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Strategy & Consulting

Total Enterprise Reinvention

januára 16, 2023 5-minút čítania

RESEARCH REPORT

In brief

  • Post-pandemic, most leadership teams of large companies are transforming their companies more than ever before, faster than ever before.
  • But a handful of companies are quietly and systematically changing the game and their industries, driving a new strategic imperative.
  • They are the Reinventors, embracing what we call “Total Enterprise Reinvention,” a deliberate strategy that aims to set a new performance frontier.
  • A strategy that is centered around a strong digital core, it helps drive growth and optimize operations.
  • Reinventors report outperforming their peers in incremental revenue growth and cost-reduction improvements—and create long-term, sustainable value.

The new imperative

The pandemic and unprecedented challenges of the past three years have tested CEOs and their leadership teams. Post-pandemic, most leadership teams of large companies are rising to the occasion, transforming more than ever before, faster than ever before—which we call “compressed transformation”—and accepting that all strategies lead to more technology. We call these companies the “Transformers.”

A handful of companies are quietly and systematically changing the game and their industries, driving a new imperative. These are the “Reinventors,” building on their experience as Transformers to embrace what we call “Total Enterprise Reinvention.”

Our research shows only 8% of companies are moving to adopt a strategy of Total Enterprise Reinvention. Most companies—86%—are Transformers. They focus on transforming parts of their business rather than the whole and tend to treat transformation as a finite program rather than a continuous process. Many, though, are beginning to recognize the importance of establishing a new performance frontier—just under half of Transformers (43%). In fact, this group says they aspire to set a new level of performance in their industry through their transformation programs. These “Aspirational Transformers” are best primed to become Reinventors. Six percent of organizations are what we call “Optimizers”, focused on functional transformations limited in scope and ambition. Technology is not a significant enabler of their transformations.

The time is now

Total Enterprise Reinvention isn’t a to do; it’s a to be. It requires continuous, dynamic reinvention. It becomes a unifying force across the C-suite and every function and business area, because, by definition, all are involved and accountable for its success. It demands an outside-in perspective that connects what’s happening at the company with what’s happening in the world. And it requires new skills and an increased depth of understanding of technology, change management, communication and how to leverage partners to achieve results faster.

Companies adopting Total Enterprise Reinvention exhibit six characteristics:

  1. Reinvention is the strategy. It is no longer an execution lever. 
  2. The digital core becomes a primary source of competitive advantage. It leverages the power of cloud, data and AI through an interoperable set of systems across the enterprise that allows for rapid development of new capabilities.
  3. Reinvention goes beyond benchmarks, embracing the art of the possible. Technology and new ways of working create a new performance frontier.
  4. Talent strategy and people impact are central to the Reinvention, not an afterthought. These companies consider change management a core competency.
  5. Reinvention is boundaryless and breaks down organizational silos. It tackles capabilities end-to-end.
  6. Reinvention is continuous. It is no longer a time-defined one-off, but a capability continuously tapped by the organization.

Setting a new performance frontier

By embracing Total Enterprise Reinvention, companies will establish a new performance frontier. Our research shows Total Enterprise Reinvention drives clear and significant outcomes for Reinventors.

Financial impact

Reinventors report higher incremental revenue growth, higher cost-reduction improvements and higher balance-sheet improvements.

Technology speed to results

66% of Reinventors say the delivery of their reinvention strategy is happening significantly faster relative to past transformations.

360° value

76% of Reinventors say setting non-financial targets is very important, compared with 32% for Transformers and 10% for Optimizers.

Total Enterprise Reinvention improves performance on multiple measures of non-financial value.

Total Enterprise Reinvention:

Six differentiating features

Total Enterprise Reinvention starts with the premise that every part of every business needs to be reinvented and that benchmarks today do not reflect what is possible if, as a company, you have a tech-enabled mindset. It recognizes that technology advancements will mean that this is a continuous and dynamic need. The focus shifts from, one and done programs, or “is this too much change” to a company that is proudly “all about change.” One that has honed the business and technology acumen to set the right priorities, built the culture and resilience for change, and the laser focus on the future and external developments.

97%

of survey respondents agree technology in general now plays, and will continue to play, a critical role in both their reinvention strategy and in transformation programs for their organization.

A strong digital core is fundamental to all other strategic needs of an enterprise. Amplifying the role of technology in reinvention means shifting from a technology landscape of static, standalone parts to interoperable pieces intentionally integrated and leveraging the cloud. The digital core consists of three layers 1) an infrastructure and security layer, 2) a data and AI layer and 3) an applications and platforms layer.

Building a digital core is not a one-time project. It must be continuous to incorporate new technologies and business capabilities. Reinventors invest in their digital core ahead of their peers, increasing their capabilities in foundational technologies, as well integrating emerging technologies.

64%

of Reinventors are monitoring and screening next-gen intelligence technologies.

In the past, many organizations determined the full potential of their transformation by benchmarking their performance against that of peers, as well as targeting current industry best practices. If you’re behind, these metrics can help create a case for change. However, they also can limit the ambition of leaders because they don’t reflect the art of the possible as it relates to technology and new ways of working.

55%

of the executives we surveyed are still focused on matching existing best practices in their industry and see that goal as the full potential they can hope to achieve.

Any successful transformation begins with the executive team creating conviction in an organization’s people to drive change. Reinventors are more likely to dedicate ample time and effort to change management and communications—including senior leaders’ communication of a compelling change story. And, from the C-suite to the front line, employees at all levels will be on a path of continuous learning to drive successful reinvention.

66%

of Reinventors say upskilling and reskilling employees with tools and capabilities needed to speed up execution were most important to the successful deliver of their reinvention strategy.

Achieving the comprehensive scale of Total Enterprise Reinvention requires companies to connect people, processes and data across the enterprise and beyond, creating a boundaryless organization. Creating capabilities at the performance frontier requires an enterprise-wide approach that cuts across business units and functions, rather than a single function or business-driven approach. An integrated operating model and new ways of working are underpinned by an integrated, enterprise-wide technology and data platform that enables the flow of data and connections between teams.

99%

of executives expect that the focus on the interconnectedness of functions across their organization will increase over the next two years.

Typically, transformations are sequential and time bound. Reinvention, however, is as dynamic as the changing technological and market landscape. It requires both speed of execution and an approach toward continuous change that seeks progress over perfection. The sooner value is released, the faster it can be invested in new initiatives that further extend the performance frontier. Reinventors further enhance their innovation engine by drawing on the power of their ecosystem. Partners bring resources—assets, ideas, skills—that can accelerate progress at scale, in support of compressed transformation.

58%

of Reinventors say that they reprioritize existing initiatives and add new ones to their reinvention strategy as part of core planning processes in support of a philosophy of continuous reinvention.

Becoming a Reinventor

We believe all companies will need to adopt Total Enterprise Reinvention as a strategy in the coming years. Here are four categories of questions to help shape a path forward.

1. Ambition and strategy

  • Where are you today: are you a Reinventor, Transformer or Optimizer?
  • Have you defined the performance frontier for your company, and how does it measure against the best in your industry and the best in other relevant industries? Are you matching the leaders or setting the new benchmark?
  • Is your entire C-suite held accountable, as a primary metric, for the success of your current transformation programs, or is the business or function lead primarily accountable?

2. Talent

  • Do leaders have sufficient technology acumen to understand the art of the possible and what it can do to drive reinvention?
  • Do you have existing change management capabilities to support your continuous transformation journey, or are you standing these up for each transformation project?
  • Do you use data to measure your transformation, and is the same form of measurement used for all programs?

3. Digital Core

  • How would you assess your digital core? What is its level of maturity and what are its known gaps?
  • Is the ability to use technology investments to achieve sustainability and other 360° value objectives and any negative impacts formally included in technology investment decisions?

4. Transformation initiatives currently underway

  • Are the leaders of your current transformation initiatives able to articulate the changes that will occur across the enterprise, and are they using metrics that take a cross-functional view?
  • Can your leaders articulate the partnership strategy for each transformation program, how that strategy is enabling them to deliver outcomes faster and increase certainty of outcomes, as well as how the partner fits into your talent strategy?

About the Authors

Julie Sweet

Chair & CEO

Jack Azagury

Group Chief Executive – Strategy & Consulting

Bhaskar Ghosh

Chief Strategy Officer

Trevor Gruzin

Senior Managing Director – Growth & Strategy, Growth Markets

Oliver Wright

Senior Managing Director – Consumer Goods & Services, Global Lead

Mike Moore

Principal Director – Accenture Research

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