Paul Knight, partner and innovation champion at national law firm Mills & Reeve
There’s no question it’s been a turbulent decade for UK organisations and we’d be forgiven for assuming a level of cynicism and fatigue – what can the world throw at them next?
To maintain competitive advantage companies can’t afford to rest on their laurels, but this doesn’t mean that they are always ready to face more disruption head-on.
You could argue that medium-sized businesses are in a uniquely strong position to adapt to disruption. More often than not they have successfully navigated upheaval and they don’t tend to have the strict operational structures of corporates. This provides real room for manoeuvre. So what is holding them back and potentially stopping them from innovating and capitalising on their experience and flexibility?
Innovation divides opinion. On one side are the disruption-ready, and on the other, the disruption-discouraged. In fact, these groups are fairly balanced. The latest Defying Gravity report has revealed:
- 52% of mid-market leaders believe their company has the knowledge to react successfully and keep pace with disruptive innovation.
- 48% believe they don’t.
Confident growth in a disruptive world
The Defying Gravity research has also revealed disruption-ready leaders are twice as likely as the disruption-discouraged to believe they will meet growth expectations, and nearly three times more likely to believe their leadership team have the capabilities to supercharge growth.
Whilst the idea of growing and scaling up can be exciting for some, it’s clear that others find it daunting. So what helps? Having a strong leadership team that is supported by a breadth of talent within the larger organisation stands any company in good stead for a successful future. It helps businesses to feel more able and more confident, nudging them into the disruption-ready category. The onus is on the leadership team to correctly enable each employee to produce their best work and support the business with their intelligence. And it is often the employees in the wider team that come up with the best, yet unexpected ideas.
Disruption-ready leaders are better positioned to put this into practice as they tend to have more confidence within their current team. Three quarters of them think that their business has the talent and skills to supercharge growth.
Two of the key factors impacting the economic environment, that can’t be ignored, include the ongoing political uncertainty around Brexit, and the technological advancements that are moving at an increasingly fast rate.
In preparation for Brexit:
- Seven in ten disruption-discouraged leaders are reducing their growth targets.
- Three in five are reducing their investments.
- Two thirds are postponing acquisition plans.
For the disruption-ready businesses, it’s a much more positive outlook as they suggest that Brexit isn’t holding back new business plans, at all.
There are steps, however, that business leaders can take to prepare in advance of a downturn. These include
- Going back to basics and looking after your cash flow.
- Focusing on the workforce to encourage collaboration.
- Investing in innovation.
- Re-evaluating your business model to take advantage of new conditions.
As we know finance has a strong role to play in the disruption equation. It has been shown that businesses that are ready for disruption are not scared to invest, but are equally not reliant on it for growth. It’s a fine balance to get right.
There is however a fear of not being able to find finance, particularly with the disruption-discouraged businesses. They are more than twice as likely to have experienced difficulties in raising long term finance, so perhaps it is no surprise that they tend to be far less confident in their ability to find the finance to support their growth.
Some leaders may look at how fast other companies are innovating and start injecting cash into operations, but without any real plan for what to do with it. But business leaders need to be wary of trying to copy competitors. The key is to be imaginative and flexible about the finance options that are available and keep a close eye on cash flow to prevent any future troubles. Additionally, leaders should be encouraged to look for finance now to make sure they don’t miss their window of opportunity. Three quarters of disruption-discouraged businesses believe they would have grown their business faster if they had invested in growth, considered taking out loans or seeking private equity investment.
New challenges and opportunities will be faced no matter which side of the disruption fence leaders sit. However there are certain steps to follow to ensure the wave of change doesn’t drown the business.
Encourage your workforce to innovate and collaborate as they will fuel ideas and move the business towards new opportunities. It’s no secret that people may be sensitive to change, particularly in these uncertain economic times. So acknowledge the pressures and work as a team to push past them. This will also benefit customers in the long run.
Seek internal and external feedback. The responses could help you look at products and processes differently in order to innovate where required, enabling you to be one step ahead of the competition.
Whether business leaders are disruption-ready or disruption-discouraged, the future is uncertain and unfortunately there isn’t a one-size-fits-all approach. Make smart business decisions and the future will be bright.