Peter Dickinson, CEO, Greentree
2015 was an interesting year for businesses in the UK. While the UK economy has had some bumpy moments, confidence remains high. Erratic global markets, technology-led disruption and changing consumer demands made 2015 a year in which it was the organisations that were prepared to adapt and innovate that thrived. 2016 is set to take this one step further, with further technology disruption and market uncertainty set to keep businesses on their toes. With this in mind, I’ve taken out my crystal ball in an attempt to anticipate what we think 2016 has in store for businesses across the UK. Here are our top four themes we think will occupy the boardroom next year:
- Technology disruption will outpace market volatility as a trigger for growth and investment. The wider business environment will continue to be difficult for firms, thanks to exchange rate volatility, international market fluctuations and new laws and regulations. However, this will pale in comparison to the existential anxiety companies’ face against their competition, particularly when a single technology disruption can allow a competitor to outmanoeuvre an incumbent almost overnight. This trend alone is driving investment in innovation, separate from anything else going on in the market.
- The list of unknown unknowns is growing. New innovations across different markets are dramatically increasing the likely volume of ‘unknown unknowns’ that might affect your business. For example, while Apple Pay has only just launched, if it takes off it will have profound implications on business retail operations and financial processing systems. Another example is Google’s ‘Project Loon’, which is centred around introducing ubiquitous free internet for all. If that comes to fruition, it could transform the supply chain. Thanks to a host of factors, such as Kickstarter and disruptive companies such as Uber and Airbnb, innovation is being delivered at an increasingly rapid rate, and businesses have the interesting challenge of keeping up with the unknown.
- The fundamentals of business operations will stay the same. Whether you’re a traditional business trying to keep pace with the changes in the market, or a disruptive innovation supplier trying to take a new model to market – capitalism is still in fashion. For all the emergence of new revenue models based on the ‘share’ economy, subscription based business, micropayment oriented apps and services etc., the fundamentals of financial management in the enterprise remain unchanged. Businesses still need to take in revenue, prove a business model, pay employees and suppliers, and one day produce a profit.
- Finance teams will be challenged to be more strategic. Despite automation being one of the biggest threats to the finance role, finance leaders will start to look for ways to automate the mechanical processes that are part of their team’s responsibility. The bandwidth created through this layer of operational intelligence will be used to allow the team to become a more strategic part of the business function. By delivering data, insight and counsel to the leadership team, CFOs will be able to set themselves up as truly valuable leaders. Many of the CFOs who eventually take the top CEO job, will be individuals that have managed this transition – from a CFO concerned with cost control to a CFO concerned with strategic enablement of the business in their battle against disruptive competitors.
Whatever 2016 does have in store, businesses won’t be able to tackle it by standing still. Innovation is vital, and the finance team should play a key role in this. Sitting at the hub of all the operational divisions in a business, this team is in the best place to see where and how existing businesses processes can be modernised to cope with the new reality of business life. From back office systems to business processes, there’s a lot that forward thinking organisations can do to make their business more competitive in 2016.