By asking the right questions now, private business leaders can navigate the rocky months ahead while also ensuring long-term success, writes Colm O’Callaghan.
COVID-19 has accelerated global disruption on numerous fronts, influencing the key issues and challenges facing private companies.
Digitalisation, workforce planning, cybersecurity, environmental, social and governance (ESG), and the intergenerational transfer of wealth — these issues will set the agenda for private business in the medium- to long-term.
Recent developments globally have also given rise to immediate challenges, however, and business leaders must respond to these challenges while also thinking ahead to broader strategic plans.
There is a lot to juggle. To help you get the right balance between immediate needs and long-term priorities, here are five questions you should ask yourself as you begin to plan ahead:
1. How can you put out fires while maintaining a long-term view?
A good way to illustrate this question is to consider the short-term impact of the so-called ‘great resignation’ alongside the long-term issue of right-sizing the workforce.
Workforce planning has been a key long-term priority for many business leaders for quite awhile.
With the rise of artificial intelligence (AI) and other technologies, they have had to consider whether the size and structure of their workforce is aligned to their long-term business strategy, and plan accordingly.
Businesses worldwide now must deal with the short-term impact of ‘the great resignation’ and the resulting need to recruit staff.
Instead of responding with a short-term mindset and replacing ‘like with like,’ now is the time to adopt a longer-term approach to workforce planning. Think ahead to the skills you will need in the future and start replacing leavers with new hires who bring new skill-sets to the business.
2. Who in your business will own the big issues?
When it comes to big issues, many businesses struggle to identify the natural ‘owner’ internally.
Listed companies may have a Chief Sustainability Officer to manage the company’s ESG strategy, or a Chief Technology Officer to oversee technology investment and implementation.
Private businesses may not see the need, or have the budget, to make such appointments, however.
For some issues, there is a natural home. For others — ESG, for example — it’s not always clear who should take ownership. The upside here is that such issues offer an excellent opportunity for people to take on new leadership responsibilities.
3. Where will you obtain expertise?
One of the disadvantages private businesses may face, compared to listed companies, is access to expertise. Take managing the effects of inflation as one example.
Listed companies will often employ macroeconomists who have studied inflation and can develop strategies to address it. In contrast, leaders in private business may not have prior experience of inflation and may struggle to respond.
This raises the question of where to access the expert insight needed to inform smart decisions quickly. Here is a good opportunity to consider the different ways in which skills can be contracted.
One of the advantages private businesses have is that they are often embedded in their local communities. Using this network – local business associations or academic institutions, for example — they may be able to uncover talent that was previously unavailable.
Finally, when considering untapped skills within the organisation, look to ‘next gens’ for their digital expertise. Millennials and Gen Zers are digital natives. They have learned digital skills that are invaluable and may be underutilised.
4. How do you ensure your digital investments are good ones?
Blockchain and cryptocurrency have come of age as challenges relating to speed, scalability and energy consumption are addressed.
Electric vehicles have gone mainstream as car manufacturers prepare for an electric-only future.
Doing business in the cloud has had the dual advantage of enabling a new generation of start-ups (some unicorns) and simplifying back-office processes for well-established businesses.
One of the advantages private businesses have when it comes to technology is their licence to operate with a long-term perspective.
Unlike listed companies, private businesses are not forced into short-term, sometimes kneejerk, decisions in response to the demands of stakeholders associated with the public markets.
The ability of a private business to take a longer-term view can make it easier to invest in technology that supports innovation without having to immediately justify the return.
5. Where and how can you find the diverse leadership to address challenges?
When considering the composition of the board or senior leadership team, private business leaders must identify their own strengths and appoint others who can complement them.
Find someone who can respect the past while also deciding what needs to be modernised or retired, for example.
Source an innovator who recognises that innovation does not always have to mean ‘brand new,’ but should instead be consistent with – and build on – a company’s history and traditions.
These complementary strengths and perspectives will help you to protect your business today and plan for tomorrow.
Colm O'Callaghan is Tax Partner of Entrepreneurial & Private Business Practice at PwC.