New research from Accenture finds that to grow and lead in today’s volatile environment, a small group of companies are adopting a deliberate, continuous strategy of Total Enterprise Reinvention for every part of their business with new technologies and new ways of working.
Total Enterprise Reinvention is powered by advancements in technologies such as AI and cloud computing. Today just 8% of companies surveyed are ‘Reinventors,’ setting a new performance frontier for themselves and, in most cases, their industries. Their transformation is centered around a strong digital core and new ways of working that help optimize operations and drive growth.
“Post-pandemic, these leaders are systematically changing the game and their industries,” said Julie Sweet, chair and CEO of Accenture. “Over time, they are transforming every part of their company to achieve improved financials, breakthrough innovation and increased resilience, and more actively create value for all stakeholders.”
As part of the research, Accenture surveyed more than 1,500 C-suite executives, 75% of whom agreed that a range of external forces—but particularly the pace of technology innovation, shifting consumer preferences and climate change—will further accelerate their investment in digital transformation.
Most companies (86%) focus on transforming parts of their business and treat transformation as a finite program rather than a continuous process. Accenture calls these ‘Transformers.’ The remaining six percent of companies are ‘Optimizers.’ They focus on functional transformations limited in scope and ambition—technology is not a significant enabler of their transformations.
The financial benefits are clear as Reinventors report generating 10% higher incremental revenue growth, 13% higher cost-reduction improvements, and 17% higher balance-sheet improvements than Transformers. They also deliver 1.3 times more financial value in the first six months than Transformers—a reflection of the speed at which Reinventors operate. Also, two-thirds of Reinventors say the delivery of their reinvention strategy is happening significantly faster relative to past transformations, compared to less than one-third of Transformers
“Our Global Disruption Index, a composite measure that covers economic, social, geopolitical, climate, consumer and technology disruption, shows a 200% increase over the past five years,” said Jack Azagury, group chief executive of Accenture Strategy & Consulting. “The time is now for companies to adopt a Total Enterprise Reinvention strategy and embrace the art of the possible that is available today through technology and new ways of working.”
Becoming a Reinventor
Companies that adopt Total Enterprise Reinvention exhibit six characteristics:
- Reinvention is the strategy. It is no longer an execution lever.
- 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.
- Reinvention goes beyond benchmarks, embracing the art of the possible. Technology and new ways of working create a new performance frontier.
- Talent strategy and people impact are central to reinvention, not an afterthought. These companies consider change management a core competency.
- Reinvention is boundaryless and breaks down organizational silos. It tackles capabilities end-to-end.
- Reinvention is continuous. It is no longer a time-defined one-off, but a capability continuously tapped by the organization.
More Insights from Accenture
Accenture released three additional reports at the World Economic Forum 2023 that underscore the importance of Total Enterprise Reinvention to accelerate growth by building a strong digital core, investing in new technologies, and transforming how collaboration works across the C-suite.
- Investing in New Technologies to Fuel Breakthrough Innovation
Cloud, AI and the Metaverse are three technology megatrends that promise to generate significant opportunity over both the near- and long-term. By harnessing these megatrends to establish a digital core and capitalize on the next generation of technology advances, every company can reinvent their enterprise with breakthrough revenue growth, operational efficiencies, and innovation, according to Accenture research.
- In 2020, AI services grew 17.3% to $19.4 billion, and are forecast to increase to $50.5 billion in 2025, at a CAGR of 21%
- Companies that plan to adopt next-generation AI and advanced computational methods are 2.6X more likely to increase revenue by 10% or more than companies not pushing toward these areas
- CEOs Identify the Combination of Data, Technology and People as Future Growth Drivers
Other research from Accenture finds that while CEOs view the combination of data, technology and people as essential to driving growth, only 5% of large, global organizations are effectively unlocking the value of this combination.
- Companies that realize this opportunity stand to gain a top-line productivity premium of 11%
- The report also shows that the 11% productivity premium drops to 4% when companies implement data and tech solutions that fail to put their people at the center.
- The report identifies the CHRO as a key catalyst in unlocking the value of this data-tech-people combination for growth
- 89% of CEOs say the CHRO should play a key role in ensuring long-term profitable growth
- But only 45% of CEOs are creating an environment that enables their CHRO to accelerate growth.
- European Companies Confident but Need to Prioritize Longer-Term Competitiveness
In another report, Accenture found that while 65% of European business leaders agree that they are facing the most challenging operating environment in their history, an even larger proportion (77%) are confident about their capacity to accelerate growth during an economic downturn. In the longer term, however, as the global macroeconomic environment continues to be volatile and the pace of technology innovation accelerates, European companies need to make the deliberate decision to transform through a Total Enterprise Reinvention strategy to help sustain their competitiveness and grow.
