Strategic Intelligence for CFOs, Finance Directors, Controllers and Treasurers in Asia |
2012, May 22
2012, May 22 While the pace of change in the business world has increased in the last five years, many businesses report that the time it takes them to make key decisions is also increasing.
A global survey conducted by Economist Intelligence Unit revealed, not surprisingly, that most businesses (79%) recognise it is important to respond quickly to changes in their operating environment, which many attribute to factors such as the volatile economic climate (39% of respondents) and increased competition (36%).
However, one-half of businesses (48%) think the amount of time it takes them to make key decisions has increased. Only 22% say that it has declined.
For many businesses this means that their internal strategy processes are not designed to handle the speed of a rapidly evolving external environment. Just as concerning is that less than four in ten (39%) of surveyed executives believe that their firms are making the right decisions about how and when to respond to change.
“If you are in an environment that is changing faster and faster, it means you have to make more calls and start experimenting,” says Rolf Bixner, senior partner and managing director of the Boston Consulting Group, in the report. “You need to fail fast, fail quickly, and fail cheaply.”
While disruptive innovations can bring companies to their knees, they can also be a source of rapid growth.
“The world is now so full of unexpected, surprising changes that companies today must either disrupt themselves or be disrupted,” says Hal Gregersen, senior affiliate professor of leadership at INSEAD.
The report also finds that scenario planning and other long-term risk management techniques have become more widely accessible to help companies think through how the future might evolve, but few companies utilise them.
According to the report, some executives advocate the establishment of an entirely new unit designed to capture the opportunities emerging from a newly identified change. This can be separated from the rest of the business, which can be migrated to a lower-cost model where it can compete more effectively.
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