My column from this week's Aberdeen Press & Journal

No year is easy to predict and 2018 is no different. Events will come to pass that we did not foresee and surprises surely will happen. There is merit in considering what might come to pass but, whatever the scenario, businesses are best served by staying nimble and being practical.

Perhaps this is no more the case than with Brexit. It is the biggest known unknown for us in the UK. For business the continuing uncertainty is deeply frustrating and only now are the negotiators preparing to address a UK-EU trade deal.

The ideological struggle about whether Brexit is right or wrong will play out for a generation but businesses need to grapple with the practical reality of it now. The transition period is critical for businesses. Transition implies movement, not inertia, so it’s important companies use that period to adapt and innovate, rather than treat it as a respite before they have to face post-Brexit realities.

A good deal of concern about Brexit’s impact has focused on the banks, given, how big a part they and the services sector in general are to the economy. So it was reassuring to see recent research by the Financial Times revealed that the UK’s biggest international banks are set to transfer fewer than 4,600 jobs out of London in preparation for Brexit – just 6 per cent of staff – rather than the tens of thousands previously forecast.

There are other encouraging signs. For the first time, Britain has come top in Forbes’ annual survey of the Best Countries for Business, out of 153 nations surveyed. The UK scored highly on technological readiness (fourth) and the size and education of its workforce (third). Forbes referenced such developments, since the Brexit vote, as Wells Fargo, Apple and Facebook making substantial commitments to London.

Here, in Aberdeen and the North East, ongoing diversification of the economy is set to accelerate in 2018. Aberdeen starts the year with a boost: the latest UK Powerhouse study shows it ranked second among UK cities for Gross Value Added (GVA) growth in Q3 2017, at 2 per cent. This is a measure of the value of goods and services produced in a specific geographic area. Diversification will continue to be driven by industries such as food and drink, agri-tech, life sciences and skills training for the energy sector.

It is still hard to see what impact Brexit is having from the economic data and much depends on whether you are a glass half full or glass half empty kind of person. I think the real risk though is that we focus on Brexit at the detriment of the other risks out there.

Some commentators have reacted with alarm rather than satisfaction to the US stock market reaching ever new highs. Eurasia Group, the risk consultancy, has warned 2018 could see a disastrous geopolitical event. It cites the possibility of China ousting American global influence in trade and technology, the volatile posture of nuclear-armed North Korea, deteriorating US-Iran relations, declining trust in democratic institutions and a surge in protectionism with regard to intellectual property and technology.

Now, assuming the worst from this gaggle of threats is clearly foolish but some of them will well manifest. Significantly this year’s World Economic Forum (WEF) meeting in Davos, Switzerland has the theme “Creating a Shared Future in a Fractured World”. That contrasts with the confident tone of previous Davos gatherings when globalization was a given. Like the Eurasia Group analysis it highlights the urgent need, reinforced by successive elections in Europe, for policymakers to reconnect with electorates.

One of the popular bogeymen for 2018 will probably be Artificial Intelligence (AI). The growth of AI has provoked fears that computers will become our masters or, at least, take away our jobs. For many, the technology seems to combine the worst of science fiction about computers taking over with the very modern (and well founded) concern that jobs and careers are more fleeting and less assured. The ‘job for life’ is now largely an anachronism.

Given what I have said here previously it is perhaps unsurprising that I am a pragmatist as far as AI is concerned. History shows that technical innovation has, in general, served, not undermined humans. This is the case whether we consider the Guttenberg Press that created printing or the wholesale mechanisation of industry during the industrial revolution. The same applies to business activity today.

Some businesses will be challenged by technological advances. They always have been. But the solution is to adapt and innovate. In the words of Jeff Bezos, CEO of Amazon: “In business, what’s dangerous is not to evolve.” Over more than 30 years in business I’ve learned it’s best to focus on your own enterprise – addressing the specific challenges it is facing and trying to capitalise on opportunities.

There will be a lot of noise throughout 2018. But it’s important that this does not distract business. We will need to adapt to whatever set of scenarios comes to pass. Our time is best spent focussing on what our companies can do, rather than what we cannot.

Via Press & Journal

Martin Gilbert, co-CEO of Standard Life Aberdeen