The future of business is already here
The adage “the future is already here, it’s just not evenly distributed” applies very well to the business environment worldwide as well as our local business landscape.
In the past few years, let’s say particularly since 2019, many organisations have changed beyond recognition. Let’s just take the average sized company in Malta for starters.
People
Today Maltese companies are looking even more like their counterparts in London, Berlin and Lisbon that ever before. One very clear metric is the make up of their workforce – if I take a snapshot of my own business, there are nine different nationalities in a workforce of about 30 people. This multi-cultural and multi-ethnic fabric, would in any company perforce bring about changes in the way management handles things. In our firm, we quickly recognised the need for a more professional approach to human resource management and an increased sensitivity to cultural diversity.
The very tight labour market has also caused a shift in approach and solutions, with the resultant of a veritable wave of 3rd country nationals migrating to Malta. Not all these personnel are working lower income jobs, as perhaps the perception of some may indicate. Increasingly many of these personnel are moving into critical roles within Maltese businesses.
The key challenge in front of us, however, remains the “war for talent” – local firms are not just competing against each other for talent, but are now having to contend with international competitors for talent. By extension, this implies that the “war for talent” is now happening on a national level as well. European countries are increasingly opening new migration opportunities for talented non European personnel. Our government here needs to review its current frameworks and processes in relation to talent migration and fast. Failing to do so and sticking to the current “fragmented” process in play today, is going to become a major barrier to economic growth going forward. Some examples of countries that have failed to address this, such as the UK since Brexit, already show much weakened economic performance.
Growth/Survival Strategy
We have gone through a decade of strong, continual economic growth. So many businesses perhaps felt that growth was normal and would continue indefinitely, leading to many enterprises not bothering to come up with strategies that would take them to the next level. For many it was a case of continuing to do what they always did and simply hiring more people when they could get them. Covid19 was a rude awakening and suddenly companies faced a chasm of uncertainty. For some, especially those in fields like digitalisation, Covid19 brought about a thick silver lining to the pandemic cloud – with the resultant that they did record business. Coming out of the pandemic, with an expectation of rapid economic growth, again, driven by recovery funding from the EU, we all got a rude awakening on February 24th last year, when Russia attacked Ukraine and thereof triggered an energy shock which we had not seen the likes of since the mid-1970s.
Some governments, like our own, chose to shield households and businesses through subsidy. Whilst seemingly beneficial in the short term, this has the nasty side effect of keeping us “fat and lazy” when it comes to energy utilisation. The jury vote is still out on what 2023 will bring and companies cannot safely assume its business as usual for the next 11 months. There will likely be new challenges, maybe as a result of more geopolitical turmoil and no doubt for the nimble, some opportunities as well. Companies need to have plans for both in order to survive or thrive.
They need to do a bit of “war-gaming” , taking into consideration short and long term scenarios – to ensure they are quick enough to react when needed.
They need to have some forethought in terms of contingency plans , especially for some obvious scenarios – such as the gradual removal of energy subsidies as the pressure on government to do so increases.
Complacency could be fatal – in recent months we have seen businesses in supposedly strong industries such as iGaming and mobility come to grief. This should be a clarion call for businesses and authorities alike and at the least there should be some soul searching especially by the authorities as to why these cases arose and whether its possible to legislate to avoid them in the future.
Technology, Innovation And Disruption
This is a vast topic and one which has created huge change for businesses since 2019. One has only to look at how many companies are still supporting hybrid working models (this is a good thing on many levels – including reducing traffic congestion). There are also a growing number of companies, whose management philosophy has shifted when it comes to having remote employees. Certainly there were far fewer CEOs ready to hire people they have never met physically, back in 2019. Today this has shifted and sectors like finance, technology, insurance, FMCG have seen a veritable explosion of remote hiring and new employer of record models.
All this of course has been facilitated by technology – especially through the use of SAAS/Cloud based platforms – the use of which for many companies has been commoditised. Yet there are still hundreds of companies out there locally, whose application of digitalisation remains stuck at an appalling low level of sophistication. These laggards are set to fall behind even more as innovation races ahead at supersonic speeds in terms of development. Witness the recent Chat GPT uproar – the technology was released scant months ago. It’s threatening to upend our education systems and has in the space of a few weeks suddenly started to appear in our everyday tools such as Microsoft Teams, Bing Search and Google Sheets. Companies in whatever sector they are in, should be trying to figure out how these sorts of technologies can be used to disrupt the status quo. Simply ignoring it, is unfortunately only providing our competitors with an opportunity to take our business.
Chat GPT is just one of several new disruptive technologies out there. Our legislative frameworks are woefully unprepared for this disruption and the way AI is sometimes discussed in public fora , gives the impression that this is something still years away, something “manageable” like “computers have been so far” or “won’t happen here”. Legislators should not simply focus on how they could legislate to regulate the use of such technologies to protect jobs, but they need to be talking to experts and companies to define new frameworks that will place Malta foursquare in the innovators quadrant ahead of time.
There are some parallels with situations I recall we went through in the 90s when internet connectivity started to slowly trickle into Malta. At the time I was involved in the first seminar about the “Web” and a gentleman from the national postal service called me and asked me if the seminar was relevant to them. I leave you to draw your own conclusions as to my response. Similarly, I remember a time when making a voice call over something like Skype was considered illegal. My point is that technology innovation and disruption is unstoppable and we need to legislate to embrace it and at the same time ensure it’s not misused.
For businesses therefore , even those with a coherent digitalisation plan, they need to be thinking iteratively about how to harness the innovation and rapidly. Today at least, there is no such thing as the fully digitalised business – business leaders need to challenge their teams continually to plan for and execute the introduction of new technologies as rapidly as possible. They need to be ahead or at least at par with their peers in their respective industries.
Yes, technology costs money, but one can plan to use different technologies in cost effective ways – there is no single way to apply technology and companies need to adopt a bold approach and not simply follow the herd. As budgets get tighter perhaps in 2023, this “entrepreneurial” approach by businesses becomes even more important.
A final word
If businesses want to stay competitive, they have no alternative but to ensure they are aligned with these areas which I have sought to shed some light upon. Harnessing these resources and ensuring their people are equipped with the tools to do the job, coupled with the entrepreneurial mind set are essential for their competitively in the years ahead.