Radically rethink your strategy and transformation plans
The value you’re creating should be for all stakeholders, for the long term. But the required strategic reset and subsequent transformation might need to be fast and furious.
Ongoing disruption from the COVID-19 pandemic has meant business leaders continue to be on the look-out for ways to identify and seize emerging opportunities that can deliver long-term value.
To succeed, it is becoming increasingly clear that a radically different approach is required. In particular, overall strategy and technology-led transformation plans need to be more aligned. This year, we explored what can be learned from leaders in the field, the practical steps you can take, and which members of the C-suite might be crucial to the changes that need to be made.
Leap ahead or be outpaced?
The pandemic has precipitated both comprehensive strategic reviews and the use of every investment lever by companies to position themselves for a reshaped competitive landscape. As a result, 2021 has had the hottest M&A market on record.
Those taking action will likely accentuate their growth trajectories, but what about those waiting on the sidelines? Thrivers expect to grow annual revenues by six percentage points over the next three years, while survivors anticipate a drop of three percentage points, according to the latest EY CEO Imperative survey. To help your business progress, we explored what sets apart those who are thriving to help you identify how to accelerate your rebound agenda.
Define your path to success
To create long-term value, we have identified some practical steps that will help your business to catch up and stay ahead of the competition. Focusing on meeting the needs of your customers and employees as a human-centric organization is vital. Leveraging ecosystems and partnerships to boost innovation and deploy effective technologies at speed is increasingly important. And environmental sustainability in your operations is moving from expected to essential. Explore how you can drive your business forward in all these areas.
Read more: Five actions to help your organization leap from survivor to thriver
COOs are the rising stars of the C-suite…
Remote work, fractured supply chains and unpredictable customer behavior have thrust Chief Operating Officers (COOs) to the forefront of discussions about companies’ future strategic plans. We have identified four ways that COOs can help to reframe the future of their organizations, from utilizing the unique customer insights that they can access, to redesigning and motivating the workforce – a core challenge as the “Great Resignation” and war for talent continue.
Read more: How COOs should take the lead on enterprise transformation
…but a new type of CIO is emerging
Until recently the typical role of a CIO was focused primarily on managing technology stacks and business enablement. But 96% of CIOs surveyed in 2021 confirmed that their role is now expanding beyond traditional IT responsibilities1. To what extent may be decisive in the success of your organization’s transformation plan. What’s required to thrive is a transformative CIO – one who can manage complex ecosystems, collaborate and co-create with other C-suite partners, use knowledge of emerging tech trends to inform the direction of enterprise strategy and build new innovative capabilities to drive revenue growth. Ensuring that the CIO in your organization is a co-architect of business transformation, not just digital transformation, is more essential than ever.
Read more: Four ways CIOs turn digital transformation into business transformation
Embrace value-led sustainability
As pressure grows to act more responsibly, it’s time to consider sustainability not just as an obligation, but as an opportunity too.
Environmental, social and governance (ESG) issues remain high on the agenda of business leaders around the world. From the climate emergency to social injustice, there is much that companies can and should do to make the world a better place. For its part, EY is now carbon negative. But, as you can read below, there are some more structural issues that also need to be addressed, if society as a whole is to benefit.
Customer expectations are shifting fast
There are increasing signs that consumers are acting on promises to pay more for sustainable products and services. While the closing of this expectation gap provides significant opportunities, business leaders need a coherent plan to ensure they are able to overcome major challenges around delivering truly sustainable products and services. We have identified five strategies that will help to keep consumers on board during the ongoing shift to more sustainable ways of working.
Read more: How to make sustainability accessible to the consumer
Partnership is key to decarbonization
Transitioning the world towards a more sustainable future is everyone’s responsibility. However, there is currently a green power gap. Our analysis found a need for an additional US$5.2t of investment by 2050 just to meet global renewable energy development needs. The good news is that there are 13,000 “shovel-ready” projects that could reduce emissions, while boosting economic recovery. But partnership and collaboration at every level – international and national, public and private sector – needs to happen urgently. Ultimately, there is still hope, as this piece explored.
Read more: Improving distribution of technology, infrastructure and finance is key to combatting climate change
Sustainable supply chains are increasingly important
Supply chains have rarely been out of the news since the arrival of the COVID-19 pandemic. While, understandably, through much of 2020-2021 the focus has been on ensuring they are agile and resilient enough to fulfil orders in a timely manner, companies also have an opportunity to reassess how supply chains affect their sustainability efforts. We looked at how closer scrutiny can help identify supply chain strategies that deliver environmentally, as well as operationally and financially.
Read more: Why net-zero supply chains are the next big opportunity for business
Decarbonization is an opportunity, not an obligation
Carbon capture technology and approaches are gaining traction and funding. As some of the world’s most successful companies commit to using it, now is an opportune time to look at the long-term value it offers. Back at the start of 2021, we explored how capturing carbon can be turned into a commercial opportunity as well as helping with climate commitments. As we approach 2022, following the latest UN Climate Change Conference in Glasgow, we believe this more than ever.
Read more: How can removing carbon add value to your organization?
Continue to focus on purpose, but also its measurement
The creation of long-term value for a wider range of stakeholders now requires as much demonstration of impact as intent.
Organizations have used the last two years of pandemic-induced upheaval to take another look at their purpose. In many cases, this has led to an acknowledgment that the old ways of doing things are no longer viable. However, there is also recognition that what comes next is still a work in progress.
At EY, we’ve long talked about building a better working world being our purpose, and our focus on creating long-term value is part of our ongoing efforts to help businesses develop and track the impact of such purpose-led strategies. Throughout 2021, we uncovered new data and views from institutional investors on how to measure the impact of your purpose in terms of the value it’s able to create.
You can’t improve what you can’t measure
For leaders who believe a purpose-led strategy aimed at long-term value creation for all stakeholders is the bedrock of a successful business, there has long been one thing lacking – a common set of standards by which to benchmark themselves. EY Global Chairman and CEO Carmine Di Sibio outlined 21 core purposeful metrics that can act as a stepping-stone to greater prosperity.
Read more: How common metrics can drive long-term value creation
Five focus areas to drive sustainable value creation
There are certain things that every business, whatever the industry, must focus on if they want to be both sustainable and profitable in the long term. Following discussions with a wide range of CEOs, we identified five critical constituents that are fundamental to a purpose-led growth strategy: trust, sustainability, tech, trade, and people. Discover how developing them within your business will enable you to seize the competitive advantages they can deliver.
Read more: Rebound to more sustainable growth
Investors need more than financials
Institutional investors remain an integral part of the transition to a more sustainable future. Our 2021 EY Global Institutional Investor Survey revealed that investors are increasingly valuing non-financial factors like ESG performance when it comes to their investment strategies and decision-making. While recognizing that a more mature approach to measuring everything from green energy to board diversity is required, we have identified some key actions for businesses to take to ensure their purpose and financial ambitions are complementary, not in conflict.
Read more: Is your ESG data unlocking long-term value?
Plan for a brighter 2022
While reverberations from the COVID-19 pandemic continued throughout 2021, vaccines, new technologies and progress on climate change showed there is plenty to be positive about. Businesses that use this experience to reflect, transform and commit to purpose-led growth should be well positioned to catch the upsides amid the uncertainty that will continue throughout 2022.
Successful transformations will be founded on deploying technology at speed, rolling out innovation at scale, and putting humans at the center of decision-making. All this should be underpinned by a commitment to sustainability and a clear sense of purpose to deliver long-term value for both companies and their stakeholders.
Realizing that ambition today requires you to take a radically different approach to connecting strategy, transactions, transformation and technology, where design and delivery inform each other at every step. As we look ahead to 2022, how will you transform to build a better working world?
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- 2021 State of the CIO, IDG, January 2021
2022 will be another year of disruption and uncertainty. But also another of opportunity: to reimagine work, reinvent strategy and reshape business models for an ever-changing world. To reveal and seize those previous unseen opportunities, leaders must ensure that their strategy and transformation plans are conceived together, so that design and delivery inform each other at every stage. They must embed environmental responsibility as a critical component of their business operations and reframe sustainability as a value-driving innovation opportunity. And they must put purpose at the center of their organizations, demonstrating so by tangibly measuring its impact on all stakeholders.