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UK companies failing to keep pace with the rate of business change
Business leaders in the UK have admitted that companies are failing to keep up with the increasing rate of change they face, placing businesses at risk from factors such as reduced turnover and hostile takeover. With an economic climate that remains threateningly unclear, the findings of the 'Fit to Change' report, carried out on behalf of Fujitsu, call into question UK plc's ability to adapt and succeed in the uncertain environment they operate within today.
The study, which included interviews with 150 c-suite executives and input from the Fit to Change panel, reveals that two thirds of executives believe that the current rate of change, driven by factors such as customer demand and new competitive threats, is too quick for UK organisations to keep pace with and 57% agree that an inability to respond rapidly and effectively to change is one of the most significant risks their organisation faces today.
Commenting on the findings, Professor John Kotter, Harvard Business School said, "Only 32% of those in private sector firms are at all optimistic that they are actually 'fit to change'. In a world that is changing more and more rapidly, these are highly distressing numbers."
It went on to reveal that:
The most likely consequences of failing to adapt to change are financial.
Overwhelmingly, 96% of executives believe decreased turnover would be a consequence of not reacting appropriately to change. Similarly, respondents felt that the ability to get finance would be severely impacted by a failure to appear responsive to the market. 62% believe that a drop in share price would be a likely outcome and 59% fear hostile takeover.
Customers are the biggest driver of change - 83% of respondents felt they were a significant factor - clearly reflecting the increasingly demanding consumer that businesses are tackling today. However, it was also the factor that business leaders felt their own organisation was least able to respond to effectively, revealing the biggest pressure point for businesses today.
"The hardest task for CEOs today is to strike the balance between responding to external change and allowing change to happen around you while you stay true to your long term plan. Being Fit to Change is about understanding the environment around you and arming your organisation in advance with the tools it needs to be able to respond quickly - and at its pinnacle it is about being the player driving change in your sector," commented Duncan Tait, CEO, Fujitsu. "This is a topic that is at the core of Fujitsu's own strategy right now. We are evolving to meet the need to change and to remain competitive in a market we have operated in for 40 years."
To tackle change successfully, respondents were clear that strong leadership is the key ingredient - 97% felt this. Additionally, the capacity to change and available resources topped the list of ingredients required to be fit to change. However, when comparing the ingredients that business leaders believe are essential to being fit to change with those they believe are most lacking across UK plc, the gaps occurred in three areas - a robust ecosystem of suppliers; a long term vision and the right technology solutions.
Responding to the threat
The research results have been combined with insights from our Fit to Change Panel to create a top ten tips list, revealing both the kinds of characteristics businesses need to foster, and also the initiatives they should launch to improve their responsiveness to change:
1. Strong, honest, leadership
Business leaders need to start not by focusing outwards on the organisation, but by looking inwards. Do they themselves really accept and embrace change, or is it just an inconvenience they're forced to tolerate?
2. Foster innovation through a deep sense of security
In contrast to the "lead by fear" ethos of the '90s, other research has shown that innovation is best fostered in organisations that first of all establish a sense of security in their personnel. Teams who feel confident, well-managed and secure in their jobs, will be able to plan for the longer-term and make the decisions that are required to ensure responsiveness to unexpected change. Put in place good planning for the worst case, and people will come up with options to carry their businesses through.
3. Be clear on the skills you need
Make sure you truly understand the market trends and customer needs driving your sector in order to map out the skills and capabilities you require to succeed. If you don't already have the necessary skills, go out and recruit them, or plan to develop them internally.
4. Release capacity through flexibility
When people can work where is most appropriate for them, when tasks can be simply shared, when teams can be brought together simply to solve problems, an organisation can be far more effective in its response to change.
5. Empower people by delegating deep into the organisation
Working practices that emphasise delegated management and delegated decision-making foster a sense of empowerment. Most change must be met effectively in day-to-day decisions, rather than by long-term strategy. Empowered organisations tend to be more responsive to the majority of environmental change.
6. Communicate, communicate and listen
If you want to ensure the whole organisation understands and feels the intensity of competition, the nature of key challenges and the pace of change required to win, the key is communications. Change is an evolving process that requires buy-in (whether willing or not), many organisations fail at an early stage by ignoring the long-term communication strategy. And communication is a two-way street. Listen to the market; listen to your staff and listen to your competitors - if you are not listening you will not hear the call to change.
7. Employee diversity
The most important thing in business today if you want to succeed is diversity across your employees. Different experiences; cultures and ages provide a range of insights that enhances a company's flexibility. When it comes to technology for instance, it is likely to be young employees that enable you to harness the latest technology to keep pace with change. And there's also likely to be advantage in hiring staff from industries which have already embedded some of the attitudes you're seeking.
8. A robust ecosystem of suppliers
The way you partner with suppliers and integrate them into your business is a complex situation - but it is also the difference now between winning and losing in business. Your supplier ecosystem can make the difference between agility and sluggishness.
9. The right technology solutions
Technology is not just a means to save money and reduce risk; it can be your ticket to ensuring that when you need to move quickly and in different directions, you can. It's essential that today's CEO has an understanding of when IT should be an integral part of business strategy - when investing in IT can reshape the business.
10. Balance your visions
Ultimately being "Fit to Change" is about ensuring the right balance between your long- and short -term visions. The key here is having a defined long-term vision but the capability and infrastructure that allows you to drop down to the frontline at any minute in response to external factors.
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