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'Zombie firms' complacent about disruption: Suncorp New Zealand Business Success Index
19 June 2018
Results of the second Suncorp New Zealand Business Success Index reveal that despite an overall increase in business confidence, companies are not prepared for the impact of disruption.
The survey found that while 78% of businesses reported being confident about handling future disruption, 57% said they have no plans to change their products and services to address market disruption in the next five years.
Suncorp New Zealand CEO Paul Smeaton said the findings show that despite a growing understanding that taking calculated risks is essential to business success, there is a corresponding reluctance to actually take those risks which means many businesses may not be resilient to disruption.
“We know you’ve got to take risks when growing a successful business, but today’s environment is changing rapidly, and businesses need to be thinking about how they will adapt to stay relevant,” said Mr Smeaton.
Suncorp New Zealand CEO Paul Smeaton
Speaking about the Suncorp New Zealand research, economist Cameron Bagrie said the attitudes to disruption showed some businesses were at risk of becoming “zombie firms”.
“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,” said Mr Bagrie.
“And astonishingly, only around 2.5% think advances in technology present a risk to their own firm.
“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.”
Overall, the 2018 Suncorp New Zealand Business Success Index proved largely unchanged (down two points from 66 in 2017 to 64), with staff, leadership and management processes again considered to be the most important factors to a company’s success. A largely neutral to positive business community appears to be adopting a ‘wait and see’ approach following the change of government.
The 2018 Suncorp New Zealand Business Success Index
CEO Paul Smeaton said he hoped the insights from the Suncorp New Zealand Business Success Index helped provoke a much needed conversation about whether businesses are focusing on the right things and 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. These findings show 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.”
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