Harnessing the Power of Disruption
busiIN THE FACE OF INDUSTRY DISRUPTION, ness leaders often present themselves with a false choice: Should they cling to the stability of their legacy business and risk missing new opportunities? Or should they abandon the legacy model in a proactive dash for the new? Finding the right balance between these two extremes has become one of the central leadership challenges of our time.
The companies that thrive amidst disruption are able to shift with speed and confidence into new markets and activities — constantly re-inventing themselves in an effort to make their business relevant to the future. However, in a recent Accenture survey of 1,440 C-level executives, we found that only six per cent of companies have embraced this challenge decisively. For the other 94 per cent, common factors that prevent progress include capital-intensive infrastructures, contractual agreements, outdated technology and relentless devotion to legacy products, services and brands.
Our survey, which spanned 11 industries and 12 countries, revealed that 54 per cent of large companies optimistically expect new business activity to generate more than half of their revenue within three years. In reality, around 70 per cent of companies currently generate less than half of their revenues from new business activities. We define ‘new business activity’ as new investment and venture activities that tap into previously unexplored markets and offerings that the company has not yet explored at scale.
In our report, “Make Your Wise Pivot to the New” (available online), we recommend that companies follow the lead of the high-performing six per cent. We refer to this group as ‘Rotation Masters’, and they differ substantially from the other companies we studied, both in the percentage of revenue they have generated from new business activities in recent years and in their financial performance. Most notably, 64 per cent of them achieved double-digit growth (above 10 per cent) in sales, while 57 per cent achieved the same growth results in EBITD.
In addition to impressive financial performance, these companies stand out from the pack by creating three preconditions to help reinvent their organization.
1. Build Sufficient Investment Capacity for Change
Rotation Masters understand the level of investment required to drive change, so they fine-tune their existing business activities by reducing costs, divesting non-core businesses and streamlining assets. It’s no surprise that