Technology causing economic predictions to fall short

Technology in the workplace is not only changing the way businesses work, but disrupting the way leaders perceive and interact with the economic environment in which they’re operating in.

This is the view of Mark Spring (pictured), managing director of Thorn Group Financial Services Limited, and member of CEO network The Executive Connection.

The Executive Connection’s Confidence Index reveals 55 percent of SME leaders in New Zealand anticipate the economy to worsen in the next 12 months – however like Spring, predict their own business sales revenues, profitability and headcount will increase.

While such optimism during uncertain economic conditions has left many scratching their heads, Spring suggests that the greater role of technology is the reason traditional economic indicators are becoming increasingly unreliable in predicting both the current and future state of the economy.

“We’re seeing historic linkages, such as the relationship between unemployment and inflation, becoming further disconnected from current economic cycles due to the everchanging role of technology,” he says.

“We’re seeing low unemployment and low inflation which, in the traditional economic cycle, are not normally associated with each other.  The role of technology in the workforce has meant the nature of work and employment has changed, but the way we measure it to provide insight into economic conditions has not.” 

In a time of significant wage growth, 77 percent of New Zealand SME leaders are looking to increase productivity and reduce costs via operational efficiencies. However, many are finding that in the race to win the customer first, technology is a costly venture.

“Our ability to increase price is pressed by the consumer’s power in terms of using technology to price shop. It’s a double whammy; we need technology to remain competitive in the market, but our ability to increase price is being significantly hampered at the same time,” says Spring.

Despite business expenses on the rise, leaders are positive about their own trajectory and prospects, and are taking full ownership of the elements they can control within their business. 

“We’re pretty optimistic because there is opportunity in this changing environment. Right now, it’s about exploring new ways your business can expand into new markets and fine-tuning your niche offering to each. We’re also embracing the challenge of streamlining internal processes as well as the customer experience,” Spring concludes.