There’s an interesting and worrying feature of the UK’s Brexit uncertainty that seems to have slipped under the RADA. Until yesterday, I hadn’t heard mention of it in the media, but it is a serious threat to UK businesses surviving transformation and those of us involved in creating and building Britain’s business heritage should recognise it as a red flag.

The UK is not alone as a nation in adopting unemployment figures as an indicator of the health of our economy. Generally we’ve assumed low unemployment is a good thing. However, in the digital economy this isn’t necessarily the case. There’s more than one way to read these data and I fear, like many businesses I visit, politicians may be adopting and are certainly promoting the wrong KPIs.

We have to understand of course that politicians and ministers don’t influence the performance of our economy as much as most people think. In many cases, they are merely front men (and women). The real work is done by civil servants. However, for over two years, the attention of both civil servants and politicians has been consumed by Brexit. As a result, maybe they haven’t given other issues the attention they warrant. The questioning of unemployment figures is not the only example, but it’s pretty fundamental to surviving transformation and this is why.

Faced with accusations that they (and by inference civil servants) have taken their eye off the ball, politicians have been quick with assurances that things beyond Brexit are ticking along OK, so no real damage was being done. They are not and it is.

Reading between the lines.

However, they may paint it, politicians and civil servants know what’s really happening. Yes, unemployment may be at it’s lowest for years, but think about it – this doesn’t make sense in a world of automation. In the short-term at least, until people are re-trained to perform digital roles, unemployment will probably increase. At best it will remain static. It certainly won’t decline as it has. 

What is happening here is UK businesses are choosing not to transform and thereby, by definition, not to compete in the digital economy. This will no doubt limit their, already slim chances of survival. They are making this choice because transformation carries with it an irreversible, ongoing commitment to investment in technology. What these businesses are doing instead is hiring people and maintaining a reliance on slower, manual labour and traditional processes. Their thinking is that hiring is reversible. You can fire as fast as you can hire. So, in an uncertain environment it’s, for some, an easy choice, but it’s the wrong one.

The creation of digital jobs may not be what it seems.

We also have to recognise that the optimistic message of Tech Week this week – that jobs are being created in the digital sector – is irrelevant as long as we don’t have people with the skills to fill them. Any tech sector leader or recruiter will tell you, while we may be creating jobs, they are not being filled at the same rate. In fact the shortage of people with digital skills is making things worse for traditional businesses, because the people with tech skills they too need are demanding vastly inflated salaries.

These are the new affluent young, the digital natives, whose demands differ vastly from the remaining 40% of consumers. It’s they who, with their new affluence, are driving the demand that tech businesses thrive on and traditional businesses dread.

There’s an additional facet to this too, that may bring some comfort to traditional business leaders, although only temporarily. The fact is that because the scarcity of skilled digital labour is forcing up the overheads of digital businesses, it is, as a result, reducing their advantage. Digital businesses, of course, succeed partly because they can deliver a cheaper solution. However, traditional business leaders shouldn’t take this as an excuse to sit back. The advantage of digital disrupters is so great they will still, ultimately win any contest for customers.

What does this really mean for the survival of UK businesses?

Britain has a culture of isolationism. We’ve never been good at “joining in” to someone else’s party. It’s what has brought us to Brexit after all.

We believe deep down that we can do better on our own, or at least, things work better when we are in charge. It’s hardly surprising that so many of our businesses are still operated on a “command and control” model when this is the example they are set. Whatever your personal views on this, it would be a mistake to assume we can opt out of the digital marketplace.

There’s no opt-out if you want to survive transformation.

What’s going to happen if we do is our businesses will become increasingly uncompetitive. We have to recognise, even if we wanted to batten down the hatches and turn even more inward, that our home market isn’t big enough to sustain sizeable companies. Our businesses have to compete in the global marketplace where businesses will have transformed and be fitter for the fight. However, this isn’t just about the ability of our businesses to trade overseas. Whether we like it or not, foreign companies will be competing in the UK market and, with their faster, more efficient processes and better and cheaper products made possible by digitisation, they will beat us at home as well.

It’s also a mistake to assume that we can change direction once the decisions are made and we are either in or out of Europe. It doesn’t work like that. The digital train is already thundering along at speed. No business will be able to climb on board and latecomers will never catch up.

It takes around three years for an average business to transform, so if you are not on the road already, your chances of surviving the digital revolution are slim.

I can understand the reticence of business leaders to commit to the significant investment of transformation in such an uncertain environment, but you simply can’t do nothing. 

Weighing the options for surviving transformation.

So, what can you do right now that will place you at the front of the field when confidence returns and the risk of transformation becomes more acceptable?

In fact, there’s is something every business can do, that will give you control over your investment levels. It will also unlock new opportunities to immediately improve business performance without making the ongoing commitment of transformation. You won’t be home and dry by any means, but you could buy yourself some time, while the politicians sort themselves out and it all centres on your brand.

Brands are more important and more potent than most people realise. They are also as much an internal tool as they are external. As such a well developed and properly managed brand is the primary influence on the efficiency of a business. And we all know that efficiency is what separates business success from failure.

The great thing about brand development is that it can be tackled in a phased manner. Phase one is a process of discovery, phase two brand modelling, phase three is brand design and phase four is where you build your brand community.

Influencing a step at a time.

The first two phases have greatest positive influence on the people immediately involved in the process. This could include people at any level of your organisation depending on how you structure your project, but their numbers will be limited. Most importantly it includes senior executives and it’s here where the potency of the process is realised. Nothing focuses leaders’ minds more than participation in the process of Brand Discovery.

Once you get on to phase three your audience and therefore your influence broadens. This is where you can begin to launch modest initiatives that will improve performance in areas of your business and increase your chances of surviving transformation.

If you want to move on to phase four your opportunities increase still further. This community-building phase is an on-going process that you can scale to suit your pockets and timescale. You can start with small initiatives that will not only immediately enhance your efficiency, yet they will provide the foundation for your eventual business transformation.

You can’t not transform …

… but, if you are smart, you can hold back on the big commitments for a while, yet stay in the game and improve your chances of surviving transformation. If you are unsure how to set about this I’m happy to advise any business leaders on how to make a plan. Just drop me a line at phil@thefulleffect.com to schedule an on-line consultation.

Phil Darby
June 14, 2019

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