Wednesday Question Time with Advita Patel & Ben Horn
In today’s Wednesday Question Time, our host Ben Horn, Digital Transformation Director,…
This article was written by two representatives of vocL, Fhaheen Khan (vocL voice and senior economist at Make UK) and Sarah Walker-Smith (Chief Executive of AMPA). It is a brief review of the first half of the decade and gives businesses a perspective of what to look out for from 2025 onwards.
Fhaheen’s Voice
As I sit on my chair wondering about all the ways the world has changed in the last five years, and how it might change in the next, I can’t help but wonder where does everything come from? The laptop I am writing this article on, the tables on which my monitor sits, my notebook for ideas or even my coffee mug. Sure, the final product might say something like “Made in China” or “Made in the UK” with a UKCA logo attached on the side, but the making of “things” is far more complex than we often realise and something many of us take for granted.
The poem “I, pencil” by Leanord Read encapsulated this idea well. It’s a short story which describes the making of a pencil, from the point of view of the pencil. It tells of the power a pencil has to save the freedom of mankind despite being one of the simplest tools we know. It ends “Simple? Yet, not a single person on the face of the earth knows how to make me”. It promotes the idea of what many might call old-school economics as each individual in a supply-chain focuses on what they are best at to produce the things we need as efficiently as possible, regardless of whether they even know what they are making it for.
The last five years has been topsy turvy to put it mildly. We had an unprecedented global pandemic, an energy crisis, high rates of inflation, an end to historically low interest rates, and the first change in government in 14 years to name a few. But we also saw the fastest vaccine ever produced, 337 days to be exact, a world record. It was a test of resilience and courage for businesses, and the world responded in kind to new ideas and new ways of working.
From 2025 onwards I suspect businesses will be focused on becoming even more efficient as people and firms will strive to find better ways to grow, economically and in quality of life. Whether it is about finding the perfect balance for modern flexible working or investing in energy efficiency technologies to secure our fuel needs. All of these will be achieved by millions of people working together or separately regardless of their individual goals.
2025 will be the year where businesses sit at the front of progress.
So, what should businesses watch out for in 2025 and think about over the next five years?
AI adoption will accelerate, embedding itself into more aspects of daily life
Businesses are already taking advantage of AI, with Make UK’s own research finding that nearly two-fifths of manufacturers were exploring how to take advantage of the technologies to improve their businesses. From supporting content creation for marketing teams to helping HR professionals design job descriptions for a new generation of workers. The applications will be endless. Though we’ve mostly seen it applied to the backend of business process, this year more businesses will mould AI systems more into the front end. It’s already happening in customer support with virtual chatbots now common place in services, and I expect the production side of business will increasingly adopt new digital technologies to improve productivity.
A key factor in all this will be access to skills. As the adoption of new technologies, not just AI, increases the demand for modern digital skills, it will also add extra pressure on the education sector to fill the gap. It’s no surprise that according to LinkedIn’s own statistics for vacancy trends, AI engineers are the number one most in demand role across the last 3 years.
Net Zero, Decarbonisation, Sustainability will form the foundations of a circular economy
Much of the world continues to target reaching net zero by 2050. Some countries have set even more ambitious targets like the Maldives (2030) or Finland (2035) to combat climate change.
Whilst Governments can set strategies and back industries through state support, it’s businesses who are going to decarbonise and deliver net zero through innovation and technology.
There’s plenty of work needed to be done in the UK if it is to target full clean energy generation with investments in offshore wind, solar, hydrogen, nuclear and even CCUS on the horizon. The creation of GB Energy which is expected to receive £8.3bn in funding by the end of parliament’s first term presents a great opportunity to invest in the right areas to ensure we meet our targets.
Yet, reaching net zero will be a cooperative goal, and businesses will need to accelerate investment in energy efficiency. The energy crisis in 2022 woke up many businesses to the reality of uncontrollable electricity costs and security, which makes 2025 such an important year for reaching energy security.
The mass adoption of existing solutions, like solar panels, heat pumps and refurbishing old infrastructure to reduce energy loss will be key for households and businesses. Plenty of new ideas are also cooking with increasing use of IoT technologies to collect data on energy use and ensuring we build smart data centres that are both green and sustainable. All of this will combine how we use and re-use limited resources to reach the benefits of circular economies, something both manufacturing and service sectors will be investing in for the remainder of the decade.
A new generation of workers will move from supporting to leading the future
By 2030, the youngest cohort in Generation Z will be turning 18, meaning the majority of that generation will already be in the working world. Are businesses ready for it? This generation of workers are native to the digital world, far more conscious about work-life balance and show genuine concern for environment and climate. Growth will not be delivered by businesses that are working to survive, but those that are innovating to thrive, which means leaders will need to shift their thinking to get the most out of the next generation of talent.
Since 2020, many of us have shifted to working from home where it’s possible and since then have been grappling with the right balance of remote/in-office systems. The last five years was about experimenting with what works and what doesn’t, and this year more people and businesses will settle on a common ground. However, professions in manufacturing or construction will face a slightly different challenge to maintain the attractiveness of career paths for younger workers. Leaders will need to innovate fresh strategies that still grasp the productive capacity of talent but in a more flexible labour market.
And let’s not forget there’s a lot to keep an eye on as government consultations come live to evaluate proposals for employment rights, such as introducing day one rights, ending zero hour contracts and strengthening SSP. Whilst many of these proposals will be good for both people and businesses, I suspect some will be done away with following consultations with industry to ensure we strike a balance that does not hinder investment in people and capital.
Long-term government strategies will be revealed
Something businesses have been yearning for many years now is certainty in the policy environment. Whilst short-term, generous support like super-deduction or “eat out to help out” may look great on the surface, they do little to create the predictable, stable economic conditions businesses want to operate it.
It is a breath of fresh air that the new government is now focused on delivering long-term strategies such as Invest 2035, the Infrastructure Plan and the Trade Strategy. The devil will be in the details and will be key to meeting many of our other objectives such as decarbonising, digitalising and producing a future fit workforce.
Sarah’s Voice
As I sit on my train, heading back to London for the start of the New Year, I can’t help but wonder how much we know now that we didn’t know at this time 5 years ago. The inevitable thought that then permeates is what will we be saying in five years time about the half decade ahead?
The one thing that is certain is we couldn’t have predicted the future in 2020 and we most certainly can’t now.
At this point 5 years ago, I was in a relatively optimistic frame of mind. I’d been in my new role, the CEO of a top 50 law firm, for around 11 months and we had a new strategy and big plans for the year ahead. None of us, at that point in January 2020, had any idea which was going to hit us and yet within a few weeks everything had changed.
By contrast, I sit here at the beginning of 2025, feeling much more apprehensive even for someone who likes to be postive. I understand so much more now about geopolitics, about the climate emergency, about both the threats and opportunities from AI, and also that so much is outside of our control. The World Economic Forum have just updated their annual review of risk, and the annual Edelmann Trust Barometre has just been published. Neither make for fun bedtime reading. The UK economy is in a tightrope position being blown around daily as each new statistics comes out and a raft of surveys show business confidence has fallen to the lowest levels in the years.
So what’s making me feel like this what are the big predictions I see ahead? What should businesses watch out for in 2025 and think about over the next five years?
It’s not entirely doom and gloom, whilst they are buried under the headlines, there are green shoots around a number of policy items and some promising initiatives ahead, particularly regarding the energy transition, investment in the regions and the very positive impact that technological developments and AI could have, not just on business, but also increasingly in medical and environmental arenas. The rhetoric has changed to reflect now a clear understanding and need for long-term planning and joined up, thinking.
Natural optimist I may be (yes really!), but the weight of a business and 1500 peoples’ livelyhoods and therefore many thousands of lives connected to it, means I cannot afford to rely on positivity alone. Business leaders can deal with the current volatility and we are now so much better able to understand that we do need to build our businesses to weather storms ahead. When I look back to 2020. We were perhaps naïve. I think that naivete has now gone, and it strikes me there are four areas that business should focus on to maximise the opportunities, but equally minimise the threats of some of the things that could happen in the next few years. Perhaps we should think of these as the strategic tests that we should pressure test our own plans against to make sure that we are fit for purpose for what lies ahead. And as ever with change will come opportunity.
Resilience
Arguably, the most important test for any business is to make sure it has resilience both in terms of its finances (espically the balance sheet), it’s people but also it’s tech. Its always worth dealing with any restructuring or building additional capacity into financial resources during the calm before the storm, rather than in the midst of it. Now is the time to consider some of the what if scenarios and plan accordingly, the response, rather than as many of us did in 2020, dealing with things in the heat of the moment. Businesses that find solutions covering a number of different needs will be even more resilent. For example AI that helps with green solutions.
Relevance
As markets sharpen up and margins decrease especially in some sectors, competition becomes fierce. Testing your relevance to your customers needs and predicting how they may change in the wake of the direction of travel for your market is vital products and brands that do not stay relevant to consumer needs and tech developments will not be here in five years time. And of course, this applies at least equally to your people. The need to be relevant to 5 working generations in a post-Covid world are complex, but the war for talent is likely to continue.
Agility
Governance, devolution, desion making and a great ear to the ground enable plans that can respond quickly. Reclarifying and reconnecting the oganisation to its pourpose also helps make fast and devolved decision making simpler and easier.
Human
And finally, I come back to this test. The pandemic taught us how very important humanity was. Connection, community and compassion catapulted into focus when things got tough. Whilst as noted above, there is, in certain quarters, a backlash against some of these ideals, I think this is short lived and people will come back again to what is really important. Businesses that can demonstrate their humanity, albeit in a way that equally shows why this drives better business return, will continue to retain and attract the best talent. The fast advancement of large languge model AI will not remove the need for human connection; it may even make it more cherished. Sucessful businesses will need to be more human in the wake of AI not less so.
So whilst it’s almost impossible to predict what will happen in 2025, what I can be certain of is that the businesses who focus on the 4 tests above are more likely to end the year in a stronger position than they start it.
Our voice
As we sit here today having listened to each others voices we cannot help but feel both hopeful and apprehensive about the future. The last five years felt like the ultimate test that few had the opportunity to revise for and so cautious optimism has become a natural characteristic for many businesses and households today. This is not necessarily a bad thing, as being both cautious and optimistic can lead to better, more thoughtful decision making and result in targeted investment strategies leading to productivity growth. There is evidently plenty of headwinds for businesses to watch out for but the lessons of the last few years which has taught many of us about resilience will no doubt help push businesses beyond our frontier.
It must not be forgotten that the machine that is the economy is made up of real people. Businesses which are very much a part of that machine is also carried on the shoulders of the people who wake up daily to produce and create new ideas that shape modern society. We are all part of a process to which many of us often cannot even see the true impact of our work, much like the making of a pencil or this article written by two voices who are not even sitting next to each other and yet managed to collaborate over some unknown distance. The old adage that ‘two heads are better than one’ is certainly born out through this process. The different perspectives based on our different sectors, but also differing roles within the organisations that we are part of has helped correlate a much more balanced view of what lies ahead and a strong endorsement of why we should actively listen to emerging voices as well as those established ones. Collaboration can be sometimes be magical in a way and will be the key to us all achieving greater prosperity by the end of the decade and learning something new in the process of whatever stage of our leadership journey we are on.
