Ask any business owner in London to list their primary concerns and Brexit would no doubt feature very close to the top. Even in the months immediately following the Brexit referendum result, some 88% of chief financial officers still felt their businesses were facing abnormally high levels of uncertainty, according to a study by Deloitte.
But when deeply uncertain or volatile conditions, such as those thrown up by Brexit, consume an enormous amount of a company’s time and energy, then the risk to the overall business can be profound. By being overly focused on dealing with the current and future impact of Brexit, businesses are in danger of taking their eye off the ball, and many may be unintentionally stymieing their growth and overlooking lucrative new opportunities.
Mervyn King, the former governor of the Bank of England, recently warned that the primary concern related to Brexit is that it is detracting from the real economic issues which should be tackled with a greater sense of urgency.
“My biggest worry about economic policy in the next few years is that all the politicians seem obsessed with Brexit” Mervyn King
King added that the biggest problems now being faced are not Brexit-related at all. Instead, the real issues facing the country are how to reduce the trade deficit, how to save enough as a nation to pay our pensions, care for the elderly, and continuing to fund the NHS.
Words to the Wise
At the same time, regulatory bodies appear to be applying additional pressure on firms to decide now how they will prepare for Brexit – despite still being some two years from the intended date of departure from the EU. The Bank of England has already set financial firms a deadline of July 14 to outline their plans.
King’s words on the dangers of being too preoccupied with Brexit should act as a timely reminder to the business community: every business needs to be very careful about just how much of a distraction Brexit is creating and should ensure “business as usual” is integrated into their strategy. Prolonged uncertainty and a continuous stream of negative messages are not conducive to a productive, innovative working environment.
History has shown that even the most volatile conditions can quickly become the new normal. Since the financial crisis, for example, the banking industry has had to deal with increased political and regulatory scrutiny, an onslaught of new technology and the need to cut costs nearly across the board. Employment in this sector has fallen some 22% since the collapse of Lehman Brothers in 2008, according to the UK Office for National Statistics. In the run-up to the Brexit referendum, a report from the London-based law firm, Allen & Overy also concluded that it did not anticipate “material impacts” for UK-focused banking and investment services from a leave vote.
While remaining too focused on one issue may put companies at risk of not identifying more pressing risks to their business, the same also applies to opportunities. A renowned but pertinent demonstration of this in effect is the original selective attention task, devised by Christopher Chabris and Daniel Simons. When asked to focus on how many times the players in white pass the ball, a significant number of people are so focused on the high-concentration task that they completely fail to notice when a gorilla walks through the group. The key lesson here is that by being overly focused on Brexit, many businesses may be at risk of missing vital issues or opportunities.
Despite Article 50 having been invoked in March, figures released by recruitment consultancy Morgan McKinley indicate no negative impact on hiring in London during the same month. Instead, the consultancy reported a 17% month-on-month and 13% year-on-year increase in job availability.
“Businesses are done trying to read the tea leaves to see what lies ahead, and they’re getting back to the business of recruiting,” Hakan Enver, operations director, Morgan McKinley Financial Services.
Recent months have also seen significant investment announcements related to London’s FinTech industry, including a new hub for Barclays’ FinTech arm ‘Rise’. By stepping in to offer real solutions for banks, institutions and other financial services firms to better adapt to changes in the sector, FinTech companies help improve the industry and create further demand for their technology and services. And continuing to forge ahead, despite the uncertainty around Brexit, is future-proofing their business for whatever lies ahead.
The Opportunity in Uncertainty
For firms to truly retain a ‘business as usual’ approach and actually reach out to existing and new clients, they should consider maintaining, or even increasing, their focus on marketing.
During the First World War, Campbell’s not only continued to invest in advertising their soups but increased their magazine advertising expenditure – all this despite rationing and arguably one of the most uncertain climates the modern world has ever known. In fact, John Dorrance even demanded at the time for all periodicals to place its Campbell’s ad first in the publication, on a right-hand page, and facing a full page of text. Today the placement is still known as the Campbell’s Soup position. It seems that marketing-savvy firms are already aware of this need to defy uncertainty, with the Advertising Association (AA) reporting a 4.2% quarterly rise in advertising expenditure following Britain’s vote to leave the EU.
Of course, for many firms, it may seem counterintuitive to spend more on getting your message across in a time of political, economic and social uncertainty – but not all agree. Global broker Icap, now Nex Group, announced its investment in new London offices the month after Article 50 was triggered, adding the move is in keeping with its rebranding and perfectly captures its “new direction”. This is in direct contrast to London-based LMAX Exchange, which has put its initial decision to set-up an EU hub in Ireland on hold until 2019, once it has more certainty around what Brexit will mean for its workforce.
However, by being nimble, flexible and adaptable, companies may find that they not only weather the storm but thrive. Marketing should remain integral to the success of their business, as it’s the main channel to educate, motivate, attract and engage audiences – uncertainty in the environment doesn’t change that. So while it’s still important to respond to and plan for Brexit-related matters as well as consider the opportunities it potentially presents, businesses should also realise that Brexit isn’t everything. Don’t overlook the gorilla!