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19 August 2014

Aussie business struggles, time for a creative way out

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Will our kids ever be able to afford to buy a house? Can they even afford to rent? Here in Woolloomooloo 2 bed flats start at $1,000 a week, unfurnished! Unemployment is on the way up, mining investment on the way down. Coles and Woolies continue to squeeze farmers and FMCG brands while bricks and mortar retail is flat.

The big 4 banks are making record profits on higher margins than ever. If you are a small to medium business they probably won't give you a loan. 20 years ago 75% of bank lending was to business, now 75% goes to funding ballooning house prices.

This chart shows the decline in business investment post GFC

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If businesses aren't investing in themselves, how can they grow let alone survive as the Internet destroys traditional business models?

Most managers have spent the last 6 years cutting and seeking efficiencies, hoping if they hang on long enough the market will recover. While local businesses seem to think it's conditions that are tough, World Bank figures show the world is booming – output was up $US75 trillion last year, which is about 20 per cent higher than the pre-GFC peak. Global_growth.png

The world is moving on

Australians need to look outwards and recognise there isn't going to be a return to the way things were, the new reality is more rapid change and creative destruction. I use the word creative discerningly. It's the best way to describe the increasingly global competitive situation most businesses are struggling to get their heads around.

Historically change came slowly and could be managed by gradual adjustments of pricing, distribution or inputs. Not any more.

Enabled by the Internet, we now have Google replacing entire distribution channels with a search box. The Cloud has enabled brands such as Xero to offer with a lower cost and better service to leapfrog long established businesses like MYOB that relied on annual software upgrades. Social media has empowered determined consumers to "out" entrenched self-serving business practices, just look at CommBank's conflicted financial advice scandal that could cost it over $100million. (Or ANZ's Timbercorp scam and Macquarie's financial planners rort.)

These are all examples of a new business environment. New challenges require new thinking. A survey of over 300,0000 managers published by Harvard Business Review shows both CEOs and the next 3 levels of management aren't equipped to think outside the square.

The most important skills as rated by managers

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Perhaps the skills that are most needed today to deal with the rapid pace of change are the ones required to find creative ways to refresh and relaunch a business. Yet the survey found these are the least valued by management. Can you imagine how the people behind some of Australia's most successful businesses would rank themselves for the skills on the list? Like the young pair behind Atlassian, ten years ago a start up now worth $3.5billion. Or Boost Juice, Cochlear or Challenger, Seek or Xero. How important to their success are the more creative skills most managers in the survey dismiss?

Creative thinking skills

Innovates

Champions change

Connects the group to the outside world

Establishes stretch goals

Practices self-development

You may be interested to see evidence of how creative thinking adds value in this time of digital disruption. UNO helps challenger brands grow by encouraging and mentoring these creative skills that most managers have underutilised. Download our formula for growing challenger brands here.

UNO's one time client at Choice Christopher Zinn explains more on the new influence of the determined consumer. 

Glenn | Tags: change management Creative thinking challenger brand


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