Leading international law firm Clifford Chance has partnered with Forbes Insights to survey 300 C-suite executives at companies with revenues of over US$1 billion (RM4.21 billion) across the globe, to better understand their confidence and challenges in the face of widespread tech-driven growth. Yesterday, Clifford Chance launches its Ready, Steady, Grow: Building a sustainable tech strategy for the next decade report.
Clifford Chance LLP is a multinational law firm headquartered in London and is one of the ten largest law firms in the world measured both by number of lawyers and revenue.
Amongst the executives surveyed, 33% are from companies headquartered in the Asia Pacific region. In Asia Pacific where regulation is strongest, 44% of executives cited a regulatory minefield, where there are too many regulatory and industry standards. This was the largest percentage from any region, with only 32% of EU and 25% of US executives sharing this view with regard to their own legal systems.
Paul Landless, Partner and Co-Head, Clifford Chance Tech Group, Singapore, says: “In Asia Pacific, there is a jigsaw puzzle of different standards for outsourcing, data privacy or intellectual property protection. This makes overregulation a natural outcome.”
Compared to their US and European counterparts, APAC executives also felt more equipped to deal with regulatory issues related to advanced technologies. This gap is particularly evident in areas such as big data (54% vs. 39%) and automation (54% vs. 41%). At the same time, only 27% of APAC executives want business to become more involved in regulating technology as opposed to 35% of EU and 39% of US executives.
Globally, the strongest theme emerging from the survey was the ethical challenges of tech innovation that organisations are facing; with 44% of respondents believing data poses their organisation’s biggest ethical challenge. The research shows that senior executives harbour clear intentions to weave ethics into the use and adoption of technology in their companies, however they are being slow to action this.
Jonathan Kewley, Partner and Co-Head, Clifford Chance Tech Group, London, comments: “Customers, employees, shareholders and investors are paying more attention than ever to ethics and values. Our report shows digital trust is now a serious issue for business leaders. They care about doing the right thing. But tech ethics puts people before profit in the short term, and this creates an inherent tension. Getting it right might slow projects down, but in the long term, it will be the companies that adopt this approach that gain market advantage. Most importantly, they will also win the trust of their customers.”
Four key themes from the report emerged:
1. Too fast or too slow – setting the right pace for tech-driven growth
With 80% of businesses surveyed currently exploring or using AI and associated automation and 78% using or exploring big data applications, it is clear that companies are rapidly implementing advanced technologies to power their business growth. However, respondents also shared that they are anxious about the optimum pace of tech-driven growth is and how to balance the potential opportunities, alongside the increased risks. Around 40% of execs are concerned they may be too cautious in their approach to tech-driven growth while 25% feel they are being too bold.
Megan Gordon, Partner, Clifford Chance Tech Group, Washington DC comments: “Everyone feels, for good reason, that they need to get on top of the newest technologies. But sometimes you don’t see the full implications until 10 years down the line. To succeed, futureproofing needs to be considered as new technologies are rolled out. Companies need to focus on the right level of collaboration and consider what the overall impact of advanced technologies could be.”
2. Adding T for Technology to the ‘ESG’ values
Results showed appetite from organisations to ensure ethical tech was a key part of their values, but many are unclear on how to practically address these in their business. While 39% of respondents saw the greatest opportunity of tech as ‘better quality of life’, 30% of respondents are concerned it will displace humans from job markets and 24% are concerned about human rights and privacy.
Paul Landless, Partner and Co-Head, Clifford Chance Tech Group, Singapore, adds: “Market power is changing. It is no longer simply about the data, but more the analytical capabilities to use data to identify new opportunities. But with this new power comes new responsibilities, which need to be at the core of an organisation’s values to enhance, not diminish, societal progress.”
3. Regulation offers certainty and confidence
There is a clear sense that regulation is a crucial part of navigating this new tech-driven business landscape, but the global picture varies: US and European executives feel less equipped than their APAC counterparts to deal with regulatory issues related to advanced technologies. In Asia, where regulation is strongest, 44% (the largest percentage from any region) says there are too many regulatory and industry standards. Regulation is often associated with impeding and restricting activities, but regulation can also bring clarity and certainty. Crucially, 56% of respondents did not think their business was well equipped to deal with the legal and regulatory issues relating to big data, an area for concern.
Dessislava Savova, Partner, Clifford Chance Tech Group, Paris, comments: “Companies that consider regulation from the inception of a product and involve other business functions (not just the legal team) in understanding how to create products that meet regulatory compliance will grow their business as a result. Those who do not aim for the highest levels of compliance, on the other hand, may soon find themselves unable to launch a product or enter new markets, or even be forced to withdraw products. It is time to make the link between pursuing compliance to the utmost standards and the success of a business.”
4. Are boards prepared?
Whilst tech innovation has stepped up in pace, board priorities have not accelerated accordingly, with less than a third (29%) of board committees’ responsibilities being adapted to account for tech innovation. Over half (54%) of executives believe boards will need to devote more time, attention and resources to tech driven innovation. Less than half of respondents say they have strong in-house capabilities to deal with the legal and regulatory issues around tech-driven growth.
Ling Ho, Partner, Clifford Chance Tech Group, Hong Kong, comments:
“Boards are very much focused on the front-office issues around products and customers, but they have underestimated and are underprepared for risks associated with back-office systems. Companies need to rebalance their reporting and accountability lines to bring the boardroom and the back office closer together. The external dependency, the lack of understanding and the difficulties of combining that external function with internal complexity all mean that businesses are creating major vulnerabilities—and boardrooms need to take note.”
View the full report here.
- The research in the report is based on a Forbes Insights survey of 300 senior business executives from around the globe, undertaken in June and July 2019. Respondents came from China, France, Germany, India, Japan, the United Kingdom and the United States.
- All of the executives are C-Suite officers, including CEOs (14%), CFOs (15%) and CIOs (15%). Executives represented all major industries, including financial services, consumer goods & retail, energy & resources, healthcare, life sciences & chemicals, industrial products/manufacturing, private equity, infrastructure, telecommunications, media & technology, and transportation & logistics.
- All are from companies with revenues of at least US$1 billion, including 20% with revenues of US$10 billion or more.
Source : Digital News Asia