Beyond 2021
November 12, 2021
November 12, 2021
Embrace four differentiated change priorities in order to get ahead—and stay ahead—beyond 2021.
View TranscriptThe year 2021 saw unprecedented change, with some industries grinding to a halt and the structure of others radically altered. Many companies that have weathered the storm appear to be making a promising recovery.
A more careful look, however, reveals a different story. Our analysis suggests that while many companies in the Asia Pacific, Latin America, Middle East and South Africa kept growing their market capitalization all through the pandemic, revenue growth has lagged behind.
But a select few—27 companies that we studied closely to understand their change actions—are bouncing forward, not merely back to their pre-crisis positions. What are these companies doing differently? Read our report to see the prime reasons behind the growth-speed disparity—and what leading companies are doing to sustain their lead well beyond 2021.
Revenue and market capitalization growth trajectories began to diverge from 2017 to 2019. The pandemic sharply accelerated the divergence, driving market capitalization growth nearly four times faster than revenue growth.
In 10 of 15 industries, companies are thriving more on investor confidence than on revenue growth. Can they close the widening gap between market cap and revenue? Some companies predicted this issue early on and took steps in the right direction.
Although the growth-speed disparity is both profound and widespread, a handful of companies were able to buck the trend.
We studied 27 companies that successfully navigated the growth-speed challenge to see what they are doing differently. At first glance, they seemed to be walking a known path—tightening cost structures, exploring new ways of operating, focusing on market opportunities and innovating to break new ground. But what truly set them apart was their differentiated change agenda.
Leading companies are focusing on change that prioritizes environmental and social impact, employee empowerment, customer wellbeing and new business foundations. In short, a change that’s Responsible, Intelligent, Customized and Expandable (R I C E).
On top of shareholder value, leaders prioritize change that fosters positive environmental and societal impact.
Incorporating intelligence into every aspect of their business operations enables leaders to be innovation-accretive.
Prioritizing connections and meaningful human experiences helps make companies indispensable in their customers’ lives.
Leaders are banking on the cloud, AI and other modern foundations to propel new business creation.
Leaders are using the twelve R I C E change interventions to smartly carve out their place in the post-pandemic world. They are committed to sustainable, transparent and ethical practices; they are investing in smart teaming, intelligent innovation, artificial intelligence at scale; they are investing in reliable digital commerce, as well as offering secure experiences and personalized solutions; and they are creating new businesses using new foundations (technology, assets, partnerships).
Responsible
Sustainable
Adopting practices that strengthen environmental stewardship. E.g., Bringing manufacturing closer to the point of end consumption.
Transparent
Creating process transparency with external stakeholders. E.g., Enabling consumers to trace the origin of goods they are buying.
Ethical
Conducting business based on a strong code of ethics. E.g., Ensuring decent working conditions for employees of main suppliers.
Intelligent
Smart teaming
Enabling a specialized workforce to make smarter and faster decisions. E.g., Data scientists collaborating with front-end teams when needed.
Intelligent innovation
Using advanced technologies to drive product and service innovation and greater speed to market. E.g., Using automation and machine augmented digital processes.
Artificial intelligence at scale
Combining the highest-quality diverse data with analytics and AI capabilities to propel timely change. E.g., Early detection of faulty products.
Customized
Reliable commerce
Uplifting physical assets to meet new last-mile needs of customers. E.g., Curbside pickup, same-day delivery and contactless operations.
Secure experiences
Providing enhanced protection across all customer touchpoints. E.g., Cybersecurity and protection of privacy and personal data.
Personalized solutions
Creating solutions that address the physical, mental and relational needs of customers. E.g., Tailored insurance products for the elderly.
Expandable
New technology foundations
Leveraging modern technologies to power growth opportunities. E.g., Using the cloud to launch new products and services, without legacy ties.
New scalable assets
Investing in new proprietary assets that are scalable. E.g., Car manufacturers producing in-house batteries for electric vehicles.
New partnerships
Committing to new ecosystem partners based on shared values. E.g., Airlines and vertical farms joining forces to deliver healthy in-flight meals.
Most importantly, leaders are more vocal in the marketplace about the 12 change interventions.
On searching media publications for mentions of the 12 change interventions for both leaders and bottom performers, an interesting insight came up:
Across the board, leaders had the highest number of media mentions of the 12 change interventions—almost twice more than that of bottom performers.
The pandemic has fundamentally altered the conditions for success. Rather than retreating to familiar pre-pandemic strategies, companies need to boldly execute on a differentiated change agenda if they want to lead in 2021 and beyond.
There’s no time for nostalgia for what once worked well; business leaders need to learn to bounce forward anew.
About the Authors
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