Fear of embracing technological change is holding back the UK economy

In a fast-evolving commercial environment, one of the most crucial lessons any modern business leader can learn is about the importance of change management.

CEOs of large companies and organisations can afford to pay for consultancies like Mercer, Boston Consulting, and McKinsey to provide transformation services to oversee the introduction of new technologies, to reduce expenses, or to renovate company culture.

Small-to-medium sized enterprises (SMEs), who don’t have the same luxury, must rely on their own skills and understanding - or acquire them quickly.

Companies that exist because they have valuable intellectual property, or because they are the first to commercialise an online or technological opportunity, will retain an advantage only until someone comes along to improve upon their innovation. Then they must change.

Today every business, no matter its size or function, depends on using some form of technology to operate on an equal, or more advantageous, footing, than its rivals. The most successful are those which embrace change quickest and most effectively.

Over the time that I have run Cobry, I have found an extraordinary level of technological conservatism among UK businesses. In general, owners and managers are incredibly fearful of using anything other than what they already have in place.

I believe that reluctance to innovate must, inevitably, adversely affect the performance of our economy and, as artificial intelligence promises to revolutionise the business landscape, this reluctance to change will become even more costly.

It seems to me that most business owners are prepared to make only very small, incremental alterations to the way their business is run, even when presented with clear evidence that more ambitious improvements could bring greater rewards.

I find it odd, because in other respects the UK is fairly progressive in its thinking, compared with most other countries.

Too often, technology is seen as a second-class citizen within companies and organisations, when it should be the fulcrum. In many businesses, the digital or IT lead is not even at board level, because their function is not considered to be strategic to the way the company operates. Of course, they should be, and it is.

Too many business leaders attach the same level of importance to the smooth-running of their IT systems as they do to keeping the lights on and the staff loos stocked with toilet roll.

This is not an urban myth. One business we encountered, underwent a change of personnel at board level and assigned IT on the same level as utilities – the digital manager was seen as strategically as important as the office cleaner.

Another, national-scale company suffered a ransomware attack on its business management system, which effectively stopped it from functioning for three weeks.

Rather than switch to a cloud-based system to prevent the possibility of a repeat episode – Google’s software, for example, is literally impregnable to cyber-attacks – the company opted to reinstall a different version of the same, server-based software that had just been attacked, and carried-on regardless.

In the meantime, staff were instructed to continue coming into work and to read a book until the IT system was back up-and-running.

There is an extraordinary level of inertia about adopting new or different technology. A lot of big, customer-facing organisations in the UK, with thousands of employees, continue to use paper for organising rotas.

Much of it is based on fear and ignorance - no-one wants to be the first to admit they don’t understand the technology that’s running their business, and they would rather maintain the pretence that they do than consider the possibility there might be a better way of doing things.

It can be tempting to imagine it’s a generational thing, but I’m not convinced that’s the case. It’s true that younger people are more tech savvy or tech curious than their elders, but that doesn’t mean they fully understand how the underlying technology works.

A range of skills is needed to engage with technology smartly, and just being young doesn’t provide people with those skills. Some of the most digitally engaged people I have encountered are over 50 or even 60.

The reality is that most people running and working in UK businesses, no matter what their age, have no deep understanding of technology. They are getting by, day-to-day, by the skin of their teeth, using Microsoft Outlook and Word and hoping no-one deletes their shortcuts.

When we do training courses for cloud-based Google systems, we find that, for many people, it’s the only tech training they have had in their lives.

The general level of technological skill in a UK company is shockingly low, because so few business owners and leaders see it as a priority. Most don’t think it’s important, and that is reflected in our country’s comparatively low productivity levels, versus comparative economies.

There used to be a saying that ‘nobody got fired for buying IBM’ and today the same can be said for Microsoft.

Because it’s perceived that everyone uses the same, market leading software – and nobody wants to rock the boat by questioning whether that is actually the right and safe thing to do – nothing much ever changes.

It’s extremely rare to see genuine leadership – a business leader saying, ‘I want to take us from A to B and I want to work out the best way to do that’. In most cases managers will make decisions based on the least chance of them being fired if it goes wrong.

If there was to be an exception, one imagines it should be around security but, as we have seen with the example mentioned above, even a catastrophic cyber-attack is not enough to convince some business owners to embrace change.

Had that company spoken to us, we could have provided them with a cloud-based system that would guarantee, 100% that they would never again suffer a ransomware attack.

Instead, they opted to spend potentially tens of thousands of pounds bolstering their existing systems with multiple antivirus and security add-ons, that might prove effective only until the next security breach happens.

Our option is viewed as radical, while it’s seen as perfectly sensible for a company to have its staff sitting about reading novels for three weeks, while its IT people scramble around trying to rescue their existing system.

It may seem like madness, but I’m convinced some owners would sooner go bust because it’s easier to imagine the end of their business than to make a strategic choice about which technology to use.

In the modern business world, we all have to be change managers, and the evidence to date is that, for some owners, it remains an insurmountable challenge that exists only in their minds.