Australian middle market finds confidence boost in tech advancement

• Nearly 40% of middle market businesses see tech as a top driver of confidence
• Top productivity strategies: new technology, collaboration tools
• Balance tech prowess with empowered workforce for biggest gains

Rapidly advancing technology has Australian middle market businesses confident of future growth, with established and emerging tools set to boost both productivity and efficiency.

While Pitcher Partners’ first Business Radar report for 2024 revealed waning confidence amongst middle market firms across sectors, optimism about the Australian economy remained above pre-2023 levels.

The independently commissioned research tapped into the perspectives of 152 middle market business leaders across a diverse range of industries.

Among the biggest influencing factors for increased business confidence centred on rapid technological evolution.

Nearly two in five (38%) respondents said technological advancement was a top driver of business confidence, with nearly half (48%) of the larger firms surveyed saying it was a big influence on their optimism.

Technology advancements continues to rank highly as a positive influence (38%), second only to greater demand for products and services (43%), which has more than doubled as a factor among business leaders since the last survey.

Efficiency also remains top of mind for middle market business leaders, jumping from 25% to 32% between surveys.

Nick Bull, Partner at Pitcher Partners Melbourne, said the Business Radar findings indicated businesses were heeding the call to prioritise technology adoption as a productivity enhancer.

“When queried about the measures they are taking or intend to take to drive productivity gains, respondents overwhelmingly cited technology-centric initiatives as their top two strategies – employing new technologies (38%) and introducing advanced collaboration tools (34%),” Mr Bull said.

“Notably, management’s heightened attention to productivity secured the third spot, garnering 33% of responses.”

The Business Radar survey also revealed that traditional approaches geared towards intensifying workforce efforts continue to hold sway, comprising half of the top ten initiatives.

These methods encompass investing in employee training (28%), revamping incentive structures (26%), exploring alternative working models (25%), and implementing well-being programs (22%) alongside feedback mechanisms (22%) to foster engagement.

But Mr Bull noted that productivity gains may not come from simply working staff harder. “Once your team is working at its peak, your productivity gains are capped, and pushing through this can often be counterproductive – you burn through goodwill, minimising future efficiency, engagement and retention,” Mr Bull said.

“When it comes to innovation around productivity, there can be fear and intimidation about needing to create something new or invest heavily.

“But business leaders should not fall into the trap everything innovation has to be ‘new’. It might just be new to you.

“What is status quo for one business might be shiny and groundbreaking for another, so draw on insights from networks and advisors to open new horizons.”

This is in line with a recent report from the Productivity Commission, which indicated that 98% of Australian businesses could achieve productivity gains from the adoption of established, even dated, technologies and practices.

When respondents were asked to suggest one change or reprioritisation for their business that would enhance productivity, internal innovations dominated.

Those included the introduction of new technology (90%) and digital tools (89%), investing in technology (85%), improving production processes (88%), and eliminating unnecessary tasks and streamlining processes (84%).

“This underscores the middle market’s recognition of technology’s transformative potential while acknowledging the enduring significance of cultivating a motivated, skilled, and supported workforce,” Mr Bull said.

“Striking the right balance between technological prowess and nurturing human capital emerges as a critical imperative for middle market leaders seeking to unlock sustainable productivity gains and drive long-term growth trajectories.