From viewing properties remotely through virtual reality to flip-flopping between banks without the least regard for loyalty, millennials are posing “huge challenges” to businesses, a major new report has warned.
The Executive Agenda, published by the UCD Smurfit School on Wednesday, is a study of business executives from public, private and semi-State firms in sectors of strategic and systemic importance to the Irish economy.
The report found the “main issue” on the demographic and societal agenda for corporate executives was the impact of millennials, which typically refers to people born from the early 1980s to the mid-1990s.
“As consumers, millennials are posing strategic challenges,” it said. “For example, in the banking industry banks have historically traded on inertia, with customers rarely changing banks and displaying risk averseness to new financial products. Millennials are different. They are more likely to change banks than other demographic cohorts, and they are more willing to experiment with non-traditional banking substitutes.”
The report said this new pattern of behaviour among customers “poses a huge challenge to the model of customer lifetime value”.
In the real estate sector the authors of the report said millennials wished to interact with companies in new ways. This had “necessitated investments in mobile technology as well as virtual reality technology that allows property viewings to be conducted remotely”.
Similarly, in the food sector one executive remarked that millennials were “growing more and more concerned about not only what is in the product, but how the product is produced”.
Trade barriers
Separately, the report found that just one in four big companies have contingency plans for post-Brexit trade barriers. The findings suggest firms are prioritising contingency planning around issues they can directly control rather than perceived risks that may have a high impact but are more challenging to plan for.
For example, the main areas in which companies were found to have contingency plans in place for were cyber-attacks, economic growth, data fraud, currency and customer confidence.
The eventualities for which companies were least prepared were border controls, trade barriers, tax policy, geopolitical tensions and political uncertainty, “many of which are perceived to be bigger risks in terms of likelihood and impact”, the report noted.
Prof Patrick Gibbons of the UCD Smurfit School said senior Irish executives were managing businesses at a time of “unprecedented change in an uncertain world”.
Prof Ciaran Heavey said it was a concern that business leaders were not planning for events that could have a significant impact on their operations.
Most controllable
“Some of the issues they face are within their control but many are not, and what comes as both a surprise and a concern is that, while contingency planning is in place for many risk areas, it is primarily centred on those risks perceived as most controllable rather than those that could potentially have a significant impact.”
Prof Heavey added that he hoped the report would allow businesses to kick-start strategic planning to counter the “volatility, uncertainty, complexity and ambiguity they face”.
The study involved 225 senior executives from 180 of Ireland’s largest companies, along with a series of in-depth, open-ended interviews with 31 CEOs and other senior executives from 23 major companies.
