Deloitte study looks at the characteristics of highly resilient private businesses
- Published: Wednesday, 19 May 2021 08:55
Deloitte has published ‘Crisis as catalyst: Accelerating transformation’, a report into organizational resilience in the global private company market segment. The report highlights that despite market challenges in the past year, many private businesses believe they are well on their way to becoming more resilient in a post-pandemic environment. In fact, more than two-thirds of private business leaders surveyed for the report expressed high confidence in their company's outlook over the next 12 months.
In examining how the pandemic has accelerated certain operations and activities, the report shows:
- 69 percent of private companies surveyed said the pandemic significantly accelerated their digital transformation — not just sparking but exploding the pace of adoption.
- 61 percent of private companies expect to form new partnerships and alliances.
- 60 percent of respondents believe that supply chains need to be redesigned as a direct result of the pandemic.
In the survey of 2,750 private company executives across 33 countries between January 21 and March 9, 2021, Deloitte found that a majority of organizations are in the process of building their resilience across seven key elements: strategy, growth, operations, technology, workforce, capital and society. Survey respondents rated their company's status in implementing these elements of resilience to develop a ‘resiliency score’. Using responses to these questions, surveyed companies were grouped into categories of highly resilient organizations, mid-resilient organizations, and low resilient organizations.
The survey found that highly resilient organizations are more optimistic about their long-term growth potential than low resilient organizations, with 52 percent extremely confident in their outlook over the next three years compared with just 15 percent of those in the low resilient tier.
Regionally, US leaders are the most optimistic about revenue, profits and productivity in the coming year compared to other global private company leaders. Additionally, executives believe that both growth and technology, including digital transformation, are among the most important elements for resilient organizations.
Other key areas highlighted in the survey report include:
Anticipated growth and workforce
A majority of respondents believe their company will snap back from the crisis during the next 12 months but also believe the wide-ranging impacts from the pandemic may continue to be felt for the next several years. Private companies appear to have laid the groundwork for workforce changes through flexible workforce arrangements and by redesigning their organizations to be more agile and accomplish more with smaller, independent teams, including:
- Highly resilient organizations (19 percent) say they have fully transformed the nature of work at their organizations already and 38 percent say they are midway through such changes.
- Highly resilient organizations are more likely to supplement their workforce in the coming year than low resilient organizations (66 percent versus 48 percent).
Emphasis on digital transformation's benefits
Executives have broad expectations about the gains that technology investments will deliver for their private organizations, and they plan to continue to increase the breadth of their technology investments. For example:
- Highly resilient organizations were nearly twice as likely (80 percent versus 43 percent) as those with low resilience scores to say that their digital transformation had begun prior to the crisis or is currently underway.
- The difference in how highly resilient companies view the importance of digital transformation to their growth versus those with low resilience was 18 percentage points.
Companies are also spending on technology in other areas. In the next 12 months, information security is primed to be the most popular technology spending area according to 39 percent of respondents, followed closely by cloud computing (38 percent) and data analytics (37 percent).
A sharper focus on purpose
Purpose and trust have always been intertwined in the culture and foundation of private companies, but took on greater importance in 2020.
The survey found that:
- Nearly 70 percent of the respondents said purpose increased in importance for their organization as a direct result of the COVID-19 crisis.
- Highly resilient organizations were at the forefront in this respect, with 84 percent of the executives from these organizations saying they sharpened their focus on purpose.