Increasing agility to fuel growth and competitiveness - Accenture

Information about Increasing agility to fuel growth and competitiveness - Accenture

Published on June 13, 2016

Author: AccentureASEAN

Source: slideshare.net

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1. Increasing agility to fuel growth and competitiveness June 2016

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

3. 3Copyright © 2016 Accenture. All rights reserved. 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%

4. 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. 4Copyright © 2016 Accenture. All rights reserved.

5. 5Copyright © 2016 Accenture. All rights reserved. 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

6. 6Copyright © 2016 Accenture. All rights reserved. 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.

7. 7Copyright © 2016 Accenture. All rights reserved. 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.

8. 8Copyright © 2016 Accenture. All rights reserved. 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?

9. 9Copyright © 2016 Accenture. All rights reserved. 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.

10. 10Copyright © 2016 Accenture. All rights reserved. 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.

11. 11Copyright © 2016 Accenture. All rights reserved. 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%

12. 12Copyright © 2016 Accenture. All rights reserved. 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.

13. 13Copyright © 2016 Accenture. All rights reserved. 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. Key Findings

14. 14Copyright © 2016 Accenture. All rights reserved. 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.

15. 15Copyright © 2016 Accenture. All rights reserved. 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%

16. 16Copyright © 2016 Accenture. All rights reserved. … 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%

17. 17Copyright © 2016 Accenture. All rights reserved. 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.

18. 18Copyright © 2016 Accenture. All rights reserved. 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. Key Findings

19. 19Copyright © 2016 Accenture. All rights reserved. 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.

20. 20Copyright © 2016 Accenture. All rights reserved. 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.

21. 21Copyright © 2016 Accenture. All rights reserved. … 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

22. 22Copyright © 2016 Accenture. All rights reserved. Three Actions to Fuel Profitable Growth

23. 23Copyright © 2016 Accenture. All rights reserved. 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

24. 24Copyright © 2016 Accenture. All rights reserved. 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 Copyright © 2016 Accenture All rights reserved. 24

25. 25Copyright © 2016 Accenture. All rights reserved. 3. Digitize to fuel sustainable growth Copyright © 2016 Accenture All rights reserved. 25 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.

26. 26Copyright © 2016 Accenture. All rights reserved. Closing Thoughts

27. 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.

28. 28Copyright © 2016 Accenture. All rights reserved. 28 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.

29. 29Copyright © 2016 Accenture. All rights reserved. 29 The best are aligning priorities and digitizing for increased responsiveness, flexibility and personalization.

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