The impact of the COVID crisis continues to shake up the business world, and new research from global consulting firm AlixPartners shows that CEOs are aware their companies need to adapt to today’s constantly disrupted business environment—and are worried about doing so fast enough. But 85 percent just don’t know where to start.
The firm’s fourth annual Disruption Index, which surveyed CEOs and senior executives to identify the impact of disruption—defined in the report as the forces that displace businesses, markets, and operating models—on their organizations. And now, as an economic downturn looms and geopolitical crises continue to unfold, business leaders at growing companies are taking action to combat such challenges.
“The pandemic forced business leaders to come to terms with the inevitability of disruption, but as we have seen subsequently, that was just a dress rehearsal,” said Simon Freakley, CEO of AlixPartners, in a news release. “Today’s business environment is tougher and more disrupted than ever and that won’t be changing any time soon. For those who move decisively and at pace, there is a tremendous opportunity to adapt and thrive amid the relentless disruption.”
Three in 10 (31 percent) business leaders are revamping their business model now, with 98 percent recognizing they need to change within the next three years in response to a multitude of internal and external disruptions.
While supply chain and energy issues continue to present significant challenges, this year’s survey also showed that business leaders’ greatest areas of concern include:
- Barriers to innovation: While 87 percent say their company has the resources needed to invest in new technology and digital solutions, 66 percent say their board of directors often impedes the process of deploying them.
- Speed of technology: 56 percent say advancements in technology are happening at a rate their company cannot keep up with.
- Meeting societal and employee expectations: Among the growth leaders, 52 percent say they have been very or extremely affected by environmental and social concerns, and nearly three out of four (73 percent) say that shifts in workforce values and preferences are driving disruption in their companies.
- Skills crisis: 40 percent of global business leaders say filling the talent pipeline at their organization will be a challenge for the foreseeable future.
In addition to these specified areas of disruption, executives recognize the threat posed by a looming global economic downturn: 83 percent of survey respondents expect a recession or economic downturn to last more than a year. Layoffs have occurred at 21 percent of companies and almost half (46 percent) anticipate staff reductions or hiring pauses in the year ahead.
Growth leaders are way out in front
The growth leaders in the survey—defined as those companies which set the pace when it comes to overall growth in their industry this year—are doing just that. They are more concerned about disruptive forces hitting them and, at the same time, are much more likely to take action by reinventing their business models, making them more likely to overcome, harness, and in some cases, create disruptive forces rather than needing to react to them. More than half (57 percent) are changing their business models this year, while only 25 percent of their slower-moving counterparts are doing so. Across the board, the researchers see them performing better, yet still trying to do more, whether that’s fixing their supply chain, or attracting the best talent, or transforming their business.
“CEOs have faced unprecedented challenges leading their companies over the last few years and those who have prepared, are agile, and quick to act,” said Freakley. “The pace of change is relentless, with little or no time to pause for breath or even to reflect on successful navigation of the pandemic. Those who remain slow to action will get left further behind, while those who have a bias for action and see opportunities will build an unassailable lead.”
3,000 CEOs and senior executives were surveyed for this report.