There are concerns in the financial markets that China’s economic slowdown and volatile demand for imports will lead the world into another recession over the next year.
While New Zealand was relatively insulated when the global financial crisis of 2007/2008 hit, we do seem to be facing an environment of increased uncertainty. So how do you adapt given that tougher times may lie ahead?
In his Financial Times article discussing the impact that an emerging market crisis could have on global economic growth (World faces third deflationary wave, 2 September 2015) Dominic Rossi, Global CIO of Fidelity Worldwide Investment, reckons that only those companies who focus on innovation have a good chance to ride out the coming storm. Innovation is not the domain of mavericks, it is a vital driver for business survival and success.
Innovation doesn’t just happen in a vacuum; it needs focus and purpose. We recently hosted Salim Ismail on his sell-out speaking tour of New Zealand. Salim is the founder of Singularity University in Silicon Valley and he addresses topics such as the disruptive influence of breakthrough technologies and how exponential growth is changing the world.
He said that where companies in the past had linear growth and would scale their organisational structure in the same way, there is now a new type of company, called an exponential organisation, that can scale as seamlessly as technology can scale.
Salim explained how technology has changed the model of supply and demand. Through the internet anyone can get referrals and new customers through online marketing and viral loops, taking supply costs almost to zero. This new type of organisation has figured out how to drop the cost of supply exponentially and will attack an industry without investing thousands to stay in the game – think of Uber or Airbnb, they don’t need to buy new car fleets or build a hotel to add a room in their respective businesses.
This new trend in business models is echoed in the latest “Disruptive Innovations’ report from Citi. They review concepts across sectors and identify new products which could potentially disrupt the marketplace. In the report Citi found three trends that are shaping innovation today: firstly, the pace of innovation is accelerating, secondly the cost of innovation is falling, and thirdly there is a sharp rise in patents and funding.
A startling finding from the 2015 report is the size of the expected markets for different products and increasing synergies between different innovations that will potentially disrupt the world in which we live in build business. An example is the autonomous driving sector – it is estimated that along with the overall sharing economy they could jointly be a US $435 billion opportunity by 2030.
So, to quote Salim, in this new digital age your business is either the disruptor or the disruptee. In this new exponential digital economy, with so many opportunities and so much change, innovation is now a vital business skill.
As a small developed country we can be agile and fast adopters of new technologies. Our ingenious, tenacious and curious nature, combined with a constant focus on innovation, can help New Zealand become a significant player in this brave and bumpy new world.
Dr Mary Quin, CEO
Updated: 28 September 2015