There is a strong link between corporate growth and technology, according to the first report in The Economist Intelligence Unit’s Tailored with Technology research programme sponsored by ANZ Bank. The report, which is focused on corporate growth, is based on a survey of more than 750 executives in eight economies: Australia, New Zealand, China, Hong Kong, India, Singapore, the United Kingdom and the United States. In the coming weeks, additional reports and articles will be published on the topics of sustainability and the macro-economy, as well as specific industries.

Nine in ten of firms surveyed have strong plans to increase technology adoption in the next five years Improving data analytics was the most popular form of technology, with 44% of the more than 750 executives selecting it as the top benefit The challenges are many, with 51% firms citing security and privacy as a concern and 43% citing technology skills among employees

The link between corporate growth and technology has always existed, but it’s growing stronger, with nine in ten executives responding that they have plans to increase their adoption of new and emerging technologies. These technologies include robotics, software-defined network, and machine learning, among others. They are being used to accomplish a range of objectives, such as improving efficiency, growing internationally and reducing costs.

The most popular trend today in the survey was big data and analytics. Nearly 38% of respondents selected it as being among their top three priorities, higher than cyber security, artificial intelligence and cloud computing. Big data and analytics are being used by firms for client attraction and retention, as well as risk management and forecasting.

There are barriers to technological adoption, however. Security and privacy is chief among them, with more than 51% of respondents selecting it as one of the three biggest challenges. It was followed at 43% by technology skills among employees and at 39% technology standards and regulation. Many organisations see organisational solutions to these problems, whether it is fostering more cooperation between the chief technology officer and his c-suite counterparts or changing individual mindsets in the workforce.

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At the same time, there are multiple challenges involved with using technologies for greater sustainability. One is a lack of strategic guidance about where to invest time and money. Another is a lack of clarity as to the best type of technologies to harness.

Successful companies are meeting the needs of an increasingly sustainability-conscious consumer base and turning it into a competitive advantage. The report’s key findings are:

Sustainability is increasingly viewed as a way to increase profit. Besides doing good and contributing to the United Nations Sustainable Development Goals (SDGs), companies realise there is a market opportunity in being sustainable. Technology is increasingly important to boosting sustainability. Almost all survey respondents recognise the importance of technology. Certain industries are thriving as a result of this commercial opportunity. Several technology trends are expected to contribute. Currently led by big data and analytics, but increasingly expected to include artificial intelligence in the development of smart cities in particular. The potential benefits of technology are vast. A large majority of survey respondents expect a spending increase on technology over the long-term, which bodes well for companies and society alike.

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This is the second in a series of papers and articles from The Economist Intelligence Unit, sponsored by ANZ. This report, and the others to follow, is based on the results of a survey of more than 750 executives across eight markets.

This paper was written by Kim Andreasson and edited by Chris Clague. Findings from the survey were supplemented with research and in-depth interviews with experts and executives. Our thanks are due to the following people, listed alphabetically by affiliation:

Michael Cooke, Senior vice president, global HSE and sustainability Affairs, ABB Mikkel Flyverbom, Professor of communication and digital transformations, Copenhagen Business School Mark Milstein, Director of the Center for Sustainable Global Enterprise, SC Johnson College of Business, Cornell University Alexa Dembek, Senior vice president, Chief technology & sustainability officer, DuPont  Tim O’Leary, Executive director, government and regional affairs & chief sustainability officer, Telstra

 

Report Summary

Gearing for growth: Future drivers of corporate productivity seeks to examine what approaches firms from all sectors are taking to improve productivity within their businesses, especially in the current challenging economic climate.

Key findings

Companies are generally optimistic that they can further increase productivity. Two thirds (67%) of companies polled for this report expect to see productivity increases in the next 12 months, either in terms of greater output or more or improved products and services. Executives see two functional areas— operations (58%) and sales (33%)—as likely to see the greatest productivity increases in the next year. North American companies are more pessimistic about seeing productivity gains in terms of improved products or services in the coming year: 59% cite this as likely, compared to 72% in both Asia- Pacific and Europe. Managing human capital is seen as by far the most important means of improving productivity. Some 85% of companies believe this is either “crucial” or “important” to their business effectiveness. But managing human capital presents challenges. Respondents, especially those in Europe, cite a lack of engagement and motivation as the biggest obstacle to human-capital productivity, followed by poor performance management. North American companies feel more overstretched and lacking in investment in staffing, making this one of their top obstacles to improved productivity from employees. Functional training is seen as a key tool for improving productivity. Training ranks highly as an efficient tool for improving productivity, particularly training for particular functions. While 67% of those that have introduced management training programmes see these as effective tools, this rises to 79% when respondents are asked about functional training. Functional training also rises to the top of the list of human-capital initiatives that executives will introduce in the next 12 months that are expected to have the biggest impact on productivity. Companies have yet to fully capitalise on the productivity potential of technology. Using the best available technology is only the third-most important factor in productivity, after human capital and good strategic decisions, with 69% ranking this as either crucial or important. Meanwhile, nearly half (49%) of respondents believe they are not getting the most out of technology. This is especially so for European firms (58%, vs 41% in North America). Lack of investment in new technology also emerges as a concern, with 36% overall believing this is hampering productivity. Companies also appear to be missing the productivity potential of social networking technologies, especially in terms of connecting with clients. More than half (54%) of those using social media for clients say it has improved business effectiveness, but relatively few companies have yet deployed this technology. There is scepticism about the productivity impact of green practices. While leading companies say they find engaging employees on sustainability initiatives is a powerful motivating tool, the survey respondents appear less certain. Only 32% of those that have introduced green practices say they have had a positive effect on productivity, while half say these practices have no impact on productivity and 17% say they have a negative impact. Corporate strategy is seen as key to productivity gains but companies worry about making the best decisions. Making the right strategic choices ranked second (77%) behind managing humancapital more effectively in terms of the primary levers for productivity improvements. But there is concern that common strategies are not always beneficial for productivity. For instance, in the past 12 months 76% of respondents have engaged in cost cutting and labour force reduction. Yet focusing too closely on cost cutting and not making the most of existing resources is also cited most commonly among the top three strategic problems negatively affecting productivity (by 36% of respondents). Respondents’ second most commonly cited strategic problem is an over-emphasis on top-line growth, cited by 30% (rising to 43% among Asian companies). China might be the world’s fastest-growing economy, but it continues to lag in terms of overall productivity. In 2001-10 China was comfortably the fastest growing economy of those in this study, enjoying annual average increases in GDP per head (measured in PPP terms) of 12.5%. China also experienced the fastest level of productivity growth of all the major economies. But macroecomomic analysis shows that China still lags way behind the world’s most developed economies in terms of overall productivity levels, suggesting that productivity growth in the country will continue to outstrip that of the developed world. On a macroeconomic scale, spending on education and IT are among the surest ways to boost productivity. One of the best ways for a country to boost productivity levels is by spending more on education—particularly female education, which is often neglected in poorer (and less productive) countries. There is also a close correlation between IT spending and productivity growth: faster growth in IT spending in the developing world largely reflects the extra catch-up potential of these markets and the potential productivity gains that such investment can yield.