Building Business Resilience Amid Economic Volatility

Business leaders are navigating a period of unprecedented economic uncertainty. Geopolitical tensions, rising inflation, and supply chain disruptions are creating a volatile and unpredictable environment. In this climate, building business resilience is critical for survival and long-term success.

This article, inspired by insights from the Singapore Business Federation (SBF) National Business Survey (NBS) 2023-2024 and BizSpeak newsletters, explores the challenges businesses face in the current economic climate and outlines strategies for building resilience. We will focus on the specific difficulties businesses encounter in adopting technology, a crucial factor for growth in today's dynamic landscape.

Economic Uncertainty and Business Challenges

The SBF NBS 2023-2024 highlights the concerns of Singapore businesses about the economic outlook. Many businesses anticipate a worsening of conditions in the next year. Key challenges include:

• Rising costs: Businesses are grappling with increasing costs of wages, energy, and raw materials.

• Manpower issues: Attracting and retaining talent is a significant challenge due to a competitive labor market.

• Technology adoption: Businesses acknowledge the importance of technology for growth but struggle with adoption due to factors like cost, expertise, and licensing complexities.

These challenges are compounded by a rapidly evolving technological landscape. The emergence of artificial intelligence (AI) and other disruptive technologies presents both opportunities and threats. Businesses that fail to adapt risk falling behind competitors.

Difficulties in Technology Adoption

The SBF reports highlight the significant difficulties businesses face in adopting new technologies. Here's a closer look at the reasons:

• Cost: The high cost of acquiring new technologies, including licensing fees and ongoing maintenance, can be a barrier for businesses, especially small and medium-sized enterprises (SMEs).

• Lack of expertise: Businesses often lack the in-house expertise to implement and manage new technologies effectively.

• Complexity: The complexity of integrating new technologies with existing systems can be daunting for businesses.

Building Business Resilience in a Polarized World

1. Diversification of Supply Chains

   • Argument: Diversifying supply chains is crucial to mitigate risks associated with geopolitical tensions and supply chain disruptions. By sourcing from multiple suppliers across different regions, businesses can reduce dependency on any single source and enhance supply chain resilience. However, it's easier said than done when every product out on the market are supplied in multi-tiered supplier environment. And every single component and part will have to be tested and pass the QA standards set by quality teams.

   • Example: We all have been here. During COVID19, there was a shortage of chips for any products that require a chip to operate. That results in a pile up of backlogs of orders. There were instances where even Governments need to step in to secure supply. A Singapore-based electronics manufacturer diversified its supply chain by sourcing components from multiple suppliers from multiple countries in Southeast Asia. This strategy was well planned and well executed with multiple stakeholder commitments. As a result, not only the project reduced the impact of regional disruptions but also provided cost advantages through competitive pricing.

2. Investment in Technology and Automation

   • Argument: Investing in technology and automation can significantly enhance operational efficiency and reduce costs. Automation of routine tasks frees up human resources for more strategic roles, while technology can streamline processes and improve accuracy.

   • Example: Overlaying to the Supply Chain scenario presented previously, A logistics company in Singapore implemented automated sorting systems and AI-driven route optimization. This investment led to a 20% reduction in operational costs and improved delivery times, enhancing customer satisfaction.

3. Agile Product Management

   • Argument: Adopting agile methodologies in product management allows businesses to respond quickly to market changes and customer needs. Agile practices promote iterative development, continuous feedback, and flexibility, which are essential in a rapidly changing environment. Providing the organisation the agility to adapt product offerings and thus influencing supply chain.

   • Example: There are a lot of technology available to empower engineering teams and product teams to adopt agile practices to their products, be it physical or a digital product. A global tech company adopted agile practices in developing their new electronic products, enabling rapid prototyping, making fast changes prior product releases. This approach allowed the company to quickly adapt to customer feedback, and short product lifecycles and time to market. It resulted in a successful product launch despite economic uncertainties.

4. Focus on Core Competencies

   • Argument: Concentrating on core competencies and outsourcing non-core activities can help businesses maintain focus and allocate resources more effectively. This strategy ensures that critical functions receive the necessary attention and investment.

   • Example: A financial services firm outsourced its IT support and back-office operations, allowing it to focus on its core competencies in wealth management and client advisory services. This focus led to improved service quality and client satisfaction.

5. Building Financial Resilience

   • Argument: Maintaining a strong financial position through prudent cash flow management and access to credit can provide a buffer during economic downturns. Businesses should prioritize liquidity and have contingency plans in place.

   • Example: A retail chain maintained a robust cash reserve and secured a line of credit to manage cash flow fluctuations. This financial resilience enabled the company to navigate the economic downturn without significant disruptions.

Conclusion:

In a polarized world with supply chain difficulties and increased costs, product management plays a crucial role in building business resilience. Here are some best practices:

1. Customer-Centric Innovation

   • Continuously gather and integrate customer feedback to ensure products meet evolving needs. This approach enhances customer loyalty and market relevance.

2. Lean Product Development

   • Focus on developing minimum viable products (MVPs) to test market viability quickly and cost-effectively. This strategy reduces time-to-market and minimizes resource expenditure.

3. Cross-Functional Collaboration

   • Foster collaboration between product management, marketing, and operations teams to ensure alignment and cohesive strategy execution. Cross-functional teams can respond more effectively to market changes.

4. Scenario Planning

   • Develop multiple scenarios and contingency plans to prepare for various economic conditions. Scenario planning enables businesses to pivot quickly and maintain stability.

5. Data-Driven Decision Making

   • Leverage data analytics to inform product development and strategic decisions. Data-driven insights can identify trends, optimize processes, and enhance decision-making accuracy.

By implementing these strategies and best practices, businesses can navigate economic uncertainty with greater confidence and build resilience to thrive in challenging times.