Australian directors and senior business leaders have spoken in this year’s KWM Directions 2025 Report: Stepping Up To The Productivity Challenge – our essential guide to what is ‘top of mind’ in boardrooms across the country.
There was a relative optimism about embracing opportunities in the next 12 months. In fact, Australian directors and senior business leaders are 5% more optimistic than in 2024, despite ongoing geopolitical uncertainty and economic headwinds.
The 2025 key themes are clear and unsurprising: productivity growth, harnessing AI and cutting through red tape.
AI is now a competitive imperative
AI has moved decisively from the sidelines into the centre of strategic and operational planning in 2025. It is primarily being embraced as a driver of productivity – not, as often assumed, a cost-cutting lever.
One in 3 directors and senior business leaders said their organisations are investing new budget or funding in AI, but governance models are still catching up. With fewer than 1 in 7 organisations having a comprehensive governance model, establishing robust and responsible AI frameworks is emerging as an organisational imperative.
From adoption to alignment
While organisations are grappling with how to demonstrate AI’s ROI and aligning it with current systems, the most significant obstacle lies with their people. A staggering 77% of respondents cite staff capability and mindset gaps as the biggest challenge to investing in or implementing AI. It is clear organisations must prioritise reskilling and treating AI literacy as a core competence.
For the most part, businesses are not looking to workforce reductions. The prevailing mindset is ‘augmentation first, attrition later’, using AI to boost productivity and retrain staff for the future, rather than cutting headcount prematurely.
However, corporate culture is slipping down the priority list while innovation surges ahead. This raises a key question for business leaders as to the role of culture in this next phase: can culture be sidelined without undermining performance? Leaders will need to reconcile innovation with culture to sustain momentum in productivity, growth and profits.
Breaking down barriers to business growth
If there’s one point of overwhelming consensus, it’s that red tape is choking productivity. Regulatory duplication, approval delays and compliance costs remain major obstacles to growth. As one respondent put it, “It is the cumulative effect of all the regulation.”
While Australian businesses cannot single-handedly cut burdensome red tape, some are actively working together to seek specific and actionable solutions. We are seeing a ‘Team Australia’ moment, with 38% of respondents indicating their organisations are collaborating with industry bodies on knowledge-sharing and advocacy. The survey results also showed improvements in how businesses are working with their stakeholders.
That spirit of collaboration is matched by a sharper focus on resilience. Nearly half of the respondents are conducting scenario planning, diversifying supply chains and stress-testing capital sources to navigate a fragmenting global order and safeguard Australia's relative 'safe-haven' status.
Corporate Australia is at a turning point. AI is set to become the defining cultural challenge of a generation – and the organisations that move with speed, build trust through strong frameworks, and bring their people along will be the ones to unlock its full promise of productivity and growth.
Read the Directions 2025 Report for the complete results and analysis.
Prefer to listen? Hear the authors, Meredith Paynter, Rhys Casey, Lizzie Knight and Jason Watts, discuss this year’s data in the Directions 2025 podcast on Spotify or Apple.Australian directors and senior business leaders have spoken in this year’s KWM Directions 2025 Report: Stepping Up To The Productivity Challenge – our essential guide to what is ‘top of mind’ in boardrooms across the country.
There was a relative optimism about embracing opportunities in the next 12 months. In fact, Australian directors and senior business leaders are 5% more optimistic than in 2024, despite ongoing geopolitical uncertainty and economic headwinds.
The 2025 key themes are clear and unsurprising: productivity growth, harnessing AI and cutting through red tape.
AI is now a competitive imperative
AI has moved decisively from the sidelines into the centre of strategic and operational planning in 2025. It is primarily being embraced as a driver of productivity – not, as often assumed, a cost-cutting lever.
One in 3 directors and senior business leaders said their organisations are investing new budget or funding in AI, but governance models are still catching up. With fewer than 1 in 7 organisations having a comprehensive governance model, establishing robust and responsible AI frameworks is emerging as an organisational imperative.
From adoption to alignment
While organisations are grappling with how to demonstrate AI’s ROI and aligning it with current systems, the most significant obstacle lies with their people. A staggering 77% of respondents cite staff capability and mindset gaps as the biggest challenge to investing in or implementing AI. It is clear organisations must prioritise reskilling and treating AI literacy as a core competence.
For the most part, businesses are not looking to workforce reductions. The prevailing mindset is ‘augmentation first, attrition later’, using AI to boost productivity and retrain staff for the future, rather than cutting headcount prematurely.
However, corporate culture is slipping down the priority list while innovation surges ahead. This raises a key question for business leaders as to the role of culture in this next phase: can culture be sidelined without undermining performance? Leaders will need to reconcile innovation with culture to sustain momentum in productivity, growth and profits.
Breaking down barriers to business growth
If there’s one point of overwhelming consensus, it’s that red tape is choking productivity. Regulatory duplication, approval delays and compliance costs remain major obstacles to growth. As one respondent put it, “It is the cumulative effect of all the regulation.”
While Australian businesses cannot single-handedly cut burdensome red tape, some are actively working together to seek specific and actionable solutions. We are seeing a ‘Team Australia’ moment, with 38% of respondents indicating their organisations are collaborating with industry bodies on knowledge-sharing and advocacy. The survey results also showed improvements in how businesses are working with their stakeholders.
That spirit of collaboration is matched by a sharper focus on resilience. Nearly half of the respondents are conducting scenario planning, diversifying supply chains and stress-testing capital sources to navigate a fragmenting global order and safeguard Australia's relative 'safe-haven' status.
Corporate Australia is at a turning point. AI is set to become the defining cultural challenge of a generation – and the organisations that move with speed, build trust through strong frameworks, and bring their people along will be the ones to unlock its full promise of productivity and growth.
Read the Directions 2025 Report for the complete results and analysis.
Prefer to listen? Hear the authors, Meredith Paynter, Rhys Casey, Lizzie Knight and Jason Watts, discuss this year’s data in the Directions 2025 podcast on Spotify or Apple.
