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Formula Won: A new way to measure corporate competitiveness

OVERVIEW

The table stakes of competitiveness have changed thanks to digital. It used to be enough for a business to flex its competitive muscle on one or two of three areas: growth, profitability or sustainability and trust. Executing with equal strength against all three was difficult and unnecessary. But now, shareholders and stakeholders expect companies to be growth led and agile with their cost base, with a commitment to sustainability and trust.

Although the game has clearly changed, the need to understand which companies hold the best cards hasn’t. That’s why Accenture Strategy developed a new gauge—the Competitive Agility Index—to discern tomorrow’s leaders.

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KEY FINDINGS

The Competitive Agility Index combines a unique blend of available data including information on sustainability and trust efforts. Our insights are gleaned from historical and future consensus growth and profitability data. The data was collected on over 350 companies across 9 industries.

Scores were analyzed to see if the index has a greater impact on revenue and EBITDA growth than any single characteristic of growth, profitability, sustainability and trust—or any two of those three combined. The Competitive Agility Index also measures the impact a one-point index score increase has on revenue and EBITDA growth.

VIEW THE INFOGRAPHIC

A $30 billion automotive and industrial company that improves its Competitive Agility Index score by one point, would see its revenues rise
3 percent or almost $1 billion
A $30 billion automotive and industrial company that improves its Competitive Agility Index score by one point, would see its revenues rise 3 percent or almost $1 billion
Create your pathway to competitive agility

Each dot in the graph below represents a real company and its score on Accenture Strategy’s Competitive Agility Index. Click or tap the graph quadrants to reveal information on the different types of company values.

future value / invested capital 400% 300% 200% 100% 0% -100% -200% -300%
 
 
 
 
 
disruptive competitors
under-estimated
striving to survive
over-estimated
Competitive agility index 80 70 60 50 40 30 20 10 -
Over-estimated
The value of these companies is over-estimated by the market, and their positioning could be at risk. Companies in this quadrant need to identify in which pillar they are underperforming so they can quickly accelerate their journey to a fully integrated strategy.

Note: Chart represents all companies within the Competitive Agility Index research for which future value could be calculated. Outliers of future value +/- 400% have been removed

 

The results prove that companies who focus on growth, profitability, and sustainability and trust simultaneously have the potential to yield far greater results on revenue improvement and EBITDA. It also showed that companies on the top of market cap and total shareholder return indices rank in the middle of the pack – at best – on the Competitive Agility Index.

GAIN THE POLE POSITION

Revenue increase expected from a 1-pt improvement in the index

EBITDA Revenue increase expected from a 1-pt improvement in the index Competitive Agility Index (CAI)

UPPING THE ANTE

Here are four companies that stand out on the Competitive Agility Index but not on traditional indices:

 

Apple's rank within electronics and high tech segment, out of 54 companies

Apple's rank within electronics and high tech segment, out of 54 companies

Companies fit for the future balance growth, profitability, sustainability and trust. And they are rewarded for each point they climb up the Competitive Agility Index. The question – or the challenge becomes:

Where is your company today?

Where is your company today?

Where would you rank on the more comprehensive Competitive Agility Index?

Where would you rank on the more comprehensive Competitive Agility Index?

And what will you do to create a brighter future for your company, your customers and your stakeholders?

And what will you do to create a brighter future for your company, your customers and your stakeholders?

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