Most companies are not prepared for the impact of disruption despite an overall increase in business confidence, according to Suncorp’s second New Zealand Business Success Index.
The survey revealed that 60% of organisations remain positive about their own business situation, and 73% are confident that they would be able to handle future disruption. However, 57% stated that they had no plans to update their products, or to address market disruption within the next five years.
Nonetheless, some responses did indicate a changing attitude towards managing risk. Market unpredictability and the emergence of disruptive technology were cited as major risks for businesses going forward, and keeping abreast of new developments and taking calculated risks were seen as essential to business success.
“The challenge is that you don’t know what you don’t know until it is in the market – like Airbnb going from 0 to 20% market share in 18 months,” said one research participant. “You just don’t know that something could come along and suddenly wipe out your business.”
“You have to know who is out there, and who is offering what,” another respondent added. “You might not think you have a huge amount of competition, but it is really important to know what the people who are playing in your similar space are doing.”
According to economist Cameron Bagrie, companies that do not acknowledge and respond to disruption are at risk of becoming “zombie firms”.
“Businesses need to embrace the threats and opportunities of digitisation, artificial intelligence, robotics and changing consumer habits to address the impact on their business models,” said Bagrie.
“Astonishingly, only 2.5% of businesses think advances in technology present a risk to their own firm. Even when prompted, only 59% see disruption coming to their businesses from digital platforms, 57% from new technology and machinery, and 51% from customer behaviour.”
The insurance industry has seen insurtech grow rapidly over the past year, with emerging technologies knocking legacy systems off the mantle and replacing them with speedier and simpler solutions. According to InsurTechNZ, emerging technology will bring “an unlimited array of insurance possibilities,” and staying on top of new developments is vital for a business that wants to survive.
Suncorp New Zealand CEO Paul Smeaton says he hopes the insights from the Business Index will provoke a much-needed conversation about whether businesses are doing enough to stay competitive.
“We are clearly faced with a climate of growing disruption, but I also like to think of it as a climate of risk and reward,” said Smeaton. “These findings have shown that only 46% of businesses feel confident in their ability to make good risk decisions. We want to help grow that number because there is a strong possibility that for many New Zealand businesses, doing nothing could be their greatest risk to future success.”