As we tiptoe into 2023, there is not a scintilla of doubt that the UK economy (and indeed that of much of the rest of the world) is not in a great place. The global pandemic, with its disastrous impact on world supply chains, and Putin’s war on Ukraine have, to put it mildly, combined to put several spokes in the wheel of economic growth. As the politicians, with their different agendas, line up to promise us jam tomorrow (albeit without any indication of their recipe to make it), one thing on which everyone does agree is that poor productivity in the UK is one of the major causes of our continuing malaise.
The statistics are not hard to find, and although the ONS tells us that productivity has now returned to pre-pandemic levels, these were nothing to write home about. In particular, economists focus on what is referred to as the “UK’s productivity puzzle” and the fact that it appears to have stagnated since the 2008 global banking/financial crisis…
One thing economic history teaches us is even in the most difficult times progress – even rapid progress - is possible. Wars, in particular, accelerate productivity in some key areas – military/defence equipment, obviously, but also medicine, aviation/transport and logistics. Similarly, serious economic and social stresses can (but don’t always) lead to dramatic solutions being brought to bear in time frames we would normally consider impossible. The incredibly speedy development of the coronavirus vaccine is just one recent example. And now, following the huge increase in the cost of electricity and gas, we are reading and hearing far more about new inventions and innovations in energy, with nuclear fusion being (fingers-crossed) the holy grail that, once achieved, will transform the world’s supply of energy. In every other sector, business leaders are looking for their own version of that holy grail – and hoping that its discovery is not too complex, costly and time-consuming.
Yet technology doesn’t have to be complex to make a big difference. To give an example that many can relate to, the introduction of goal nets to football in the late 1880s transformed that sport. Previously, there were frequent disputes as to whether the ball had passed inside or outside the post. But even something as simple and effective as a goal net can be improved, with the more recent introduction of goal-line technology now removing any possible doubt as to whether a goal has been scored.
I have recently joined Cedar, after 20 years in recruitment and management consultancy, working mainly across finance, data and tech. Such diverse client experience led me, inexorably, into the transformation space. And currently, all across the UK and beyond, I see businesses seeking the equivalents of the goal-net and goal-line technology. My conversations over the last few years – and even more since joining Cedar – are largely with C-Suite leaders, all of whom realise just how important this is now – both for their current survival and their future success.
Underpinning all our discussions are the big issues of the day. Dominating everything is the economy. Almost everyone expects a rough time in 2023, so the focus is on how to ameliorate any damage by adapting and changing. Part of this is, naturally, going to involve re-structuring, but as the storm clouds swirl, I’m seeing more and more investment in every possible area of technology, using big data and the cloud to accelerate automation and create improvements in efficiency and profitability. This push is being driven by the CFOs: they know that spending money on transformation now ought to reap dividends when the storm clouds eventually disperse and favourable economic tailwinds and new opportunities appear on the horizon. It’s telling that, despite the doom and gloom of the last few months, in Q4 last year over 50% of CFOs increased net spending, with an emphasis on digital/cloud transformation.
I’ve seen some spectacular results, especially involving really talented people who were brought in to rescue failing programmes in some massive blue-chips. Of course, the trick is to ensure that you don’t get to the stage where things are in danger of falling apart. This means conventional operating models are being torn up as boards hire the key individuals who understand how data analytics and tech know-how can drive efficiencies and keep the show on the road while plans are being formed for the (hopefully) sunlit uplands as we come out of the other side of the recession. It will take time and effort, but, with the right people, we will get there…
Daryl Riley, Head of Finance Transformation, Cedar
