Technology laggards ‘face extinction’
Written by Peter Walker
Conventional wisdom has it that large companies always have the resources and know-how to compete, but in an age of disruption, many big businesses are struggling to digitally transform and could face an uncertain future.
This is according to a new report from the CBI and Oracle, which suggested that more technology adoption, coupled with better management practices, could add £100 billion to the UK economy and cut income inequality by five per cent.
However, only 54 per cent of UK companies believe disruptive technologies play an important role in their organisation – much lower than in countries such as France, Germany, India and Russia.
Since the 2008 financial crisis, UK productivity growth has slowed considerably compared to many G7 competitors, with key sectors such as financial services and construction experiencing negative growth. At the same time, a productivity and prosperity gap is opening up between companies willing to invest in the latest technologies and those that are not.
The research highlighted that larger companies - which account for 48 per cent of UK turnover and employ 40 per cent of its workforce - are especially struggling to digitally transform. They face a range of issues including skills scarcity, complex legacy systems and a 25 per cent greater threat from cyber attacks compared to other companies. By contrast, smaller startup companies are more likely to adopt new technologies, while firms aged over 15 years are the least likely.
Felicity Burch, CBI director of digital and innovation, said: “No business can rest on its laurels when it comes to technology – big firms must be doing all they can to stay ahead of international competitors and adopt new technologies that will boost productivity and efficiency.
“Many will assume that, with the resources at their disposal it’s easy for large firms to adopt new technology,” she continued. “But a host of challenges, from ageing legacy systems, cyber security threats and agile new challenger firms can make successful innovation feel like hitting a moving target.”
The CBI suggested that for the UK’s big hitters to secure their position as world leaders over the next 10 years, senior business leaders must be prepared to challenge their established ways of operating and cultivate an environment that encourages employees to seek innovative solutions to company-wide issues – or these companies risk extinction.
Neil Sholay, vice president of digital innovation at Oracle, said: “At the same time, innovation isn’t an endgame, it’s a constant process of transformation – the only constant today is disruption, so businesses need to evolve ruthlessly fast to keep up with it.”
The joint report also set out new guidelines to help large businesses ease their digital transformation journeys and become more competitive. Recommendations to improve productivity and employee engagement included:
• Bring digital transformation to the boardroom – senior business leaders must commit to addressing risks, sharing learnings across departments, and being strong advocates for change
• Digitally empower your workforce – make growing digital skills a company-wide initiative and focus on building trust and fostering communication to drive further innovation
• Maximise and connect your silos – silos are a reality within any large business, but when connected to an overarching strategy they can act as useful testing grounds for innovation
• Automatically upgrade – invest in systems and software that constantly update and self-optimise to help the business keep pace with disruption