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 CEO6%

Regional or

Business Unit CFO4%

Regional or

Business Unit COO6%

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 revenue53%

Greater than

$10 billion in

annual revenue

47%

http://www.accenture.com/us-en/Pages/insight-high-performance-finance-study.aspx

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 optimizedQ: 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 activitiesQ: 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 modelsQ: 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 growthQ: 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 growthQ: 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: DigitalQ: 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.