Chiu Wu Hong, Partner, Head of Private Enterprise, KPMG in Singapore and Co-chairman, Enterprise 50 Awards
In the face of economic uncertainty, adopting a conservative approach can seem like the most sensible strategy for businesses. However, it is important to remember that uncertainty is an inseparable part of any business environment. For enduring success, businesses must continue to invest and spend strategically during challenging times, focusing on expansion, technology adoption, and strong environmental, social and governance (ESG) practices.
The global economy is projected to grow more slowly at 2.7 percent in 2024, down from 3 percent in 2023. The Organisation for Economic Co-operation and Development has projected that rising inflation, which increases costs, could persist longer than anticipated. In Singapore, a CEO Outlook survey conducted by KPMG this year revealed that 68 percent of CEOs have predicted that rising interest rates and tighter monetary policies could prolong any existing or impending recession.
Despite these challenges, the winners of this year's Enterprise 50 (E50) Awards have demonstrated that achieving more with less is possible. They have done so by scaling their operations, quickly adapting to changes in consumer behaviour, and embracing digital technology. Their resilience and adaptability offer valuable lessons for other businesses in Singapore.
The importance of achieving scale
One strategy that some E50 winners have used is scaling. This remains a crucial strategy for businesses, even in times of economic turbulence. As the global economy becomes increasingly complex, it is essential for companies to expand and diversify their operations to maintain a competitive edge.
However, expansion often comes with its own set of challenges. Cash flow or financing issues can become significant barriers, especially during periods of austerity. Similarly, the difficulties in finding reliable local business partners and complying with local regulations can deter companies from entering foreign markets.
But internationalisation can be a powerful tool for building resilience. It allows businesses to access new markets, establish a global presence and mitigate the risks associated with relying on a single geographic location. Even smaller enterprises with limited resources can internationalise with the right strategies and execution. As exemplified by some of this year's E50 award winners, joint ventures have proven to be an effective approach in integrating supply chains, reducing risks, and increasing profitability.
Adapting to changing consumer behaviour
Economic uncertainty has not just affected businesses, but also caused consumer behaviour to change significantly. This presents a real challenge for businesses trying to adapt and succeed. Companies that can adjust quickly, innovate, and manage costs, can secure customer loyalty in a crowded marketplace and protect their future.
An increasing number of consumers are now gravitating towards personalisation and purpose-driven purchases, with ESG factors influencing many of their buying decisions. KPMG’s Customer Experience Excellence Report 2022 demonstrates that brands adopting a customer-centric approach and leveraging data insights to better understand their consumers have managed to carve out a competitive edge.
To keep up with these changes, companies need to invest consistently in technology and data analytics. This will enable them to monitor market trends, spot opportunities, and act quickly to stand out from competitors. As the ways to engage customers increase and their journeys become more complex, businesses can use tools such as artificial intelligence or machine learning to predict and solve problems. By investing wisely, businesses can engage better with customers and align their operations with the ESG principles now expected of them.
Technology investments: a necessary expenditure
Looking ahead, it is clear that adopting technology is no longer a luxury but a necessity for businesses. While there might be significant initial costs, the long-term benefits outweigh them. Digital transformation can streamline operations, cut long-term costs, improve customer experiences, and open new opportunities.
During uncertain times, companies can focus on making small, cost-effective improvements rather than aiming for immediate, big impact. For example, one E50 company this year increased its market share by investing in technology to improve customer support, reducing response times and solving customer issues more efficiently. To ensure ongoing investment, regardless of economic conditions, companies could allocate a fixed percentage of their annual resources towards research and development, or exploring new technology solutions. Commitment to innovation and technology transformation can drive growth and long-term success, as demonstrated by this year's winners.
While it might be tempting for businesses to cut spending during volatile times, it is important to understand that strategic investments can lay the foundation for future growth. Now, more than ever, how businesses respond to challenges is key to their success. As shown by this year's E50 winners, a proactive approach involving strategic spending and investment in key areas can build resilience, stimulate growth, and ensure long-term prosperity, irrespective of the economic climate.