A website is not enough: businesses that use digital tools without a strategic plan will struggle in a tough economy

Small businesses across Australia and New Zealand are facing one of their toughest periods in decades.

A flat economy and shifting consumer behaviour have put pressure on already thin operating margins. A 2024 survey by business finance company ScotPac found 29% of Australian small businesses say they could face insolvency if they lose a major client.

Accounting organisation CPA Australia’s latest small business survey shows only 48% of New Zealand’s small businesses grew in 2023. This is significantly down from 60% in 2022. There have also been a record number of business liquidations in both New Zealand and Australia.

Yet some small and medium-sized businesses are thriving. Part of the reason for this is because they have embraced the concept of “digital leadership”.

This is the ability to strategically integrate digital technologies – such as artificial intelligence, cloud computing, data analytics and automation – into a business’s operations, decision-making and long-term vision.

Digital leaders use emerging technologies to improve efficiency, redesign business models, scale operations and reach new customers in ways that wouldn’t be possible otherwise.

Our review of the research on digital leadership, recently published in Digital Leadership and Contemporary Entrepreneurship, found that firms treating digital leadership as a core business strategy, rather than just using technology for isolated tasks, are the ones that successfully scale, grow and future-proof their organisations.

Without this change in mindset, firms risk stagnation and missed opportunities. That difference is critical in an economic environment where small margins separate thriving businesses from struggling ones.

Why some small businesses fall behind

It’s easy to assume small businesses lag in digital adoption because of costs or technical complexity. However, most of the studies we reviewed suggest the real issue is hesitancy at the leadership level.

Some business owners are risk-averse and take a “wait and see” approach. Others believe their current solutions are sufficient even when new technology could improve efficiency.

A 2021 survey commissioned by cloud accounting software company Xero, found fear of change, overconfidence in existing processes and decision paralysis are among the biggest barriers preventing small businesses from embracing digital solutions.

Even businesses that already use digital tools – for example, to manage their social media – often fail to go further and integrate technology into core operations such as supply chain management and automation.

Embracing digital leadership

The lesson is that simply adopting digital tools without a strategic plan doesn’t lead to growth. True digital leadership requires businesses to rethink how they operate, compete and scale.

The firms making the most of digital transformation embed technology in their core strategy. They use data-driven decision-making to refine products, forecast demand and identify new opportunities.

They streamline operations by automating routine tasks, such as using AI-powered invoicing, chatbots for customer inquiries and predictive analytics for inventory management. This frees up time for strategic initiatives such as product development and market expansion.

At the same time, they invest in training employees to effectively use and adapt to new technologies. Perhaps most importantly, they take an experimental approach – testing, learning and adapting in real time.

Learning to thrive in the digital economy

Businesses that have successfully grown through digital leadership illustrate this approach in action.

Set up in 2016, New Zealand-based investing company Sharesies fundamentally changed how everyday people access financial markets.

Traditional investment firms required large deposits and complex paperwork, excluding many potential investors. Sharesies took a different approach. The company designed a mobile-first platform where users could start with as little as $5. The company now has more than 750,000 users, NZ$8 billion of platform assets, and requires no minimum investment from users.

In Australia, The Very Good Bra, a sustainable bra company, used digital leadership to create a global, sustainable fashion brand without traditional retail infrastructure.

Founder Stephanie Devine developed a direct-to-consumer model through e-commerce, bypassing wholesalers and physical stores. She utilised digital tools such as social media platforms for community engagement, online surveys to collaborate with customers to design products, and data analytics software for demand forecasting, ensuring every product had a market before it was manufactured.

Both companies succeeded by leveraging digital technologies to disrupt traditional business models. Sharesies democratised investing by making it accessible to individuals with minimal capital, while The Very Good Bra utilised e-commerce and customer collaboration to create sustainable fashion products.

Their digital-first approaches enabled them to identify and fill market gaps effectively.

To thrive in the tougher economic climate, businesses need to think beyond software tools. The question is no longer whether to go digital, but how fast a business can rethink their work for the digital future.

Guy Bate is affiliated with The Education Technology Association of New Zealand (EdTechNZ). He serves as Chair of their AI in Education Technology Stewardship Group.

Rod McNaughton does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

Ignore the ‘ivory tower’ clichés – universities are the innovation partners more Kiwi businesses need

When it comes to turning research into real-world success, New Zealand has a problem.

Despite the country’s NZ$3.7 billion research and development spending in 2023 – a 17% jump from the previous year — too many New Zealand businesses fail to commercialise innovation.

According to the World Intellectual Property Organization, New Zealand ranks 21st for innovation inputs. This means we’re good at investing in research and development. But we rank 45th in knowledge outputs and 78th in industry diversification. Essentially, we’re spending more but getting less.

So, what’s holding the country back? In a lot of cases, it can boil down to a lack of collaboration with universities.

Universities are typically focused on generating novel or new-to-the world knowledge, with researchers, cutting-edge technology and deep industry connections.

Working with universities can connect businesses to researchers, government agencies, private industry and global networks. Collaboration can also offer businesses credibility. It signals to investors, partners and customers that they are serious about innovation.

Yet many businesses underestimate their value. They assume collaboration is slow, academic or bureaucratic.

Our study – based on a digital survey of 541 firms across a wide range of industries and regions in New Zealand – looked at whether collaborating with universities could help businesses to bring ideas to market, sell intellectual property and develop technology.

We also considered whether there was a difference in working with international universities versus collaborating with local institutions. While identifying details of the individual businesses were kept confidential, here is what we learned.

The case for foreign university partnerships

Our research found partnering with foreign universities allowed New Zealand businesses to tap into global expertise and advanced research. It also provided access to diverse knowledge networks, where businesses could learn from various real-world applications of scientific knowledge.

For example, a New Zealand business specialising in artificial intelligence (AI) can gain game-changing insights by collaborating with top universities in the United States.

The partnerships can provide access to leading AI models, advanced algorithms, and global industry connections. These partnerships can enable the business to stay ahead in an increasingly competitive market.

Additionally, many universities had well-established technology transfer offices. These had experience in helping businesses commercialise research.

In short, foreign university collaborations opened doors to the world’s best knowledge and technology – critical for firms operating in fast-moving industries.

The strength of local university collaborations

We also found local university collaborations had their own advantages, including
an understanding of New Zealand’s specific challenges, from climate change impact on agriculture to AI adoption in small businesses.

This contextual knowledge made their expertise highly relevant for firms aiming to commercialise innovation within New Zealand’s unique market conditions.

Working with local universities also allowed businesses to build strong, personal relationships with researchers, fostering faster and more effective knowledge exchange.

Unlike foreign partnerships, where interactions may be limited to emails and virtual meetings, local collaborations allowed for regular in-person brainstorming, experimentation and problem solving.

Finally, collaborating with New Zealand’s universities gave businesses access to top local talent, helping them recruit skilled graduates familiar with the domestic market and its needs.

A balanced approach

Investing in research and development alone won’t drive innovation for businesses. Without strategic collaboration, firms risk wasting resources on ideas that never reach the market.

Businesses should take a balanced approach. Foreign university collaborations can offer groundbreaking advances, cutting-edge knowledge and global networks. At the same time, local university collaborations offer accessible knowledge, local expertise and stronger working relationships.

By embracing these partnerships, New Zealand businesses can turn research into commercial success, drive national economic growth, and position themselves as global innovation leaders. The question is no longer if firms should collaborate with universities – it’s how quickly they can start.

This research was completed with Annique Un (Northeastern University), Kazuhiro Asakawa (Keio University), Jarrod Haar (Massey University) and Sihong Wu (University of Auckland).

Omid Aliasghar receives funding support for this research provided by Building New Zealand’s Innovation Capacity Spearhead within the Science for Technological Innovation National Science Challenge.

Ignore the ‘ivory tower’ clichés – universities are the innovation partners more Kiwi businesses need

When it comes to turning research into real-world success, New Zealand has a problem.

Despite the country’s NZ$3.7 billion research and development spending in 2023 – a 17% jump from the previous year — too many New Zealand businesses fail to commercialise innovation.

According to the World Intellectual Property Organization, New Zealand ranks 21st for innovation inputs. This means we’re good at investing in research and development. But we rank 45th in knowledge outputs and 78th in industry diversification. Essentially, we’re spending more but getting less.

So, what’s holding the country back? In a lot of cases, it can boil down to a lack of collaboration with universities.

Universities are typically focused on generating novel or new-to-the world knowledge, with researchers, cutting-edge technology and deep industry connections.

Working with universities can connect businesses to researchers, government agencies, private industry and global networks. Collaboration can also offer businesses credibility. It signals to investors, partners and customers that they are serious about innovation.

Yet many businesses underestimate their value. They assume collaboration is slow, academic or bureaucratic.

Our study – based on a digital survey of 541 firms across a wide range of industries and regions in New Zealand – looked at whether collaborating with universities could help businesses to bring ideas to market, sell intellectual property and develop technology.

We also considered whether there was a difference in working with international universities versus collaborating with local institutions. While identifying details of the individual businesses were kept confidential, here is what we learned.

The case for foreign university partnerships

Our research found partnering with foreign universities allowed New Zealand businesses to tap into global expertise and advanced research. It also provided access to diverse knowledge networks, where businesses could learn from various real-world applications of scientific knowledge.

For example, a New Zealand business specialising in artificial intelligence (AI) can gain game-changing insights by collaborating with top universities in the United States.

The partnerships can provide access to leading AI models, advanced algorithms, and global industry connections. These partnerships can enable the business to stay ahead in an increasingly competitive market.

Additionally, many universities had well-established technology transfer offices. These had experience in helping businesses commercialise research.

In short, foreign university collaborations opened doors to the world’s best knowledge and technology – critical for firms operating in fast-moving industries.

The strength of local university collaborations

We also found local university collaborations had their own advantages, including
an understanding of New Zealand’s specific challenges, from climate change impact on agriculture to AI adoption in small businesses.

This contextual knowledge made their expertise highly relevant for firms aiming to commercialise innovation within New Zealand’s unique market conditions.

Working with local universities also allowed businesses to build strong, personal relationships with researchers, fostering faster and more effective knowledge exchange.

Unlike foreign partnerships, where interactions may be limited to emails and virtual meetings, local collaborations allowed for regular in-person brainstorming, experimentation and problem solving.

Finally, collaborating with New Zealand’s universities gave businesses access to top local talent, helping them recruit skilled graduates familiar with the domestic market and its needs.

A balanced approach

Investing in research and development alone won’t drive innovation for businesses. Without strategic collaboration, firms risk wasting resources on ideas that never reach the market.

Businesses should take a balanced approach. Foreign university collaborations can offer groundbreaking advances, cutting-edge knowledge and global networks. At the same time, local university collaborations offer accessible knowledge, local expertise and stronger working relationships.

By embracing these partnerships, New Zealand businesses can turn research into commercial success, drive national economic growth, and position themselves as global innovation leaders. The question is no longer if firms should collaborate with universities – it’s how quickly they can start.

This research was completed with Annique Un (Northeastern University), Kazuhiro Asakawa (Keio University), Jarrod Haar (Massey University) and Sihong Wu (University of Auckland).

Omid Aliasghar receives funding support for this research provided by Building New Zealand’s Innovation Capacity Spearhead within the Science for Technological Innovation National Science Challenge.

A new report card shows inequality in Australia isn’t as bad as in the US – but we’re headed in the wrong direction

It’s hard to remember a time the United States seemed as tense and divided as it does today. That should serve as a stark reminder of just how important it is to monitor the health of our own nation.

Today, our new report card on Australia’s progress will be launched in Canberra. It assesses progress on 80 economic, social and environmental targets and models a range of policy shifts that could boost progress.

We find that progress on more than half of these targets has either stagnated or is going backwards. And growing inequalities threaten the wellbeing of many Australians.

Our report comes on the heels of America’s own State of the Nation report, which puts the US near the bottom of global rankings on inequality, violence, trust and polarisation.

The situation in Australia is not yet as dire. However, our results signal a need to start thinking long-term and take bold action on inequality to avoid a similar fate.

Not an A+ student overall

Our report draws on the 17 UN Sustainable Development Goals (SDGs) to select a broad and balanced set of 80 economic, social and environmental indicators.

Each of our indicators can be grouped under one of these 17 goals and includes a 2030 target. We use this target to evaluate progress and allocate “traffic lights” that tell us about the direction in which the country is moving.

We also benchmark Australia against peer nations from the OECD, including the US.

The overall outlook for Australia is mixed. We aren’t completely on track to meet any of the 17 SDGs. And on some indicators, Australia is actually going backwards, away from the target.

Many areas of concern centre on increasing inequality. These include:

• a 30% decline in the share of wealth held by the bottom 40% of Australians since 2004
• almost 20% of Australians living in financial stress
• over 40% of lower-income renter households living in housing stress
• household debt levels now exceed Australia’s annual gross domestic product (GDP).

There are also some broader economic concerns. Australia’s level of investment in innovation is nearly 40% below OECD averages. Economic complexity – which measures the sophistication and diversity of what our economy produces – has fallen behind Honduras, Armenia and Uganda.

And there’s been a rapid decline in education outcomes for students from lower socio-economic groups.

Shining in some areas

On the other hand, Australia is on track and actually leading our peers in life expectancy, road fatalities, tertiary education, water efficiency and government debt.

We’re also above average on closing gender gaps in both income and political representation. Australia also has very low homicide rates and high feelings of safety and trust compared to our peers.

In some key areas, Australia is actually trending rapidly towards SDG targets.

The gender gap in superannuation, for example, has fallen from 53% in 2014 to 21% in 2021.

The share of renewable electricity in our national energy grid has climbed to 35% and greenhouse gas emissions are steadily falling.

And rates of unemployment, underemployment and youth unemployment have all declined to within or closer to SDG target levels of below 5-6%.

How does the US compare?

America’s State of the Nation report, which tracks progress on a range of similar measures to our report, paints a bleak picture.

There are only four measures where the US performs in the top 20% of high-income countries – economic output, productivity, years of education and long-term unemployment.

Compared to Australia, the US outperforms us on average per-capita income, investments in research and development and knowledge-based capital, economic complexity, household debt and broadband connection speeds.

But despite their apparent economic success, mental health and life satisfaction have deteriorated. Social connections are fraying with increased social isolation, polarisation and eroding trust.

Tragically, suicide rates, fatal overdoses and shootings have increased.

Far worse on some measures

In areas where Australia is also trending backwards, things in the US are often far worse.

Income and wealth inequality, for example, are much higher in the US. The top 1% of Americans hold around 35% of wealth – compared to 24% for the top 1% of Australians.

US welfare payments are almost 90% below the poverty line and the poverty rate is 30% higher than in Australia. Yet US government debt as a share of GDP is almost double that of Australia.

This stark contrast suggests America’s approach to pursuing material prosperity is undermining social wellbeing, with rising inequalities fuelling social tensions and polarisation.

Bold action needed

For the first time, our new report models two future scenarios for Australia, exploring policies that reverse negative trends and accelerate progress towards SDG targets by 2050.

Our modelling shows that with increased policy ambition, Australia can halve poverty and reduce income inequality by a third. We can also boost health, education and productivity, improve biodiversity, and deliver net-zero greenhouse gas emissions.

To do it, we’d need to increase public investment by around 7% a year over 10 years in key areas such as education and health, disaster resilience, sustainable food, energy and urban systems and the natural environment.

Our modelling shows that with these measures, Australia could achieve 90% of our Sustainable Development Goal targets by 2050.

Without them, our future prosperity is projected to stagnate and decline by 2050, reaching just 55% progress towards our targets and with GDP around A$300 billion lower than our more ambitious scenario.

There’s a famous aphorism that in the long run, economic productivity is almost everything. The social fissures in the US despite a strong economy would suggest otherwise.

Australia should take note and take action to ensure the long-term sustainable prosperity of our nation.

Cameron Allen receives funding from the Australian Research Council.

John Thwaites is Chair of Monash Sustainable Development Institute and Climateworks Centre which receive funding for research, education and action projects from the Commonwealth and state governments as well as from philanthropy and industry. He is a former Deputy Premier of Victoria (1999 – 2007)

A new report card shows inequality in Australia isn’t as bad as in the US – but we’re headed in the wrong direction

It’s hard to remember a time the United States seemed as tense and divided as it does today. That should serve as a stark reminder of just how important it is to monitor the health of our own nation.

Today, our new report card on Australia’s progress will be launched in Canberra. It assesses progress on 80 economic, social and environmental targets and models a range of policy shifts that could boost progress.

We find that progress on more than half of these targets has either stagnated or is going backwards. And growing inequalities threaten the wellbeing of many Australians.

Our report comes on the heels of America’s own State of the Nation report, which puts the US near the bottom of global rankings on inequality, violence, trust and polarisation.

The situation in Australia is not yet as dire. However, our results signal a need to start thinking long-term and take bold action on inequality to avoid a similar fate.

Not an A+ student overall

Our report draws on the 17 UN Sustainable Development Goals (SDGs) to select a broad and balanced set of 80 economic, social and environmental indicators.

Each of our indicators can be grouped under one of these 17 goals and includes a 2030 target. We use this target to evaluate progress and allocate “traffic lights” that tell us about the direction in which the country is moving.

We also benchmark Australia against peer nations from the OECD, including the US.

The overall outlook for Australia is mixed. We aren’t completely on track to meet any of the 17 SDGs. And on some indicators, Australia is actually going backwards, away from the target.

Many areas of concern centre on increasing inequality. These include:

• a 30% decline in the share of wealth held by the bottom 40% of Australians since 2004
• almost 20% of Australians living in financial stress
• over 40% of lower-income renter households living in housing stress
• household debt levels now exceed Australia’s annual gross domestic product (GDP).

There are also some broader economic concerns. Australia’s level of investment in innovation is nearly 40% below OECD averages. Economic complexity – which measures the sophistication and diversity of what our economy produces – has fallen behind Honduras, Armenia and Uganda.

And there’s been a rapid decline in education outcomes for students from lower socio-economic groups.

Shining in some areas

On the other hand, Australia is on track and actually leading our peers in life expectancy, road fatalities, tertiary education, water efficiency and government debt.

We’re also above average on closing gender gaps in both income and political representation. Australia also has very low homicide rates and high feelings of safety and trust compared to our peers.

In some key areas, Australia is actually trending rapidly towards SDG targets.

The gender gap in superannuation, for example, has fallen from 53% in 2014 to 21% in 2021.

The share of renewable electricity in our national energy grid has climbed to 35% and greenhouse gas emissions are steadily falling.

And rates of unemployment, underemployment and youth unemployment have all declined to within or closer to SDG target levels of below 5-6%.

How does the US compare?

America’s State of the Nation report, which tracks progress on a range of similar measures to our report, paints a bleak picture.

There are only four measures where the US performs in the top 20% of high-income countries – economic output, productivity, years of education and long-term unemployment.

Compared to Australia, the US outperforms us on average per-capita income, investments in research and development and knowledge-based capital, economic complexity, household debt and broadband connection speeds.

But despite their apparent economic success, mental health and life satisfaction have deteriorated. Social connections are fraying with increased social isolation, polarisation and eroding trust.

Tragically, suicide rates, fatal overdoses and shootings have increased.

Far worse on some measures

In areas where Australia is also trending backwards, things in the US are often far worse.

Income and wealth inequality, for example, are much higher in the US. The top 1% of Americans hold around 35% of wealth – compared to 24% for the top 1% of Australians.

US welfare payments are almost 90% below the poverty line and the poverty rate is 30% higher than in Australia. Yet US government debt as a share of GDP is almost double that of Australia.

This stark contrast suggests America’s approach to pursuing material prosperity is undermining social wellbeing, with rising inequalities fuelling social tensions and polarisation.

Bold action needed

For the first time, our new report models two future scenarios for Australia, exploring policies that reverse negative trends and accelerate progress towards SDG targets by 2050.

Our modelling shows that with increased policy ambition, Australia can halve poverty and reduce income inequality by a third. We can also boost health, education and productivity, improve biodiversity, and deliver net-zero greenhouse gas emissions.

To do it, we’d need to increase public investment by around 7% a year over 10 years in key areas such as education and health, disaster resilience, sustainable food, energy and urban systems and the natural environment.

Our modelling shows that with these measures, Australia could achieve 90% of our Sustainable Development Goal targets by 2050.

Without them, our future prosperity is projected to stagnate and decline by 2050, reaching just 55% progress towards our targets and with GDP around A$300 billion lower than our more ambitious scenario.

There’s a famous aphorism that in the long run, economic productivity is almost everything. The social fissures in the US despite a strong economy would suggest otherwise.

Australia should take note and take action to ensure the long-term sustainable prosperity of our nation.

Cameron Allen receives funding from the Australian Research Council.

John Thwaites is Chair of Monash Sustainable Development Institute and Climateworks Centre which receive funding for research, education and action projects from the Commonwealth and state governments as well as from philanthropy and industry. He is a former Deputy Premier of Victoria (1999 – 2007)