Building Business Forward Post-Covid in Scotland: Reflections & Insights
Authored by Mr Jim Fairbairn FRSE (Chief Executive Officer, Megger Group), Commissioner for Building National Resilience Working Group, and Dr Poonam Malik FRSE (Head of Investments, University of Strathclyde & Board Member, Scottish Enterprise) member of Building National Resilience Working Group.
The Building National Resilience Working Group engaged with a wide-range of businesses through a series of online roundtable discussions during April and May 2021 involving around 30 businesses from across Scotland representing a diversity of sectors and scales. This article presents a summary of reflections and key points discussed.
Learning from the experiences of the pandemic, there is an opportunity for business in Scotland to enhance resilience, become more engaged stakeholders in our communities and meaningfully contribute to wider societal issues.
- The Covid-19 crisis has highlighted the importance of considering where and how decisions are made. We need to distribute more ‘points of control’ which can establish distributed leadership that will lead to more local accountability and embed cross functional/stakeholder teamworking.
- Business playing a full part in our communities will make them more adaptable, resilient and widen the benefits of business beyond shareholders.
- There were numerous outstanding examples of pivoting, diversification and repurposing as many businesses adapted quickly, early and with purpose.
- Many companies are undercapitalised and lack an understanding of financial resilience tools.
- Multiple reboots, bolder action and sustained support is required from policymakers in areas such as digital connectivity, adaptable staffing and skilling, longer-term financial support for fast-growing businesses and business volatility preparedness.
- Resilience is complex for businesses to define specifically. However, a general definition or description of business resilience is the ability to keep businesses viable. Critical elements of business resilience include:
- Diversity – to be resilient, a business should have diversity embedded into its business model; this includes diversity of talent, its markets, income streams, and supply chains
- Adaptability – an important aspect of business resilience during the pandemic was their ability to adapt to changing circumstances. This includes changing business practices (including embracing digitalisation), and offering new products or services
- Leadership – create durable foundations through process capability, better structural and financial resilience and broader connections and networks.
1. What are the challenges? To build forward better, there are critical structural and cultural issues that must be tackled now:
- Across many business sectors, there is a lack of financial resilience and strong business leadership skills, and these are crucial to business resilience.
- Scotland currently lacks a strong scale-up venture capital investment ecosystem that can provide capital at all stages. Traditional banking environments are unsuitable to offer support for smaller, early stage, less robust businesses who have no guarantees for leverage.
- There is a general lack of understanding of the needs of businesses by government (such as the speed of decision making, alternative financing). However, the job retention scheme and business support loans from government were hugely appreciated by businesses and helped many of them survive as well as maintain a large number of diverse jobs.
- Access to skills is becoming a significant problem due to inadequate skills development, travel restrictions, and Brexit.
2. What can we learn from examples of businesses that have accelerated change due to the pandemic?
- Businesses that have embraced digitalisation have adapted to the changing circumstances, changed their business model, and reached larger markets, leading to accelerated growth.
- Companies that regularly face risks, such as market fluctuations or logistical problems due to their location, have built up their business resilience through developing inherent redundancy in their systems and through business continuity planning.
- Foresight – certain businesses were able to undertake foresight analysis. They looked at the response of businesses in the areas that experienced the pandemic before the UK (such as China and Korea) and made the changes necessary in their business.
3. What are the key priorities for business stakeholders and decision makers to reinvigorate business? Business growth will be crucial to help rebuild and reskill our communities after the pandemic.
- Businesses need greater support, and this needs to be inclusive, as marginalised areas in society have suffered disproportionately and several business sectors such as travel and hospitality are still struggling as a result of ongoing restrictions.
- In the short term, additional financial support will be necessary to support business until restrictions end. At the same time, businesses that have received loans during the pandemic may not be able to repay, so other support options may be required.
- To improve business growth and innovation, enhancements should be made to the investment pipeline/ecosystem, including the creation of new and sustained funding streams; this would help improve access to finance at all stages of investment, helping spinouts, start-ups, and businesses to scale up.
- The relationship between all levels of government and business needs to be improved. This could include more formal mechanisms which help local government enhance its knowledge of local economies and the businesses within them. As part of this, consideration should be given to helping businesses develop local procurement models, in which businesses support other local businesses by creating shorter/local supply chains. There is also scope for government and businesses to work more closely together to address major societal challenges including climate change.
- Greater investment by the government in key infrastructure such as telecoms and broadband access in rural areas of Scotland, 5G, data analytics and AI, net-zero transition tools and enabling policies for green renewable circular technologies will become crucial to sustainable growth and resilience.
- Improving access to skills should be a priority of both government and business; this will require sustained investment in skills development (reskilling, upskilling and developing a life-long learning mindset). Ensuring that skills are retained in, and attracted to, Scotland will be critical for Scotland’s competitive advantage.
- Business groups have the opportunity to combine forces and take a much more active role including demanding better policy support and showing more vocal leadership in re-imagining and re-engineering the business landscape.
- Promotion of the success of best-in-class third sector and social enterprises will nurture new pathways in business and widen the benefits of business beyond the shareholder as a single stakeholder.
- Heavyweight industrial strategies in areas such as automation and digital twinning for example, will counter the limited long term vision or ideas on the future of work and implications for business in Scotland.
- We must find a better way to back our world class assets, including Scotland’s universities and keep them competitive.
Authored by Mr Jim Fairbairn FRSE (Chief Executive Officer, Megger Group), Commissioner for Building National Resilience Working Group, and Dr Poonam Malik FRSE (Head of Investments, University of Strathclyde & Board Member, Scottish Enterprise), member of Building National Resilience Working Group.