Recession is a catalyst for business change

The recession has raised concerns about commercial models, supply chains and finance that will reshape business behaviour well into the next decade, the CBI said at its annual conference.

Richard Lambert, CBI Director-General, said: “We may be at the start of a new era for businesses, in which attitudes to finance and to corporate leadership are changed for a generation by the shock of the past two years.”

Lambert added: "What we now need is a more balanced, less risky pathway to growth – one in which the short-term returns may be lower, but the long-term rewards for management success will be a lot more sustainable and secure.”

A new report launched by the CBI flags four key areas of UK business where fresh approaches will develop because of the downturn. These are:

• Businesses do not see credit terms falling back to pre-crunch levels and, having become wary of higher debt levels, firms will look to alternatives to debt-driven growth to protect investment and innovation. More financing options will be created and deployed.

• Companies will reorganise and re-examine their approach to working with partners - from suppliers to universities, and even competitors. Ongoing concerns over a 'domino effect' of supply chain failures and issues around trade credit insurance will compel firms to forge more collaborative supplier relationships.

• Sustainability and ethics will become more integrated into the business model. Firms will seek to improve accountability and corporate citizenship further to attract and retain customers and staff.

• A more flexible workforce will evolve, assisted by developments in technology and training, and building on the spirit of collaboration between employers and staff which has grown over the recession. For some firms that might mean a smaller core workforce and a larger 'flexiforce'.

Lambert added: "There are important questions around how businesses are going to finance growth and investment in the future. And in a more collaborative, less transactional world, closer relationships with customers, suppliers, employees and shareholders look like becoming the new norm.”

"Firms looking to reduce risk and acknowledge their interdependence are seeking more collaborative ways of working through partnerships and joint ventures. Perhaps we will see a flourishing of supply chain finance – in which firms with the largest, most solid balance sheets help finance their smaller suppliers or customers.”

He continued: "Businesses want to adapt to a harsher credit climate by finding new sources of funding. Why not encourage new forms of institutions to finance the growth of small and medium-sized enterprises through equity and debt? And why not make it easier for companies to raise money locally, perhaps through new regional banking and investment institutions, rather than having to rely on a few very big players in London and Edinburgh?"