Accenture surveyed CEOs, CFOs, COOs and their direct reports to analyze their challenges and opportunities associated with creating cost-competitive operating models and reinvesting in growth. In parallel, investor analysts were also surveyed to understand what external stakeholders measure, value and expect from the companies they evaluate.
Some key learnings from this global research include:
- Businesses give purpose to cost reduction activities, aiming to increase profitability, but struggle with sustainable execution due to inflexible operating models. The respondents said cost management efforts are driven by building agility to respond to market changes, improving competitive advantage and financial performance, and investing in growth. However, only 36 percent strongly agree their business sustains the benefit of cost reduction programs. They suffer from a lack executive alignment and difficulty identifying and removing investments that don’t add value. In addition only 24 percent of respondents have a flexible operating model that can adapt to execute activities that drive value.
- They are focused on reinvesting savings to fuel growth, but leadership misalignment and competing priorities impede progress. Eighty-two percent of respondents are now focused on cost reduction to free up funds to invest in growth initiatives, and 72 percent say their organization has the ability to funnel cost savings into growth because they have enterprise-wide or partial strategies in place. Yet they have difficulty with competing priorities and too many growth initiatives that blur focus, and the C-Suite and VP level are not aligned.
- Investing in Digital is one area where executives clearly align to drive growth and agile operating models. More than half of respondents are reinvesting cost savings into digital technologies. The research shows that digital investments enable new business models that allow unprecedented speed, agility and scale. Companies that intend to funnel cost savings into growth and have established enterprise-wide strategies are more likely to strongly believe that technology, digital strategies and digital business are enablers.