Increasing agility to fuel growth and competitiveness - Accenture

Increasing agility
to fuel growth
and competitiveness
June 2016

2Copyright © 2016 Accenture. All rights reserved.
About the Research
Key Findings
Recommended Actions
Closing Thoughts
Agenda

COUNTRIES
%
ASEAN
(Indonesia, Malaysia,
Singapore, Thailand
and Vietnam)
9%
Brazil 12%
Canada 10%
China 11%
France 14%
Germany 12%
Italy 12%
Japan 9%
United Kingdom 6%
United States 6%
About the Research
Source: Accenture Agility to Compete, January 2016 - http://www.accenture.com/us-en/Pages/iXXXXXXXX.aspx
INDUSTRY
%
Automotive 8%
Banking 7%
Chemicals 8%
Communications 8%
Consumer Goods 8%
Energy 7%
Health 7%
Hospitality 7%
Industrial Equipment 7%
Medical Technology 7%
Pharmaceutical 9%
Retail 8%
Utilities 8%
FUNCTION
%
Company CEO 22%
Company CFO 13%
Company COO 13%
Regional or
Business Unit CEO
6%
Regional or
Business Unit CFO
4%
Regional or
Business Unit COO
6%
Senior VP,
Executive VP, VP,
Managing Director,
Senior Director or
Director of Finance
23%
Senior VP,
Executive VP, VP,
Managing Director,
Senior Director or
Director of Operations
13%
REVENUES
%
$1 - $10 billion
in annual revenue
53%
Greater than
$10 billion in
annual revenue
47%

Traditional rules of competitiveness no
longer apply, thereby forcing companies
to redefine how they compete.
Our research explores how companies
can become lean and agile enough to
focus on sustained profitable growth.

1. Businesses give purpose to cost reduction activities,
aiming to increase profitability, but struggle with
sustainable execution due to inflexible operating
models.
2. They are focused on reinvesting savings to fuel
growth, but leadership misalignment and competing
priorities impede progress.
3. Investing in Digital is one area where executives
clearly align to drive growth and advanced operating
models.
Research findings at a glance

Key Findings
2. They are focused on reinvesting savings to fuel growth,
but leadership misalignment and competing priorities
impede progress.
1. Businesses give purpose to cost reduction activities, aiming
to increase profitability, but struggle with sustainable execution
due to inflexible operating models.
3. Investing in Digital is one area where executives clearly align
to drive growth and advanced operating models.

Execution of cost reduction programs is difficult
Cost reduction programs are often not aligned with
business strategy—which makes it difficult to sustain.
Only one quarter of companies have a flexible
operating model that can adapt to consistently deliver
on strategy and execute activities that drive value for
the organization.
There are competing priorities between company
executives and investor analysts.

Profitability with purpose: Most companies are
reinvesting cost savings into growth
82%
of respondents agree that their business is
reinvesting cost savings into growth initiatives.
41% strongly agree 41% agree 15%
Q: To what extent do you agree or disagree with the following statement: Our business is now focused
on cost reduction to free up funds to invest in growth initiatives?

However, perceptions and priorities related to
cost management differ among executive leaders
VPs vs. C-suite
Only 1 out of 4 C-suite executives thinks
they have the right cost reduction
initiatives in place. For the VPs, it is even
less than 1 out of 6.
VPs are less confident (76%)
than the C-suite (84%) regarding
eliminating activities that do not drive
value for the organization.
VPs are less confident that
“Our business identifies and eliminates
overlapping cost reduction exercises”.
82% of C-suite agreed vs. 76% of VPs.
CEOs vs. CFOs
23% of CEOs vs. 10% of CFOs
agree that simplifying and increasing
the flexibility to respond to market
changes is the top outcome driving
cost management activities.

The process for identifying cost reduction
opportunities is not optimized
Q: How do you rate your company’s ability to identify and remove business activities,
processes and investments that do not add value to the organization?
Only 23%
say they have optimized their process for
identifying and removing business activities
and investments that do not add value.
Only 36%
strongly agree their business sustains
the benefit of cost reduction programs.

Inflexible operating models impede
execution of cost reduction activities
Q: How do you rate your company’s ability to execute on the activities that drive value for
the organization?
Only 24%
of companies have a flexible operating model
that can adapt to consistently deliver on
strategy and execute the activities that drive
value for the organization.
The company employs an operating model
that enables execution on the activities that
drive value for the organization, but with
inconsistent success.
The company has a flexible operating
model that can adapt to consistently deliver
on strategy and execute the activities that
drive value for the organization.
24% 48% 25%

Companies face significant barriers
to advancing operating models
Q: What are the barriers to advancing your organization’s operating model?
Cost, technology and change management are the
top barriers to advanced operating models.

impede progress.
Key Findings

Disagreement regarding priorities hinders
growth, despite strategic intentions
Most companies have a strategy in place to fund
growth, yet they face a number of challenges in
executing.
Executives have differing priorities.
Companies are unsure where to invest for growth.
Less than one-fourth of companies surveyed are
positioned to optimize and deliver the growth
objectives they recognize are critical.

Most companies surveyed have a strategy in
place to reinvest savings into growth
Q: Indicate the degree to which your organization is able to reinvest cost savings to growth
in a strategic way?
72%
of respondents say their organization has the
ability to funnel cost savings into growth
because they have enterprise-wide or partial
strategies in place.
The organization focuses on cost savings,
but there is no direct connection to growth.
The organization’s intent is to funnel cost
savings into growth and enterprise-wide
strategies are in place.
18% 54% 25%

… Yet face challenges reinvesting cost savings
into growth
Q: What are the top three challenges your organization has in funneling cost
savings to growth?
Most businesses have difficulty funneling savings into growth because they have
competing priorities and too many concurring growth initiatives, which blurs focus.
Top challenge Second challenge Third challenge
54%
48%
44%
40%
38%
38%
38%

Misalignment inhibits growth. Perceptions and
priorities differ among executive leaders.
CEOs vs. CFOs
Only 20% of CEOs versus
30% of CFOs indicate that
reinvestment priorities are driven
by the fastest ROI.
Only 31% of CEOs versus
17% of CFOs strongly agree
that their company’s operating
model is aligned to fuel
strategic growth initiatives.
C-Suite vs. VPs
Only 1 out of 3 C-suite
executives and 1 out of 4 VPs
believes that the reinvestment
priorities are in line with the
business strategy.
31% of C-suite executives versus
16% of VPs are confident
regarding the company’s ability
to execute on activities that
drive value.

impede progress.
Key Findings

There is consensus on where to reinvest: Digital
Q: Where is your organization reinvesting cost savings?
More than half of respondents indicated that their number one
direction for reinvesting cost savings was in digital technology.

Technology is seen as a powerful
enabler to help reduce operating costs…
Q: If your business had to operate at half its cost base, through which of the following
would the organization enable its operating model?
Executives view technology as the most impactful way to reduce operating
costs and ensure that an organization is positioned properly for the future.

… and help deliver growth.
Q: To what extent do you agree or disagree with the following statements?
Digital investments enable new business models that
allow unprecedented speed, agility and scale.
Strongly agree Somewhat agree Neither agree nor disagree Somewhat disagree Strongly disagree

Three Actions to Fuel Profitable Growth

1. Organize for growth
To successfully execute for growth, companies must first:
• Know where growth is coming from
• Understand the long-term growth strategy
• Identify specific goals and where to focus
• Develop the specific execution plan
• Clearly define needed capabilities, and establish performance metrics,
incentives and performance management tools
Copyright © 2016 Accenture All rights reserved. 23

2. Manage the journey
As the research shows, executing cost reduction programs to fuel growth is hard. Success
depends on identifying and preempting any executive resistance to build buy-in across the
executive team. Consistent communication across the entire organization—based on value
drivers—helps change the culture to be cost-conscious.
Additional enablers include:
• Phased rollout
• Change management
• A transition team

3. Digitize to fuel sustainable growth
To increase speed and agility, companies need to commit to building capabilities in critical
areas and digitizing traditional processes. Digital effectively helps interpret signals of
disruption that will impact the business, and determine when to accelerate innovation.
To harness digital:
• Make full use of and monetize the data available
• Build digital intelligence
• Organize digital capabilities for speed
• Digitize the front and back office.

Closing Thoughts

27Copyright © 2016 Accenture. All rights reserved. 27
To grow, companies must proactively
identify activities that drive value,
take out the costs that are not
contributing to business goals and
reinvest those savings into growth.

Companies are determined to
survive the perpetual state of
uncertainty by becoming lean and
agile enough to focus on aggressive,
sustainable growth. The task may be
great and the stakes high—but the
path forward is clear.

The best are aligning
priorities and digitizing for
increased responsiveness,
flexibility and personalization.

Increasing agility to fuel growth and competitiveness - Accenture

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (20)

Similar to Increasing agility to fuel growth and competitiveness - Accenture

Similar to Increasing agility to fuel growth and competitiveness - Accenture (20)

More from Accenture ASEAN

More from Accenture ASEAN (9)

Recently uploaded

Recently uploaded (20)

Increasing agility to fuel growth and competitiveness - Accenture