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On Fertile Ground
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Where do businesses see opportunity in a post-pandemic world?

Against all the odds, 2021 has brought an air of optimism for world business leaders. Covid-19 has plunged global economies into their deepest recessions in years, but the rapid response of governments and businesses has protected many organisations from the worst of the crisis.

Now, as the vaccines start to lead us out of the pandemic, businesses must shift their focus from the challenges of survival to the opportunities for growth. To come up with an ambitious plan, however, they need a clear idea of where growth will come from in the future.

IDA Ireland has surveyed more than 100 C-suite executives to find out where they expect to find new growth as the crisis recedes, and whether businesses are ready to capture them.

The economics of expansion

A year ago, economic forecasts painted a bleak picture — US credit rating agency Fitch Ratings, for instance, revised down its global growth forecast in March 2020 by almost half1 — but recovery has outpaced expectations. In the UK, economists at the Bank of England are predicting the fastest growth rate in over 70 years,2 buoyed by a boom in consumer confidence.3 And the CBI expects output to reach pre-pandemic levels4 before the end of the year — one year ahead of schedule.

In the European Union, meanwhile, there are expectations of a 4.3 per cent expansion of the economy in 2021,5 as vaccinations continue and lockdown restrictions are lifted. A positive sentiment towards the EU’s future prospects are shared by executives in our survey, as 62 per cent are confident in its potential for growth.

For businesses, this turnaround offers an opportunity to ride a wave of consumer optimism and capture the attention of the customers who are ready to spend money. Sixty-six per cent of executives in the IDA survey say that now is the time to prioritise geographic expansion, and 64 per cent want to entice new customers with new products and services. Others are favouring a greater push into existing markets.

To make the most of the current macro conditions, executives should start weighing up these different growth strategies and opt for ones that work to their favour in this period in which hope in the economy’s future prosperity builds.

Tech investments are crucial

The digitisation of the world since the onset of the pandemic, which Microsoft chief executive Satya Nadella once described as “two years’ worth of digital transformation in two months”,6 has established new ways of operating and engaging customers, partners and other stakeholders.

But to unlock new growth, businesses need to invest strategically in new, cutting-edge technology. Four in 10 executives in the IDA research say that new technology adoption is a priority — whether to develop new business models or introduce greater efficiency to processes that in turn support growth.

The new technologies businesses can choose from include AI and blockchain, but they need to use these to increase growth — not just add them as embellishments that fail to be integrated into operations properly. That means they have to see technology as more than just a way to cut costs. Research from McKinsey indicates that one in four businesses are planning to use AI to enhance their products7, for example, with the features of AI allowing them to finetune developments to meet the specific needs of customers.

Businesses cannot ignore new ways of working

IDA’s survey finds that hybrid working is likely to become the norm for most businesses. And in Ireland, almost all Irish workers want some form of remote working8 to remain, according to NUI Galway.

UBS is one example of a business that is taking hybrid working from theory to practice: the investment bank is planning to allow a majority of its staff to combine home working with time in the office.9

Companies have had some time to prepare for this with the past year’s wholesale shift to remote working, but they still need to approach hybrid working with care. One pitfall, say researchers, is that a two-tier workforce could emerge,10 leading to scenarios in which remote workers are treated less favourably than those who are on-site.

To avoid a situation in which some employees feel left out, leaders will need to establish a clear vision of the future of work. That means offering flexibility within limits, for example, while increasing investment in measures to retain talent. About a third (32%) of executives in our survey say they expect to increase spending to this end, and more than half (53%) are preparing to compete for scarce talent.

Sustainability has become business-critical

The Paris Agreement incentivised companies and governments to take the environment seriously, but the Covid-19 crisis has forced them to act faster.

In the IDA survey, the majority of executives say they are aiming to hit net zero CO2 emissions by 2030 – ahead of the longer timelines businesses had previously committed to.11

For businesses, getting sustainability right is in part about meeting the demands of stakeholders. So targets are becoming part of their business strategies, with firms increasingly linking executive pay to environmental, social and governance outcomes.12 But they also understand that sustainability can prime them for growth: 61 per cent of executives in the IDA survey are confident that becoming net zero can help them reach the next stage of growth.

Business leaders who recognise these new sources of growth — emerging technologies, new ways of working and sustainability principles — are best positioned to thrive in the post-pandemic world.

The Evolution of Growth
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