For executives, the one constant over the past three years has been a permanent state of crisis. Amid geopolitical turmoil, economic uncertainty, and the COVID-19 pandemic, they’ve had to navigate consequent challenges ranging from inflationary pressures to supply chain disruptions, from rising raw material prices to a wide talent shortage.
With few signs that this environment will diminish, leaders need to focus on transforming their organization for performance to build resilience and thrive in the long term. The decision to undertake a transformation isn’t one to make lightly. That moment may dictate the company’s direction and prospects for years to come.
To get a full inside view on transformation, we surveyed more than 400 global C-suite executives across 14 geographies and 12 industries, representing a combined annual revenue of more than $5 trillion. Nearly two-thirds of the respondents mentioned organizational performance-related factors as the primary drivers or "transformative moments" that motivated them to pursue change. Across the board, executives recognized the value of rethinking their organization’s core capability systems, driving innovation in their business model, or truly changing how the work gets done to make productivity or scalability benefits sustainable. In analyzing their insights, we identified several key themes.
Four key themes for executives to drive growth through transformation
A Time For Optimism In Executive Leadership
Three out of four executives surveyed said they believe market conditions will improve over the next 12 months, indicating a growing resilience in the face of ongoing, "near permanent” challenges.
Future-focused business and proactive adaptation
We found 63% of companies expect to focus on sustainable growth in the next 12 months; more tactical concerns such as talent management are at the bottom of executives’ priority lists. Compared with our 2023 survey, we notice a significant shift in focus away from “firefighting” the challenges of today and toward “future-proofing” their organization through proactive adaptation to anticipated challenges. (See Exhibit 1.)
Increasing financial benefits through innovation
Companies that met all transformation objectives expect 16% higher revenue growth and 12% higher profit growth compared with those that did not meet most of their transformation objectives. This creates a virtuous circle that reinforces the companies’ competitiveness, as higher profitability allows for superior investment in critical capabilities to further extend their lead, in areas such as product and service innovation, operational expansion, technology upgrades or upskilling the workforce.
Embracing artificial intelligence (AI) in work transformation
About 50% of executives expect technology to be the key area of change in their companies in the coming years. Companies are on the cusp of a true AI revolution, with 100% of executives using or planning to use AI in their transformations. More than 40% of them have already fully implemented generative AI solutions. With more widespread adoption of the technology and related adjustments to organizational structures and processes, executives expect to derive lasting benefits from “changing how the way the work gets done” with the help of AI. (See Exhibit 2.)
Our report "Transformative Moments In A Time Of Permacrisis" offers further insights into why companies transform and how to achieve success. With that guidance, executives will be well-equipped to approach their own transformation efforts, which is why the report concludes with a strong call to action. We exhort leaders to prioritize a small number of initiatives and measure them assiduously. We urge them to look at the transformation end-to-end, align leadership, and take advantage of all that AI technology can do for their businesses. And we remind them that as large and multifaceted as their transformation may be, to always strive to keep things simple. Apply this hard-won advice artfully, and the foundation for a successful transformation will soon begin to form.
