within the public sector.
“We will become irrelevant if we do not stay ahead of our game by keeping up with new opportunities in technology and business partnerships. While VITAL currently serves more than 100 public agencies and 100,000 public officers as a Central Agency for Corporate Shared services, we are not a monopoly. My service partners have every right to use commercial service providers,” says Lui.
In the shorter term, businesses will continue to face fierce competition for talent. According to Cheung Pui Yuen, chief executive officer, Deloitte Singapore, employees are more willing than ever to leave for fresh opportunities, even as companies struggle to resume pre-pandemic operations with fewer workers.
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Research by Deloitte has shown that 46 per cent of Gen Z workers in Singapore are not choosing traditional employment, while millennials are experiencing one of the largest decrease in employment tenure at 3.05 years.
“Employees are now more active in searching for roles that offer better work-life balance or are more aligned with their personal values. For us in professional services, the challenge is attracting and retaining talent with the skillsets to address the needs of our clients. Talent with deep knowledge in areas such as digital, AI, analytics and sustainability are in short supply,” explains Cheung.
Lui notes that organisations have to do more to unlock the full potential of their existing workforce. This requires business leaders to tap on “the contingency workforce and articulate our unique value proposition to bring purpose and meaning to our staff”.
Leveraging technology to create value Faced with heightened uncertainty, organisations must use data and technology to determine where and how they want to create value in their businesses.
“The use of data enables organisations to know more about their business, including their customers, suppliers, competitors and investors. Correct interpretation of such data sets will result in better business decisions and hence, improved performance. However, organisations must classify, simplify and analyse information carefully, and not let the sheer vastness of data overwhelm them,” says Cheung.
As a platform for innovation at the centre of government, VITAL’s approach to creating value in a sustainable way is to work with different partners from both private and public sectors for the benefit of its ecosystem.
“We will build platforms not just for our own use, but also for the whole-of-government. One specific example is to collaborate with leading technology companies to provide ‘RPA (Robotics Process Automation) on demand’ to our fellow public sector agencies,” says Lui.
The sustainability challenge Sustainability is another area that will continue to be a top priority for businesses in 2023. According to Loh, the sustainability agenda is imperative both from a value and risk perspective.
“On the one hand, it is throwing up opportunities in terms of new solutions and markets to address emerging demand, drive resource efficiency and capture value. On the other, climate change and ESG factors can threaten stability via physical and transition risks which must be systematically managed and mitigated,” he says.
He adds: “Overall, businesses are making a marked shift from purely shareholder primacy to stakeholder value, and stakeholders want to cement sustainability as a non-negotiable strategic necessity for organisations to operate successfully in the future.”
To move the needle, Cheung urges organisations to embed sustainability into their strategies and operations, and not shy away from harder-to-implement actions. In particular, he advises organisations to follow recognised frameworks that can help leaders set appropriate goals and assess progress, develop a concrete plan to ensure long-term goals have near-term accountability, and educate senior leaders and the Board of Directors.
Transforming business models In a fast-changing world, business leaders will need to re-imagine operating models if their organisations are to thrive in the new normal. “It is time to consider the long view of operating in a digitally disrupted world, with the goal to do more with less, reduce operating costs, and create additional capacity to fuel the business in the midst of shrinking budgets, all the while creating an engaged and agile workforce,” says Cheung.
Loh believes that organisations must go beyond process automation and efficiency gains, and towards a business model that drives new digital revenue streams, is customer-centric and efficient. “While transformation and change are always challenging, this will open up much broader opportunities to create long-term value for all stakeholders.”
Companies must also be bold in their thinking, putting aside legacy-related constraints to strive for true transformation in the face of disruption. Says Lui: “Being excellent at what you do today is not enough to guarantee future success. In fact, it may be an impediment to future success. Think of what the world and your operating environment will look like in 5 or 10 years from now, and ask yourself what it takes for your organisation to succeed.”
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