5 must reads for your weekend

We keep our ear to the ground for the interesting stats, insights and discussion points you need to feel in the know.

1. The ‘butterfly effect’?

Small changes can have large consequences. That’s what Edward Lorenz,?Meteorology Professor at the Massachusetts Institute of Technology (MIT), discovered in the 1960s, after making tiny, butterfly-scale changes to his?weather simulations. The outcome? Not what was expected - anything from warm sunny days to violent storms, with no way of predicting the result. Lorenz famously encapsulated his butterfly effect concept in one question:?“Does the flap of a butterfly’s wings in Brazil set off a tornado in Texas?”?The inherent complexity of businesses today and, more broadly, the interconnectedness of the modern world - through trade, financial, supply and information systems -?means that we are particularly susceptible to the butterfly effect.?But while organizations can’t always predict the timing of a crisis, they certainly position themselves to get ahead of it. More from Jeffrey Sallet,?Partner, Investigations & Compliance, Forensic & Integrity Services, EY.?

How can a crisis help you turn a challenge into an opportunity? ?

2. A fashion U-turn?

“Had we not reshaped ourselves, we would not have had the ability to buy that brand that we so dearly wanted [Topshop].” Nick Beighton, CEO of UK online fashion retailer, ASOS. In early 2020, ASOS was at a crossroads. After close to two decades of stellar performance, ASOS?found itself faced with increasing competition, profit and growth headwinds, and challenging operational issues resulting from the simultaneous implementation of two state-of-the-art international distribution centers. So ASOS approached EY for help.?Reviewing their product range, customer segmentation, supplier performance, logistics, inventory and support functions, EY was able to identify significant opportunities that would help supercharge ASOS’s ambitions.?Fast forward and ASOS today continues to inspire its fashion-loving customers in a way that is difficult for others to copy. So much so that?“ASOS had its best-ever performance in the last 12 months, on the back of its worst-ever performance in the previous 12 months.”?

Fashioning a sustainable future for an online clothing retailer?

3. An uncertain future is not a bad one

As we begin 2023, uncertainty is the only safe prediction. After years of rising tensions, great power rivalry is back at the forefront of global affairs. After decades of dormancy, inflation has returned to the top of the economic agenda. And after many years of ultra-low interest rates, monetary policy has dramatically tightened across the US, Europe and Asia. UK base rates, for example, rose from 0.5% to 3.5% during the year. Looking ahead, the underlying drivers of higher prices - including deglobalization, decarbonization and demographics - are not going away. When the world changes, so do markets. Asset owners and asset managers subsequently face a highly unpredictable investment outlook. We highlight six specific actions that are consistently important for asset managers looking to differentiate themselves in an uncertain future.?

Six ways asset managers can prepare for an uncertain future?

4. The digital skills gap?

Today, as technologies like?artificial intelligence?and virtual reality spark a new revolution in how businesses interact with their customers, big ideas are overshadowed by more practical questions like: who in the organization understands how this works and can make it a reality,?and how can we secure the talent we need to scale up? Of course the answers are not so straight forward. Take digital skills: according to EY research, digital skills are increasingly hard to find with 67% of respondents stating they have seen a rise in attrition among employees with data and digital skills since the disruption of the COVID-19 era began. Of those surveyed, 57% said that data science is the most challenging skill overall to recruit but the challenge isn’t just restricted to technical skills. Teamworking (55%) and creativity (54%) are also high on the list. So, in an era when employees are looking for something more meaningful how can businesses respond??

Addressing the talent crisis in digital innovation?

5. Why regeneration, why now?

Nature is under attack. Vital systems like oxygen, water, food and carbon regulation are being threatened by overconsumption of our global biocapacity. But what does that mean? Take the ocean biomass for example, on which 500 million people depend for food - it is declining — and increasingly threatened by ocean plastic. Sadly, it doesn’t stop there. Intensive farming practices contribute to climate change too, and deforestation is turning the Amazon from the world’s largest carbon sink into a carbon source. It’s no secret that climate change is affecting the entire world – but more so in developing countries as they?disproportionately suffer the largest climate consequences. The time to act is now, but how??

The CEO Imperative: How can you put regeneration at the heart of creating value?

If you do one thing:?

Remember that making small changes every day can compound into?life-changing results over time.

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