Is Now the Time to Reform Business Institutions?

by | May 11, 2020

Government and business leaders are shifting attention onto the crucial reforms that would accelerate the post-crisis economic recovery. What is missing in the narrative, is how business leaders will be driving reforms to modernise their own institutions. 

People believe what they see and the collaboration by governments, such as Australia’s National Cabinet has been welcomed. A similarly visible, national response by business institutions remains absent.

The COVID-19 challenge is unprecedented and its scale is still not understood. What we do know, is that the future will not be business as usual.

Simply dusting off the old reform thinking and plans and keeping old institutions that were designed for a past era would be a mistake.

If there is ever a time when businesses would value their associations it is during a pandemic and the recovery. Yet it is individual businesses that are pivoting in response, while most business associations are keeping a low profile and sitting it out.

History says that traditional business associations will not reform and innovate in response to the crisis. More likely, what will prevail is fragmentation and vocal demands that other institutions (e.g. government, unions, other industry sectors) must change.

The truth is, that too many business and industry organisations are languishing with outdated business models, low and declining membership and legitimacy. Their vital role in shaping the business environment for the benefit of all is not being optimised.

The opportunity for businesses right now is to force a rapid transformation of the very institutions meant to serve them. Rather than the current proliferation of competing groups, businesses need less, but better. It will mean radical changes and take strong leadership from big businesses.

The recovery must be business-led, while businesses and governments alike need agile, modern business institutions that can speak with authority and influence on reforms and policies to get on the fast-track. In their absence, we can expect an increasing clamour about how others need to change.

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