Transformation at the heart of the CEO business strategy in 2021
CEOs worldwide are stepping through 2021 acutely aware of the need to transform their business model – most notably via digital investments. A new EY study examines what’s on the C-suite agenda this year.
Over 300 CEOs from the Forbes Global 2,000 – the world’s largest public companies – spoke to EY’s insights arm EYQ, explaining what they learnt from the crisis last year and how it impacts their 2021 action plans. Most have realized the need to transform, and fast.
Gone are the pre-pandemic days when businesses were dragging their feet when responding to market disrupters. “Covid-19 hastened the full-force arrival of trends already on the CEO agenda – from digital transformation to changes in consumer behavior to a growing focus on long-term value,” explained EY’s global managing partner for client services Andy Baldwin.
“The stakes are now existential,” and top CEOs are upping the ante. Technology is the core driving force here, for nearly two-thirds of businesses. As pointed out by Baldwin, virtual working, consumer transitions online and squeezed resources have positioned technology as “the common denominator for most organization’s resilience amid the pandemic.”
Indeed, accelerated digital transformation is the one priority that unites leaders across sectors – spanning tech, finance, consumer, manufacturing, and energy. Other transformation drivers also reflect crisis repercussions, although these differ by industry.
Shifting customer expectations, for instance, are informing a business model rethink across tech, finance, and consumer goods, while manufacturing and energy companies are less worried by this. Instead, the latter set is consumed by adapting to global supply chain shifts – relatively less concerning for tech and finance players.
A stark example is climate change and sustainability, which is a transformation driver for just over 25% of businesses on average – and 70% of businesses in the energy sector. New revenue streams, stakeholder capitalism, workforce shifts, and geopolitics are other factors playing a role in business strategy this year, albeit to a lesser extent.
Enterprise of the future
Implicit in these transformation efforts is a need for survival. At the same time, CEOs are also busy shaping the enterprise of the future – businesses that align with a competitive, tech-powered, data-driven, human-centric, innovative, post-pandemic market driven by purpose, long-term value, and sustainability.
As the dust settles, success will take on a new form with more dimensions than just growth and productivity. Successful businesses allegedly will be compassionate towards their people; behave responsibly towards society and their environment; and operate with an agility and flexibility to keep up with fast-changing market conditions.
“To thrive, organizations must acquire or evolve a new DNA for this future,” noted Prianka Srinivasan, EYQ insights director. CEOs are not unaware of this: long-term value-creating tech such as AI and data analytics, cybersecurity, behavioral science, and a host of other innovative tools feature on the corporate agenda for 2021.
The question remains of which organisations can deliver on this promise. “Closing the gap between intention and execution in moving to the future enterprise will require pursuing three interconnected value drivers: putting humans at the center, adopting technology at speed and driving innovation at scale,” explained Srinivasan.
Gil Forer, EY global markets digital and business disruption leader, believes combining these principles with an agile approach to business will be key. “Nimbler companies, ones that deal with ambiguity better and embrace risk-taking, will be able to pivot and respond quickly to emerging opportunities,” he concluded.
