As corporations and communities emerged from the fallout of COVID-19 lockdowns, they were soon thrust into the next wave of uncertainty relating to the ongoing conflict between Russia and Ukraine. The series of unprecedented challenges experienced by organisations throughout 2022 saw global inflation and rising interest rates dominating headlines, instilling fear in living rooms and boardrooms around the world.
As we enter 2023, the looming recession is front of mind for many business leaders but, despite this, global management consultancy Partners in Performance says the year holds strong opportunities to grow and prosper.
Leading business experts at the firm believe that success for organisations in 2023 can be achieved through smart investment in training and retraining talent, innovative technology, and maintaining a laser focus on achieving net zero emissions targets.
Staying focussed as the recession looms
As inflation remains a major concern around the world, organisations need to embrace this new reality and adapt to price volatility and control costs. Colleen Grady, a Partner at Partners in Performance who specialises in retail and consumer goods, has monitored price increases across the sector in Australia, and advises that, ahead of the impending downturn, organisations should learn from the past in order to manage the current situation.
Grady says, "Organisations should focus on 'scenario planning' by implementing spend controls and scaling down costs. Saving is the key to businesses emerging as a 'winner' in 2023. If well managed, inflation-driven price increases will not have to be passed on to consumers.
"Chasing profits in the short-term is not a sustainable strategy in this economic climate."
Net zero goals should still take centre stage despite economic headwinds
Corporations should not shy away from investments in energy transformation in their efforts to cut costs. In fact, this will become more of a pressing need throughout 2023, according to Mark Evans, a Director of Partners in Perfomance's South African branch, who says: "Globally, organisations are realising they must de-risk from the existing network and put renewables and storage solutions in place to operate successfully."
"Governments around the world face similar difficulties in balancing energy transition with employment and power supply stability due to rising inflation and energy consumption."
The solution, according to Evans, is a collaborative strategy to fix local infrastructure.
US-based Director at Partners in Performance, Eric Powell, echoes the need for a 'collaborative strategy' with various partnerships being formed throughout the value chain: "Utilities, regulators, communities and investors must work together to de-risk projects. No organisation can do it alone."
Powell also reiterates the importance of learning from the past to meet energy needs in the future: "Organisations must look to previous downturns, where new industries emerged — nuclear in the 1980s and LNG in the 2000s — to learn how success was achieved. Organisations that accept this, and heighten their energy transformation plans, will be successful in 2023 and beyond."
To accomplish a transformation of this scale, an army of specialised professionals, from engineers to programmers, will be needed.
In Australia, reusing and repurposing existing power grid infrastructure will be critical to meeting Australia's ambitious target of increasing the grid's use of renewable energy to 82 per cent (from the current 32.5 per cent) by 2030. This includes retaining and leveraging the existing electricity infrastructure in coal-fired power complexes across the Latrobe Valley, Hunter, Illawarra and Collie regions.
There are ongoing discussions around how legacy assets of coal-fired power stations in Australia, and nuclear stations in the UK, can be used to turbocharge the deployment of renewable energy on the grid. Offshore wind energy zones, common infrastructure for mainline connections, and facility maintenance hubs, will enable much of the assets in older energy hubs to be used well into the future.
Partners in Performance Senior Advisor, Rob Fowler, says, "The sooner we get on with combining and deploying the finance, technology and smarts at our disposal, the sooner we will truly see the green mining, green metals, and green basic chemicals that our 'net zero future' undoubtedly demands."
Shifting energy strategies in industry and government
Both the United States and Europe are taking different paths to spur energy transformation, and this trend will continue throughout 2023.
J-P Martins, Partner at Partners in Performance's UK-based office, notes: "The US is using a metaphorical carrot — the Individual Retirement Account (IRA) — to incentivise transformation. Conversely, the EU is using sticks like the proposed Carbon Border Adjustment Mechanism (CBAM), and a Battery Directive to spur change through tariffs and taxes."
Martins adds that both will play a massive role as industry rushes to take advantage of incentives, or prepares to overcome the new regulatory hurdles to reduce costs.
The UK government is now supporting onshoring wind for decarbonisation and electrification, previously hampered by policy, to meet energy demand. This offers opportunities to organisations where power can be sold back to the grid while supporting grid resilience.
US-based Director at Partners in Performance, Chris Millican, weighs in on his perspective on grid resilience in the US, where increasing domestic production is being explored due to power shortages impacting grid stability.
"As new competitors emerge, utilities must secure their spot by investing in the next wave of digital solutions and customer offers, to deliver on affordability, reliability, sustainability and customer service. They must also upgrade planning capabilities to anticipate and respond to market signals like fleet electrification," says Millican.
Brian Innes, senior energy transformation consultant and Partner at the Australian branch of Partners in Performance, adds, "In addition to Australia enhancing its distributed control capabilities toward achieving net zero targets, the nation's corporations, regulators, governments, communities, and research institutions must form a united front.
"Rather than existing in silos, regulators, asset owners, operators and technology and service providers, must collaborate and promote open source platforms to spur Australia's clean energy transformation, to offer a future energy supply that is both secure and sustainable in the long term.
"Furthermore, as Australia looks at increasing electric vehicle uptake amongst both consumers and corporations, agile thinking and cooperation between networks and aggregation service providers is crucial. The appropriate management of peak usage periods will also be key to a successful strategy in harnessing the capabilities of Australia's existing grid infrastructure."
Losing specialised skills as populations age and retire
As populations grow older and experienced workers reach retirement, organisations are faced with the arduous task of replacing them, particularly among specialised workers in fields such as manufacturing, engineering and technology.
The war for talent in engineering, design planning, and project management is impacting the infrastructure boom, as skills that were once taken for granted are fast disappearing.
Australia is currently facing possibly its greatest challenge in procuring engineering talent. As Australia, along with the rest of the world, accelerates pace toward achieving energy transformation goals, national priorities rely on the engineering sector — the need to replace lost skills is vital.
As Karin Wright, an Australian-based Partner at Partners in Performance, highlights, "Australia is still seeing the impact of reduced migration and hence, a lack of skilled and unskilled labour. This can be overcome by investing in project teams and their development to mitigate these issues. Proactive management of emerging risks, such as labour challenges, is the way forward."
With proactive management in mind, there are two ways to manage this issue; firstly, Australian students should be encouraged to pursue required skills like engineering at university and, secondly, Australia should look to attract migrants who have those skills.
Katya Vladislavleva, CEO of DataStories, a Partners in Performance company, shares the need for organisations to have foresight as they enter 2023. She says, "This is the perfect time for organisations to use prescriptive analytics to unleash potential and overcome these labour challenges."
With industry professionals retiring, prescriptive analytics is the ideal tool to train or retrain new talent so that operations aren't impacted.
She sums it up by saying, "Organisations who find ways to preserve knowledge in the face of labour challenges will have an edge to help them achieve success in 2023 and beyond."
Despite the uncertainty of what 2023 has in store for businesses, Partners in Performance reiterates that capitalising on the right opportunities, and leveraging informed advice, will hold the key to success.
