Disruption threatens almost half of mid-sized companies

Disruption is negatively impacting nearly half (48%) of Australian mid-sized businesses according to their Chief Financial Officers at a time when a third (34%) haven’t experienced business growth in the past three years and 28% predict no growth in the year ahead.

Yet for the third of companies embracing disruptive change and harnessing opportunities, forecasts are for double-digit growth in the next 12 months.

The American Express CFO Future-Proofing Survey examined the views of 250 CFOs from companies with revenues of between $2 million and $300 million as part of an exploration into strategies being employed to navigate increasingly disruptive times. The results are published in a white paper titled: The Age of Disruption CFOs as Champions of Change.’

The research reveals disruption is wide-spread, reaching almost every sector in Australia. 67% of CFOs confirm disruption is currently taking place in their businesses and 40% admit their companies are more focused on managing disruption today, compared to a year ago.

Local competition proves the greatest disruptor

The single biggest disruptor to business is existing local competition (38%), indicating mid-sized companies are most concerned by what’s already on their doorsteps rather than by new disturbances from left field.  Second, is new market entrants from overseas (18%), followed by existing international competition (11%).  Surprisingly, only 9% of CFOs cite technology as the most disruptive factor. 

According to Christine Wakefield, Vice President of American Express Global Corporate Payments Australia & New Zealand, “Today businesses must grapple with disruption at never-before-seen levels of speed and intensity.  Our research shows there are disruptive leaders, others that embrace disruption when it comes along, and others that fight it.”

“Those companies enjoying greatest success are those that view disruption as a positive impact on their business and embrace it.  They’ve accepted disruption as part and parcel of operating in today’s world and look to maximise every opportunity it brings.

Urgency breeds risk taking but chance of failure is high

With a greater focus on managing disruption, it’s perhaps not surprising that the research reveals company’s risk appetites have also increased.  38% of CFOs rate their company’s risk appetite as high – up 6% compared to 2014.

Alarmingly, with greater risk taking, almost half (46%) of CFOs acknowledge their company is at risk of failure in the next 3-5 years.

“The time is now for companies to take action to harness disruption.  The old catchphrase ‘who dares wins’ rings true.  Companies must have a spirit of reinvention and constantly evolve.  Those that sit still won’t survive.  The CFO plays an essential role in partnership with the CEO to lead the company into the future, Ms Wakefield said.”

The white paper: The Age of Disruption – CFOs as Champions of Change is available for a free download at www.chieffutureofficer.com   

Other findings of interest in the white paper:

  • Companies that are positively impacted by disruption and recording strong growth are focusing on the recruitment of staff with new skills sets (38%), reaching new customer segments (32%) and overseas expansion (26%) during the next 12 months.
  • Those that are negatively impacted by disruption are focused on developing new products/services and investing in new technologies
  • 20% of mid-sized businesses cite disruption as positively impacting their business
  • 37% of CFOs are responsible for developing the growth strategy and identifying initiatives to navigate disruption.  51% say they play a significant role.
  • The level of acceptance for trying new ideas and innovation without fear of failure is increasing – up 7% on 2014 figures to 80%.