This report’s findings are based on three interrelated research efforts, namely a literature review, benchmark analysis, and in-depth consultation with expert sources, which provide considerations for firms to become future-ready.

The benchmark’s conceptual framework spans more than 130 indicators across three pillars: external environment, business preparedness and progress towards the frontier. These pillars establish the thematic and conceptual scope of the report and are weighted in accordance with our assumptions of their relative importance in fostering the future-readiness of businesses. For the purposes of this benchmark, the definition of future-readiness incorporates modernity, adaptability, resilience, long-term orientation and ambition.

2,000
executives in multinational businesses in
10
countries, of which
400
are from Australia

The benchmark also draws on a survey of 2,000 executives in multinational businesses in ten countries, of which 400 are from Australia, as well as interviews with senior executives and experts and wide-ranging desk research with the aim of understanding the future-readiness of businesses. This report focuses on the state of Australian business today in light of tomorrow’s needs.

Economist Impact bears sole responsibility for the editorial content of this report. The findings do not necessarily reflect the views of the sponsor. The report was written by Siddharth Poddar and edited by Charles Ross and Satvinderjit Kaur. Development of the Future-Ready Business Benchmark was led by Vaibhav Sahgal.

Economist Impact wishes to thank the following experts for their time and insights:

  • Rebecca Jinks, head of sustainability and ESG, Asia-Pacific, Cushman & Wakefield
  • Kwanghui Lim, associate professor of strategic management, Melbourne Business School
  • Derek Moir, AUNZ head, Google Workspace
  • Shane Oliver, head of investment strategy and chief economist, AMP Capital
  • Michael Rosemann, professor, Queensland University of Technology
  • Jennifer Westacott, chief executive, Business Council of Australia
  • Katherine Wynn, lead economist, CSIRO Futures
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Sponsor Foreword
The publishing of this report is timely.
The investments in new technologies in the past three years in Australia are amplified by several macro factors; the covid-19 pandemic, supply chain issues, a tipping point on climate change, a new Federal Government, and now a period of economic uncertainty. We find ourselves at an important juncture in the Australian business environment that requires a balance of navigating both the short-term economic conditions and the medium to long term agenda of becoming a modern business.
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Executive summary

It’s a challenging time for businesses as they navigate disruptive headwinds—both locally and internationally—amid the demands of a rapidly digitalising world. While technology has long been seen as a source of advantage, its mere adoption is no longer enough. Companies need to be able to leverage new technologies to create opportunities to support their digital transformation, and undertake sustainability efforts, implementing effective strategies to ensure their competitiveness in an increasingly uncertain world.

This is easier said than done: companies are in fierce competition for top-tier talent, on top of social and regulatory pressures that mount in tandem with the undeniable effects of climate change. Rising inflationary pressures are adding further complications by limiting firms’ ability to access labour and capital, while also pushing up the costs of crucial raw materials.

The steep surges in raw materials prices could be particularly impactful on Australian businesses, says Shane Oliver, head of investment strategy and chief economist, AMP Capital. “The commodity sector is so large that it tends to have a distortionary impact on the rest of the economy,” he says, referring to the phenomenon as ‘Dutch disease’ or the ‘Gregory effect’. These macroeconomic challenges may blunt the government’s ability to issue any meaningful policy correctives with a view to diversification.

Faced with these difficult straits, firms can no longer afford to remain idle if they wish to achieve future-readiness. And despite the immediate challenges posed by their bottom lines, companies pursuing business continuity and longevity must expand their purview to also consider the environment, society and their stakeholders at large.

These shifts demand a flexible, future-oriented mindset. Those who fail to adapt will find themselves left behind.

Australian business at the frontier

From its perch in the Pacific Ocean, Australia sits at an advantageous vantage point. Thanks to a rich endowment of natural resources and a highly developed services sector, the country has experienced overall strong economic gains, hindered somewhat by challenging headwinds and falling productivity. Regardless, these economic fundamentals, coupled with strong government action, have helped Australia weather the worst effects of covid-19. However, many are now wondering what is next on the horizon for the country as the global economy reopens—especially as it’s a vastly altered environment, given a spate of geopolitical, economic, social and environmental issues.

Key findings

01
Australia ranks seventh in the future-ready business benchmark:
with a score of 58.9—marginally ahead of France (58.5), Germany (57.8) and Singapore (57.6)—Australia has mixed results across the various indicators of the benchmark. Sweden ranks first with a score of 61.2.
02
Australia is strong in preparedness, but sees weak progress towards the frontier:
across the three pillars, Australia performs the strongest in business preparedness, where it is ranked sixth. Australia’s external environment for business is ranked seventh, and in its progress towards the frontier, it is ranked eighth. While Australia doesn’t score as well as some of its peers, given the tight clustering of all countries, its scores reflect strong businesses in a solid operating environment.
03
Strong accountability for environmental tracking and evaluation:
Australian firms show a strong level of accountability when it comes to environmental initiatives, ranking fourth in terms of prioritising environmental sustainability. A large share of firms indicate that they use data in environmental tracking and evaluation, as climate-related risks increasingly threaten supply chain and business security.
04
Poor long-term planning and collaboration hamper firm modernisation:
compared with global peers, Australian firms have room to grow in terms of leadership and culture. Australian companies relatively underperform when it comes to instilling company-wide understanding of their modernisation goals, as well as prioritising future planning and outcome-driven digital adoption.
05
More is needed to build clear connections between business goals and tech strategies:
with a score of 64.5, Australia ranks below the global average in terms of technology and innovative ability. This is a result of firms failing to strategically link their tech investments to overarching business goals and clear metrics, and prioritise data-driven and tech implementation strategies. With better alignment in place, firm investments in automation and innovative activities could drive higher levels of productivity.
06
Underlying differences present opportunities for improvement:
underlying the tight range of overall scores are myriad variations, with valuable lessons to be drawn. These nuances across the pillars reflect differing environments for firms, varying levels of business preparedness and mixed adherence to best practices.

The results highlight how firms and policymakers in Australia might adapt to enable businesses to prepare for the future and embrace its full potential. But to do so, Australian businesses need to deal with current headwinds first.

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