As companies seek to respond to these strands of disruption, the pressure to improve performance is unrelenting. In PwC’s 21st Annual Global CEO Survey, 58% of UK business leaders said they were under increased pressure to deliver business results – meaning growth and profitability – within shorter timelines. Their top two initiatives to achieve this, not surprisingly, were organic growth (87%) and cost reduction (67%).
However, other research reveals profound misgivings about whether businesses really can achieve both of these at once. Getting this right, or being “Fit for Growth”, requires an understanding of where to invest to deliver on the growth strategy, and where to look for cost reductions. Only 23% of respondents to Strategy&’s global Fit for Growth Index are strongly confident in their company’s ability to make the right choices on difficult “where to play” decisions. Such statistics beg the question of how business leaders can simultaneously cut costs and invest in capabilities that drive organic growth – especially when many admit they lack the insights needed to do either with certainty.
Also, when asked about the extent to which their major projects are aligned with their strategy, only 37% of companies said that they were “strongly aligned”. The implication is that businesses are failing to target their investments in the capabilities required to deliver their strategy. Put simply, companies need to find a way to put their money where their strategy is.
“Put simply, companies need to find a way to put their money where their strategy is.”