Small businesses across Australia and New Zealand are facing one of their toughest periods in decades. A flat economy and shifting consumer behavior have put pressure on already thin operating margins. A 2024 survey by business finance company ScotPac found 29% of Australian small businesses say they could face insolvency if they lose a major client.
Accounting organization CPA Australia’s latest small business survey shows only 48% of New Zealand’s small businesses grew in 2023, significantly down from 60% in 2022. There have also been a record number of business liquidations in both New Zealand and Australia.
Yet, some small and medium-sized businesses are thriving. Part of the reason for this is that they have embraced the concept of “digital leadership.”
The Digital Leadership Edge
Digital leadership refers to strategically integrating digital technologies – such as artificial intelligence (AI), cloud computing, data analytics, and automation – into business operations, decision-making, and long-term vision. Digital leaders leverage emerging technologies to improve efficiency, redesign business models, scale operations, and reach new customers in ways that would otherwise be impossible.
Research published in Digital Leadership and Contemporary Entrepreneurship found that firms treating digital leadership as a core business strategy, rather than using technology for isolated tasks, are the ones that successfully scale, grow, and future-proof their organizations.
In contrast, businesses that don’t embrace this mindset risk stagnation and missed opportunities. In an economic environment where small margins separate thriving businesses from struggling ones, this difference is critical.
Why Some Small Businesses Fall Behind
Small businesses often lag in digital adoption not due to high costs or technical complexity, but because of hesitancy at the leadership level. Many business owners are risk-averse and take a “wait and see” approach. Others are overconfident in their existing processes and fail to consider how new technology could improve efficiency.
A 2021 survey by Xero, commissioned by cloud accounting software company, found that fear of change, overconfidence in existing processes, and decision paralysis are major barriers to adopting digital solutions. Even businesses already using digital tools, such as social media management, often fail to integrate technology into core operations like supply chain management and automation.
The Importance of Digital Leadership
Simply adopting digital tools without a strategic plan doesn’t lead to growth. True digital leadership requires businesses to rethink how they operate, compete, and scale. Firms that make the most of digital transformation embed technology into their core strategy.
They use data-driven decision-making to refine products, forecast demand, and identify new opportunities. They automate routine tasks – such as using AI-powered invoicing, chatbots for customer service, and predictive analytics for inventory management. This frees up time for strategic initiatives, like product development and market expansion.
Successful businesses also invest in employee training to ensure that new technologies are used effectively and that employees can adapt to changing tools. Perhaps most importantly, these businesses take an experimental approach, testing, learning, and adapting in real-time.
Learning to Thrive in the Digital Economy
Businesses that have grown successfully through digital leadership illustrate this approach in action:
Sharesies (New Zealand): A mobile-first investing platform launched in 2016, Sharesies revolutionized access to financial markets. By offering investment opportunities starting from just NZ$5, the company democratized investing, attracting over 650,000 users and NZ$3 billion in investments. Sharesies leveraged digital tools to make financial markets accessible and efficient for a wider audience.
The Very Good Bra (Australia): This sustainable bra company created a global fashion brand without relying on traditional retail infrastructure. Founder Stephanie Devine used e-commerce and digital tools like social media for community engagement, online surveys for customer-driven design, and data analytics for demand forecasting. This approach ensured products met market demand before production began.
Both companies succeeded by leveraging digital tools to disrupt traditional business models. Sharesies democratized investing, and The Very Good Bra used digital-first strategies to create sustainable, on-demand products.
Conclusion: Embrace Digital Leadership for Growth
To thrive in the tough economic climate, businesses need to think beyond just adopting software tools. The question is no longer whether to go digital, but how quickly businesses can rethink their operations for the digital future. Embracing digital leadership is no longer optional but necessary to stay competitive and scale effectively in an increasingly digital world.
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