While the climate crisis and pandemic were the two most obvious metaphors for the comet in the movie Don’t Look Up, the Don’t Look Up moment for Australian small and mid-market businesses in 2024 relates to AI and productivity.
These – along with workplace exhaustion and mental health issues – are issues the sector just cannot ignore.
I’ve learned many things from the past two decades of hands-on work turning around Australian businesses who are having a hard time dealing with market conditions or managing fast growth, but one lesson that will be particularly resonant this year is the ability to adapt to change at speed.
The local and international economy is suffering in a way not seen (outside Covid) since the Global Financial Crisis. Money is tight and banks are cautious about lending.
The economy has been flatlining following three very anaemic GDP quarters, cost of living remains high and some industries – including food production, discretionary retail, manufacturing and construction – are already nominally in recession.
All indicators are flashing red. Household savings are at an all-time low of 1.1%, worse than during the GFC, and at the same time credit cards are maxed out again after a lull during Covid.
This is brewing as businesses approach the trickiest time of the year, when Christmas and the holiday period have interrupted cashflow for many, exacerbated by holiday leave and lower production.
Three items must be top of agenda for every business owner or board so they can navigate a challenging 2024 – improving stagnant or declining productivity, meeting the challenge of artificial intelligence (AI) at board or management level, and heading off the looming mental health dilemma within their workforces, a result of delayed impact of Covid.
Productivity is paramount
It’s well past the time for platitudes: productivity, long a conundrum for Australia, must be addressed in 2024. The Federal Government and individual businesses must make a concerted push to improve productivity, the biggest driver of Gross Domestic Product).
Australia’s productivity is down 7% in 12 months, against a backdrop of record high debt globally, and locally high inflation, high interest rates, and consumer spending dropping like a brick.
The last big boost to productivity was when business transitioned to emails from fax machines. Declining productivity hits every business and workforce, and we are looking for the next big boost.
That boost has fallen into our laps at the right time: the best way for the Australian business sector to improve productivity is to become fast followers (as it’s too late to claim early adapter status) of artificial intelligence.
Don’t just watch as AI takes over
Businesses should create a team within their business to stay on top of AI because AI will redefine the business landscape by 2030.
No matter your business size, you cannot afford to sit back and see what happens or you’ll be quickly left behind. AI will be a total game changer when it comes to productivity.
If you don’t embrace it and invest in it like your life depends on it, your business is unlikely to be around by 2030. If you were still using faxes 10 years after the Internet came along, you were a dinosaur and probably out of business. AI is like that tech transition, on steroids.
With AI, business owners will have two choices: reduce your cost base and keep the same revenue if that’s the size business you want or use AI to improve productivity and grow your business.
It’s the ultimate productivity tool, but it’s coming so quickly that businesses need to start looking at this right now because it is moving at a pace that we haven’t seen before.
If you’re not on board with this, if you’re not aggressively looking at what AI can do for your business, your competitors will be doing it and they’ll be streets ahead.
Every Australian business should be creating a team to champion how the business will use – and navigate the use of – artificial intelligence.
This person or team should just start researching, and create a monthly report to the board, or in smaller businesses to the owner or management team, highlighting AI developments that could be beneficial or disruptive to the individual business. This will allow businesses to keep up with news, risk management issues, new Apps and business applications when it comes to AI.
Look after your workforce
The human element of productivity and AI is crucial and is intertwined with the looming delayed mental health impact of Covid. Productivity means you’ve got a healthy population, turning up to work, motivated, enjoying their work and with the tools they need to get the job done.
We see workforce tiredness and stress in every single turnaround client we help, and we have done for the past two years.
Workforces are in second gear. It’s the stress from Covid and the resulting health and emotional impacts on people, coupled with the current financial pressure on families.
A lot of the issues that turn up in the workplace stem from home, and we’re going to see that play out in the workforce in 2024. All this is set to make productivity even worse. Statistics are showing sick days and leave days are up. On the back of record low productivity and the other markers this is highly concerning.
I’d like to see management teams offering and encouraging staff to take up activities that can relieve stress – like yoga lessons, breathwork and meditation classes, cold plunges or saunas.
These can be offered say once a month but what you will find is people will take these up personally because they feel much better afterwards. It’s even worth suggesting to staff to build in some of these practices as part of their personal development plans for 2024.
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