As an operator of SMEs, Arowana is continuously on the learning path to ensure our operating companies are focusing on the right areas at the right times.
Staying on top of research pieces and surveys provide valuable insights to find out what trends might have an impact on small and medium-sized businesses. And with the internet age making global business instantaneous, what applies in one country is now relevant for the entire business community.
One such report that was released in 2018 was the PwC Global Investor & CEO Survey – a series of online interviews conducted annually with investors and CEOs by PricewaterhouseCoopers. The primary aim of these surveys is to gain insights into the thinking and strategic goals of chief executive officers and to see how their views compare with those of the people investing in their companies. And within the responses from these key stakeholders, there were four key areas that we think are of particular importance to SMEs.
What areas should businesses be aware of?
The four areas we identified are cyber threats, disruptive technologies, automation, and difficulties in attracting the right talent. So let’s take a closer look at each of these, and what we believe they will mean for SMEs going forward
This is obviously a major concern for both investors and CEOs. IT governance issues need to be addressed, but how does an entrepreneur tackle this threat on their own?
If you Google ‘cyber-attacks’, you will find lots of information on how governments and major corporations have been victims of a cyber-attack. These are organisations who have dedicated teams and budgets focused on protecting against such threats.
However, this is often not the case with SMEs, who are potentially more vulnerable to cyber-attacks, which can lead to reputational damage, financial loss and data breaches.
A successful cyber-attack on an SME can have a much bigger impact than on a large organisation, as they may not have the ability to sustain losses or the disruption caused to their business.
So how is an SME able to protect itself from cyber threats? Firstly, awareness of the type of attacks that can occur is key, as well as always remaining vigilant about what is being received on our computers and portable devices.
You also need to be organised. Having an IT governance framework may sound like something for the large companies, but is in fact even more crucial for SMEs. Our competitive advantage is our ability to create value by optimising technology.
Today, the traditional attack vectors of hacking the firewall (although still significant) are no longer as prevalent as they used to be, due in part to changes in traditional work practices. Once, you would go to your office in the morning and log on to a desktop computer to access the IT system, which was protected behind the physical barrier of a firewall.
Hacking the firewall was the only way to get into a company’s IT system. But the workforce now accesses IT resources from anywhere, at any time and on any device.
This, in conjunction with the rise of cloud-delivered IT services and applications, which means hacking the person has become more common than hacking the firewall. It is far easier, quicker, and requires less skill.
41% of CEOs and 41% of investors surveyed are concerned about cyber threats.
The best defence against this is for SMEs to have a culture where IT security is everyone’s responsibility, no longer just falling on the shoulders of IT to ensure security of the company’s systems (although they may still lead the charge in this aspect).
Having strong security protocols and knowledgeable staff is just as important today as was having traditional firewalls in place 20 years ago. Therefore, a recurring IT training program is a must for organisations of all sizes.
A good analogy here is that a loaded gun is not dangerous until someone decides to pull the trigger. Likewise, an email with a malicious payload is not dangerous until someone decides to click on the attachment.
So IT governance certainly plays a key role. And not only should we be focusing on preventing cyber-attacks, we should be equally focused on how they occur and how we manage the aftermath.
At some point most SMEs will experience some sort of cyber-attack. If you haven’t already, then expect it. It will happen. That’s why you need to have strong procedures in place to deal with the aftermath. Cyber-security insurance for SMEs is also another option and is becoming more available to SMEs.
Time is of the essence in minimising the damage. Knowing what you have, where it is located and what’s been taken will assist you in dealing swiftly with the situation. And with new regulations such as GDPR now in force, knowing your legal obligations will help to ensure you fulfil your responsibilities to government, clients and staff.
Disruption by technology is not a new phenomenon. In 1970, the most common profession in the world was the typist. The advent of the desktop computer disrupted the typewriter and the typist was extinct by the late 1990s.
From an SME perspective, technology has been an invaluable tool that has helped entrepreneurs start up faster and leaner than ever. This is a threat to major corporations whose margins are being eroded by the new kids on the block.
The Black Eyed Peas have called it the ‘Now Generation’, but this is the reality of the world we live in. We no longer want to wait in the call queue, especially if it’s just to ask a question. Instead, we use online technology to research the product or service in detail, mostly during a commute or in the wee hours.
AI Chatbots who can answer customer enquiries also improve the customer experience and help the buying process. It’s no secret that if a business isn’t using their customer data to improve their service, then someone else certainly is.
Technology such as social media platforms are providing SMEs with the ability to generate leads by running targeted ad campaigns for their products and services, which is far cheaper than traditional media.
85% of investors expect technology to greatly disrupt the business landscape in the coming years.
And with this greater ability to target an audience, consumers are requiring greater transparency about our products or services before making a buying decision. They want to align their own beliefs with a brand and business that has an authentic purpose and a similar vision. SMEs are able to compete as well (if not better) than large corporations in this regard.
According to Zendesk, 75% of people would return to a company with excellent service, but 87% think brands need to work harder to create a seamless experience for customers. Today, more businesses have an omnichannel approach to servicing their customers to ensure they manage the customer experience from initial enquiry all the way through to sale and delivery.
At Arowana International, two of our companies have specifically employed technology to improve their customer experience. These are Thermoscan, a thermal imaging company which – through the digitisation of paper-based processes – now provides customers with a report within 24 hours of an inspection, and DDLS, which – through the adoption of state-of-the art technology – now delivers industry-certification programs across Technology, Process and People product verticals.
Investors expect automation to reduce headcount to some extent in the future. We are already seeing some of this now. But at Arowana International, we believe that what this is really doing is freeing up the capacity for smaller businesses to focus on more creative and strategic thinking rather than repetitive tasks.
While CEOs are more concerned than investors about the loss of jobs that automation will bring and their obligation to retrain staff, at Arowana International we believe it’s a matter of perspective.
Automation will inevitably reduce headcount and just as in the example of the typist, those who reskilled as computer literate secretaries continued to be employed.
From an SMEs perspective, automation will help save time and improve margins. RPA (robotic process automation) specialists can introduce software and tools into our processes that will help with menial, repetitive tasks and with zero errors. This will in turn free up our time, enabling us to focus on strategic and revenue-generating tasks.
In the PwC survey, investors believed that creating learning opportunities and providing a modern and flexible work environment are the most important factors for attracting the right talent to a business.
And at Arowana International, we agree. In an increasingly hi-tech world, the rate of knowledge decay is escalating (around 6% per annum according to Professor Boris Groysberg of Harvard Business School) and our knowledge and skills “half-life” is becoming shorter and shorter.
This means that everyone, whether they are blue collar, white collar, back office, middle office or front office, will need to take a leaf from the book of Tim Ferris – the world’s greatest learner – and embrace a mantra of lifelong learning to stay relevant in a rapidly automating world.
And at Arowana International, we practise what we preach. We believe in lifelong learning and consider it vitally important that our team not only remain relevant, but also have skills and experience that are future-proofed in order to assist our companies to scale up sustainably.
We continually invest in learning programmes spanning leadership, technology, marketing, data science and finance and each team member is allocated an annual online education budget to expand their knowledge base.
A good example of how we’re helping SMEs find suitably skilled employees is our company EdventureCo, a leading vocational and professional education provider specialising in the fields of building, construction and information technology. Its goal is to equip students with relevant skills in a rapidly changing world where jobs are becoming increasingly displaced by automation.
While investors and CEOs differ in some regards, the PwC Global Survey clearly shows that both groups recognise the major challenges facing business in both the short and long term. Hopefully this article has shown that many of the challenges such as technology and automation can actually be opportunities for small to medium businesses, particularly for those who work with the right hands-on partner.
At Arowana International, we partner with businesses that serve a real purpose in society and who need our support to achieve sustained growth. We use our experience and rigorous research and data analysis to help them develop and overcome the inevitable challenges, without ever losing sight of the long term.