South African businessmen must not forget to plan for the future
MORE THAN 80 percent of local businesses do not consider disruption and longevity in their strategies, according to the Grant Thornton International Business Report (IBR) for the third quarter of the year.
The IBR found that about 88 percent had not implemented long-term strategic planning to ensure business growth.
The firm’s director of advisory services, Michiel Jonker, said: “These results are quite concerning, as it would appear that local businesses do not believe they can be affected by the global trends in disruption and other contextual developments.” The report presents the views and expectations of more than 9 600 C-Suite executives in privately held and listed businesses across more than 36 economies with more than 2 400 interviews.
In South Africa, the firm researches 400 privately held businesses annualy on business environment and political climate.
It said business disruption – often manifested in the form of new technology – had been one of the biggest threats of the past decade and upended many sectors globally in a short period.
Jonker said: “It is naive for South African businesses to believe these threats and developments will have no bearing on their local operations.
“Disruption is the result of deeper and long-term social processes in society. Over and above these processes, executives should be mindful of the broader contextual environment, producing agents of disruption. These could pose both opportunities and risks to a business.”
Jonker said the local and international retail sector were a good example where technology disrupted the industry. “However, in South Africa, it was the macroeconomic context… that eventually pushed some businesses over the edge.
“This combination led to the implosion of old business models. Outdated business models are often finally destroyed by the ‘last straw’, originating from the political and/or economic environments.”
On the upside, the IBR found that information technology (IT) and cybersecurity featured more prominently on companies’ risk plans, with 82.4 percent of those privately held businesses surveyed taking this threat into account in their strategies.
Cybersecurity About 31.5 percent of surveyed businesses have or foresee that their organisation will in the near future experience a breach of IT or cybersecurity.
Jonker said while this was a positive development, it was another illustration of shortterm focus. “There has been a number of cybercrime incidents over the past three years which have had serious ramifications for small and large local businesses.
“Firms are increasingly seeing just how vulnerable they are to hacking and data theft, and only now are more businesses realising the importance of mitigating these risks.”
He is especially concerned about the apparent lack of long-term planning from local businesses.
According to the report, of those surveyed, only 12.3 percent included long-term strategic planning – covering the next five years – to ensure business growth, while 17.8 percent were planning to address possible future emerging issues and trends, appearing on the business horizon, that could severely impact the company.
“It is worrying that the majority of South African businesses are overly focused on the short term, and do not appear to look at the future,” said Jonker.
He acknowledged that the local economic macro- and microeconomic conditions had been tough for small business as well as large corporations, but urged companies to nonetheless look at the long-term future.
“While business leaders must have an eye on the immediate challenges, it is crucial that they have the wherewithal to look through the difficulties and engage in strategic planning for the longer term, to ensure the sustainability of the business. This is especially important in South Africa at this point, as we need to ensure we are building stable foundations for our economy – even amid challenging conditions,” said Jonker.