It’s that time of year when we all collect our thoughts on the year just closed and peer into the future. In the first of two posts, here are my thoughts on what I think will be six key issues for boards in the twelve months ahead.
Political and economic uncertainty
In economic, political and geopolitical terms, in the UK and across the world, 2022 was a turbulent year, and 2023 doesn’t promise much of a respite.
Inflation is still running high and while the signs are it will fall in 2023 it looks unlikely to fall to anything like the Bank of England’s target rate of 2% anytime soon. Growth is also going to prove elusive. The UK may have narrowly avoided going into recession in Q3 of 2022 if the figures for November are any indication, but projections are that that marginal or no growth could continue throughout the course of 2023 and it’s been variously forecast that the major economies of Europe and even the US will go into recession, too.
Given the state of the economy and the massive gap between rising inflation and falling living standards, it’s hardly surprising employers are reluctant to fund hefty pay demands. Late 2022 saw the phrase “winter of discontent” banded about seriously for the first time since the 1970s and as January unfolds the current wave of industrial action looks unlikely to end anytime soon.
Ministers have been holding talks with NHS leaders as well as with the health, education and rail unions. In the meantime, though, the Government in early January unveiled plans to curb strikes in the public sector under a new “minimum service requirements” regime (a bill aimed at addressing disruption on the railways, the Transport Strikes (Minimum Service Levels) Bill, had already been introduced in October). For now, polls indicate a high degree of public sympathy with the strikers, although that may wane. Still, it’s hard to see this being resolved swiftly.
All of which only adds to pressure on Ministers to supply stable and consistent leadership in the year ahead. In many parts of the the world, 2022 felt like a year of high stakes political dramas and we can only hope that things start to calm down again.
Brexit uncertainty will also be a theme this year. Recent polls have pointed towards greater public disquiet with Brexit and steadily rising numbers in favour of another referendum. While a fresh vote seems a remote proposition, the UK feels little more united on the issue than it did six years ago. The SNP, at least, will keep Brexit front and centre in its campaigns for Scottish independence, as will the resurgent Reform party, and in the meantime Members of the House of Lords are apparently minded to frustrate Government plans to review and repeal some 4,000-plus pieces of EU law under The Retained EU Law (Revocation and Reform) Bill 2022.
Even if Ministers get their way, a bonfire of rules on anything from employment rights to health and safety may cause organisations some considerable short-term challenges.
Leading through crisis
With all this economic and political turbulence, leaders at board and executive level may well find 2023 a very challenging year.
As the economic squeeze and inflation continue to bite, we’re likely to see consumers expecting ever more bang for their buck on the one hand, and escalating pressures on wage bills on the other. The increasingly disruptive effects of the changing climate (on which, more in part 2) and, again, continuing industrial unrest may also test employers’ ability to get their employees back into offices. Supply chain issues which emerged during the global lockdowns will also likely continue to be a significant risk, while geopolitical issues – the continuing war in Ukraine and heightened tensions between the US and China, among others – could also have a destabilising effect on the global economy.
Keeping the ship steady will require some very effective leadership. It’s axiomatic that one of the key virtues of an effective leader is the ability to maintain, and project, a sense of calm and control in the face of a crisis. That’s likely to prove especially challenging in 2023, a year which is opening on anything but a calm note. The era of social media and 24-hour rolling news means that for organisations that do find themselves at the sharp end, it’s especially tricky to keep on top of the story.
Boards this year would do well to dust off and revisit the assessments of the risks the organisation faces and determine whether the planning, testing and mitigations that are in place really are fit for purpose. Many organisations view business continuity planning largely as an exercise in the theoretical, with different activities delegated within operational siloes, risk registers that edit out the more difficult issues for fear of upsetting apple carts, and a model of “continuity” that isn’t really continuity at all.
When push comes to shove, organisations are often simply not ready to deal with the unexpected. 2023 could be the year that puts many organisations to the test.
AI and digital change
Keeping apace with developments in the digital sphere is a significant challenge for boards, and the rise in recent years of such things as artificial intelligence (AI), the Internet of Things (IoT), augmented and virtual reality (AR/VR) and blockchain among others have left many a board scratching its collective head.
For some years now, commentators have been arguing AI will have a transformative effect upon organisations. The question, though, has always been how? Will its impact, as some have predicted, be limited to a wholesale transformation in the customer services realm? Or will it go further? Could it even impact upon board themselves?
The launch in November of ChatGPT suggests that question may be about to be answered. Developed by artificial intelligence research firm OpenAI, ChatGPT is a new variant on the language generation model GPT (Generative Pre-trained Transformer), which is designed specifically for chatbot applications. The new model has been trained on a massive and growing corpus of textual data on a wide range of topics and styles, and uses deep learning algorithms to generate responses to prompts.
Even in its early weeks, some of its responses to given inputs have been described as uncannily human-like, and with the number of free users registering exceeding 1 million in just a week, it’s already put the cat amongst the pigeons.
It's early days and once the initial “wow” has died down the limitations of ChatGPT will doubtless become clear. EvenOpenAI warned following its launch that ChatGPT sometimes writes “plausible-sounding but incorrect or nonsensical answers.”
What does this mean for boards? Well, maybe nothing much yet but the system has intrigued and alarmed in equal measure. Notwithstanding its potential use in customer services, it’s being discussed as a potentially invaluable tool for the acquisition of knowledge (particularly for explaining difficult concepts) and as a fast route for content production. It’s also been discussed as a potential aid to exam cheats and a threat to the integrity of applications for jobs or funding grants.
It doesn’t take a huge intuitive leap to realise of this technology’s potential may be limited only by our own imaginations, both the good and the bad.
Part 2 to follow.
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