Interdependent business strategies are better poised to compete in future markets than those that boast one-dimensional strategies, according to new Accenture research.
Interdependent business strategies are better poised to compete in future markets than those that boast one-dimensional strategies, according to new Accenture research. The global services company has released a new performance index — the Competitive Agility Index — which identifies the corporate leaders of the future across nine industries: automotive and industrial, consumer goods and services, retail, life sciences, communications, electronics and hi-tech, energy, insurance and utilities.
Accenture conducted the analysis and built the Index from a set of nine performance measures to create a forward-looking view on potential future competitiveness. The analysis demonstrates that the companies best positioned for competitiveness have an interdependent strategy focused equally on growth, profitability and sustainability and trust.
The Competitive Agility Index revealed that automotive and industrial companies stand to gain the most from adopting interdependent business strategies that focus on all three competitiveness dimensions — in the range of $1 billion per company. The top performing automotive and industrial companies on the Index include: BMW, Schneider Electric, Honeywell and Daikin.
“While these leaders each have unique business strategies, they’ve all prioritized the three competitiveness dimensions. They are investing for growth in new digital capabilities, focusing on cost, implementing tighter profitability measures and exploiting their brands to position themselves as trusted suppliers in the digital age,” said Mark Pearson, Senior Managing Director at Accenture Strategy.
The Index shows that an interdependent strategy can yield far greater revenue and EBITDA improvement than one that focuses on just one or two of the dimensions. For example, according to analysis of a sample set of 47 automotive and industrial companies, a $30 billion company that adopts this strategy could see revenues rise almost $1 billion and a two percent increase on EBITDA.
Interestingly, the leaders identified by the analysis are in stark contrast to the leaders in market cap or total shareholder return — the more traditionally used metrics for success. “Traditional metrics are backward looking and only shed light on part of a company’s operations, failing to register how strong a company is in areas like sustainability and trust,” said Bill Theofilou, Senior Managing Director at Accenture.
“Companies that don’t adopt an interdependent strategy that integrates the three competitiveness dimensions are at risk for being overestimated by the market or worse, succumbing to the competition. The good news is every company can start improving their performance immediately — the key is knowing where to start.”
According to Accenture, the competitiveness dimension that automotive and industrial companies — which are starting to lose their footing in an economic landscape that is increasingly favoring businesses and products that prioritize sustainability and the SDGs — need to put immediate emphasis on is growth. “The dramatically changing sales channel structures, as well as the emergence of whole new mobility business models like car and ride sharing and electrification of cars, will offer enormous opportunities for the automotive company of the future in terms of growth. And those that do not seize these opportunities on time will be simply left behind,” added Pearson.
Published Aug 1, 2017 2pm EDT / 11am PDT / 7pm BST / 8pm CEST