Firms that ignore disruption risk becoming akin to the walking dead. Photo/123RF.
Firms that ignore disruption risk becoming akin to the walking dead. Photo/123RF.
Less than half of New Zealand businesses have plans to address disruption in their industry and are at risk of becoming "zombie firms", says an economist.
Suncorp's second New Zealand Business Success Index, released today, found although 78 per cent of surveyed companies were confident about handling future disruption, 58per cent were not planning to make any changes to address disruption in the coming five years.
Economist Cameron Bagrie said companies were at risk of becoming "zombie firms".
"Even when prompted, only 59 per cent see disruption coming to their businesses from digital platforms, 57 per cent from new technology and machinery and 51 per cent from customer behaviour," Bagrie said.
"And astonishingly, only around 2.5 per cent 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."
When asked about disruption to business, companies ranked natural disasters, staffing problems, and changes implemented by government as the top issues. Technological changes - including robotics and artificial intelligence - ranked fourth.
Of the 600 businesses surveyed, just 12 per cent thought technology was a main area of disruption.
"On a prompted basis businesses cite disruption being most likely in the development of digital platforms and new technology and equipment. That said, 34 per cent do not believe that technology will disrupt their business over the next five years," the report said.
"Only 2.5 per cent highlight technological advances as a key risk facing businesses – down from 5.4 per cent in 2017."
Based on the results, smaller businesses were less likely to be affected by disruption.
This was attributed to smaller companies viewing themselves as the disrupter or operating in niche markets.
Cameron Bagrie of Bagrie Economics. Photo / file
"Views of future disruption also hint at complacency with many businesses not seeing disruption impacting their businesses in the past or in the near future," the report said.
Of the surveyed companies, 57 per cent believed that if a business didn't take risks, it wouldn't reach its potential, however this was not reflected in company actions with just 14 per cent claiming to have taken on significant risk when making business decisions.
Suncorp New Zealand chief executive Paul Smeaton said despite a growing understanding that taking calculated risks was essential to business success, there was a reluctance to actually take those risks.
"We know you've got to take risks when growing a successful business, but today's environment is changing rapidly," Smeaton said.
"Businesses need to be thinking about how they will adapt to stay relevant."
