- Digital transformation, cyber threats and digital disruption are top of mind for the 220 business leaders surveyed by KPMG for its 2019 Keeping Us Up at Night report.
- The collapse of public trust is a massive challenge, and businesses will need to harness any big data insights into their customers in a safe, secure way.
- Increased compliance was cited as a significant burden, but the emerging field of regtech may supply solutions.
By Ben Hurley
Another year is almost behind us, bringing new challenges that will keep business leaders up at night in 2019.
To help businesses hit the ground running after the summer break, KPMG’s research practice, KPMG Acuity, asked 220 C-level leaders from diverse industries what issues concern them most in the year to come.
Here are 10 of the biggest, outlined in KPMG’s Keeping Us Up at Night report, along with some high-level insights about how to tackle them.
1. Digital transformation
Business leaders should ask themselves whether they are facing challenges that may have digital solutions, such as systemic cost pressures, falling barriers to entry in their field, or intense competition for customers driving a need for unique customer experiences. Digitally connecting customers, employees and partners into an ecosystem with well thought-out priorities can unleash a lot of power. But new technology has to connect to a business’s existing systems, otherwise it’s a superficial, cosmetic change.
2. Innovation and digital disruption
New developments in cloud computing, blockchain technology and artificial intelligence (AI) are driving disproportionate growth opportunities for the lucky few, and disruption for the rest. Businesses face a population sceptical about whether innovation and disruption actually benefits consumers, or a small elite. For innovation in new technology to work, it needs to deepen relationships with customers, employees and communities by being useful and intuitive.
3. Regulation and regtech
Compliance will be a significant burden for most businesses in 2019, particularly Australian financial institutions following the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. But forward-thinking businesses will take compliance pressures as an opportunity to build deep trust with their customers. The emerging field of regtech is one to watch for possible solutions.
4. Political paralysis
A toxic political climate in Australia and growing polarisation worldwide are making it hard to gain support for complex reforms, causing headaches for companies. Members of the business community with a deep and pragmatic understanding of issues can recognise behaviour that is not geared to the broader public interest, and can bring clarity when outlandish claims from politicians go uninterrogated. Having a strong foundation of trust will be crucial.
“Businesses need to give as much thought to their customers, employees and communities as they do their shareholders.”
5. Putting the customer first
Customers previously had limited access to information, background and options. But that era is over. Customers now have easy access to large amounts of data and are spoiled for choice when it comes to service providers. Disruptors such as Uber, Amazon and Netflix have raised expectations. Customers are notoriously poor at articulating their needs and values, but businesses will need to find ways of understanding them, regardless. But beware of taking a tech-first approach, as customers should come first.
6. Cost competitiveness
Concerns about the cost of doing business remain valid going into 2019. KPMG Economics research shows Australia suffers from poor labour cost competitiveness, particularly in manufacturing. Rising energy costs are also affecting businesses. Reforms aimed at reducing costs, lifting productivity and improving the efficiency of energy production should be a priority for Australian governments.
7. Public trust
KPMG Australia chair Alison Kitchen FCA says she can “scarcely recall a single client meeting in which the issue of trust has not come up”. The collapse of public trust in institutions is a massive challenge. Leaders are sharpening their focus on this issue and emphasising openness and transparency. More than ever, they understand businesses need to give as much thought to their customers, employees and communities as they do their shareholders.
8. Cybersecurity and data privacy
Cybercrime and espionage are no longer just an “IT issue”. Data is becoming one of the most important intangible assets for organisations globally, and cyber breaches can destroy hard-won consumer trust. Strong cybersecurity policies don’t work without strong implementation. Default passwords and other poor digital hygiene practices among staff can undermine progress. New platforms can integrate multiple types of security controls and identify risks, helping organisations shift away from relying purely on staff diligence.
9. Big data
Organisations are making huge strides in utilising their data, and leaders need to stay on top of this. In particular, they need to understand and govern the algorithms they are increasingly expected to draw insights from. Data-fuelled technology such as machine learning and AI are increasingly driving a competitive advantage. Businesses need to ensure they are identifying unique data points and leveraging them in a safe, secure and responsible way.
10. Infrastructure and livable cities
A lot of work is needed to update Australia’s infrastructure. Traffic congestion, a waste crisis and challenges in efficiently providing utilities and services are becoming more pressing. The debate still rages about how to fund key projects and which level of government is accountable. Cities best able to capture data and turn it into practical insights will deliver the best benefits to citizens and economies.