Moorhouse Barometer on Change 2015-16

Barometer on Change 2015/16

Avoid the zombies,innovate for growth


Richard JonesPartner

Stephen VinallPartner

Richard GooldPartner

John LunnPartner

Executive Summary

Since 2012, Moorhouse has conducted an annual survey of senior leaders on the challenges they face in implementing change. Our findings draw on the views of over 200 Board members and their direct reports, from a broad spectrum of organisations across the private and public sectors.

Previous years have shown most organisations to be focusing on cost reduction programmes, supported by internal transformational change. Round after round of cost cutting has bred a number of ‘zombie organisations’, trapped by their own under-investment in both resources and innovation. However, with the economy moving from downturn to stability and now to growth, The 2015/16 Barometer on Change reveals an increasing emphasis on high performing organisations aspiring to deliver greater innovation and service-led change.

This year’s results show an increasingly polarised marketplace, with top performers demonstrating an agile and ambitious approach to change. With additional resources available from their cost-saving programmes, there is an opportunity for high-performing organisations to reinvest resources in new strategies and innovative services which will transform their operations.

1Barometer on Change 2015/16

Overview of survey respondents

Barometer Sample

17% Board

83% Reporting into board

26% UK-HQ non FTSE 350

24% UK subsidiary of multinational

8% Public sector

7% FTSE 100

25% FTSE 250

10% Privately owned

13% Transport & distribution

13% Technology, media & telecommunications

20% Retail and FMCG

10% Public sector

1% Other

13% Energy & utilities

21% Financial services

9% Health and pharmaceuticals

What level are respondents within their organisation?

What size is the respondent’s organisation?

Which sector does the respondent’s organisation sit in?

We design and deliver transformationalchange


Contents

4 Context The current change climate

9 Theme 1 Organisations continue to attack their cost

bases – but with an increasing emphasis on reinvesting in growth

13 Theme 2 For investments to deliver superior returns,

organisations must seek innovative opportunities – and underpin these with internal transformation

18 Theme 3 For growth to be sustained, organisations must

prioritise and accelerate development of the right capabilities


Context: The current change climate

Over the past four years, our Barometer on Change reports have highlighted the ongoing challenge of achieving growth in an ever-changing climate. With change established as the ‘new constant’, organisations must take it in their stride if they are to outperform their competitors.

All change

The pace of change has intensified in recent years, and this shows no sign of slowing down. 69% of this year’s respondents have identified an increase in the pace and pressure of change over the past three years – a marked jump from 58% in 2014, and the highest level since 2012.

80% of respondents also predict a further jump over the next 2-3 years. For organisations to compete in this environment, they must demonstrate agility in how they respond to the increasing drivers and rate of change, and proactively manage the challenges that lie ahead.

80%

Anticipate an increase in the pace and pressure of change

in the next three years

72%

Felt an increase in the pace and pressure of change in 2012

58%


65%


69%


HOW MUCH HAS THE PACE AND PRESSURE OF CHANGE INCREASED OVER THE LAST 2-3 YEARS? HOW MUCH DO YOU EXPECT IT TO CHANGE IN THE NEXT 2-3 YEARS?


Optimistically embracing the change

In this fast-paced environment, it is vital that leaders instil a ‘pro-change’ culture to ensure the wider organisation is supportive of transformation. Without this, an organisation will inevitably constrain its own growth potential.

70% of respondents describe their firm as ‘pro-change’ (either ‘change able’ or ‘change embracing’). The Barometer on Change interviews senior leaders, and it is these individuals who, by adopting a ‘pro-change’ tone, can ensure support at all levels. They also need to ensure that the wider organisation builds the capability and capacity to deliver the change – an ongoing challenge for many, as we explore in Theme 3.

In order to sustain a ‘pro-change’ culture, leaders must support their employees to embrace the transformation required – starting with a clear and well communicated strategy. Evidently, this is far from straight forward: last year, 77% of respondents described their organisational vision as ‘very’ or ‘extremely’ clear. However, this dropped to 69% in 2015 – the lowest level in three years.

This drop may reflect the increasing pace of change, where strategic priorities can become overtaken by a shifting context. In this environment, it is challenging to maintain a consistent alignment of transformation with strategic goals. However, given that our report is based on responses from Board level directors and their direct reports, this is a stark statistic.

A continuation of this pattern would be concerning and a likely barrier to growth. A clear, consistent and compelling vision is vital for teams to commit to the change and for the

new processes to be embedded successfully as ‘business as usual’.

2014 60% of respondents described their firm as pro-change

2015 70% of respondents described their firm as pro-change

HOW WOULD YOU DESCRIBE THE CULTURE OF YOUR ORGANISATION TOWARDS CHANGE?


Investment in change continues to grow

The increasing prevalence of transformation programmes can be seen from the average annual spend on change initiatives, which has increased by almost 25%, from £20.8m in 2014 to £25.4m in 2015.

While the overall picture is of increased spending, there has been a particularly marked increase in the number of organisations spending over £25m per annum – from 21% of respondents in 2014 to 34% in 2015. This clearly demonstrates the increasing importance organisations are placing on their change initiatives.

2013

£22.3M

2014

£20.8M

2015

£25.4M Average spend on change initiatives

73%

of respondents described their organisational strategy

as ‘very’ or ‘extremely’ clear in 2013





77% 69%

WHAT IS THE APPROXIMATE ANNUAL COST OF THE CHANGE INITIATIVE(S) THAT YOU ARE CURRENTLY UNDERTAKING?

HOW CLEAR IS YOUR ORGANISATION’S VISION/STRATEGY FOR THE NEXT FEW YEARS?


This positive appetite for change is reflected in success for these organisations, with 81% of those spending over £25 million experiencing growth over the past year.

Those organisations who commit to change, and whose leaders and employees embrace and are prepared for it, are achieving the greatest success. The same group are also optimistic that they can sustain this pattern in the future, with 89% anticipating further growth in the next three years.

The challenge ahead…

Major organisations are increasingly embracing change and preparing themselves for additional transformation in the coming years. With nine out of ten organisations planning for growth, we should expect an increasingly competitive climate. For organisations to truly differentiate themselves, agility will be key to stay ahead of the competition. Clearly, this poses a number of strategic questions for leaders to consider:

• How should the organisation balance shareholder payouts with investment in growth?• Should the organisation build on its existing programmes to support growth – or move

into new territory?• Can new initiatives be delivered by the organisation’s existing structures and capability?

There is no definitive answer or ‘rule of thumb’ for how to respond to these questions – however, we will explore each of these throughout this report.

expect growth in the next three years

89%

expect growth next year

85%

experienced growth this year

81% Showing only firms investing £25m+ in change

IN THE LAST YEAR, WHAT RATE OF ANNUAL GROWTH HAVE YOU EXPERIENCED?WHAT ARE YOUR REVENUE GROWTH EXPECTATIONS NEXT YEAR? WHAT AREYOUR REVENUE GROWTH EXPECTATIONS IN THE NEXT THREE YEARS?


Theme 1:Organisations continue to attack their

cost bases – but with an increasing emphasis on reinvesting in growth


Theme 1: Organisations continue to attack their cost bases – but with an increasing emphasis onreinvesting in growth

2015 has seen a significant change in the drivers of cost reduction. While a core of organisations continue to cut costs reactively in order to protect profitability, their competitors are reinvesting the savings into new, growth-oriented initiatives which will help to redefine their organisations and achieve ambitious expansion targets.

For low growth organisations, it’s not going to get any easier…

While many organisations are clearly optimistic regarding opportunities for growth in the coming years, this is not felt by all. Despite the average growth predicted in the coming years remaining at the same rate as 2014, there is now a marked difference in the anticipated growth at either end of the scale. This was further evidenced in a recent OECD report (‘The Future of Productivity, 2015’) which stated that, rather than there being a worrying overall flatlining of productivity, many ‘frontier’ firms are in fact becoming much more productive, whilst the productivity of others is falling behind.

2015

19%

2014

14% Firms anticipating over 10% growth

1% 12% Firms anticipating no growth, or negative growth

WHAT IS YOUR AVERAGE ANNUAL REVENUE GROWTH FORECAST OVER THE NEXT THREE YEARS?


Most starkly, 12% of firms are anticipating no growth or a decline in annual revenue growth over the next three years. The Barometer on Change interviews the leaders of FTSE 350 firms and major public sector organisations – this prediction paints a depressing picture for the ‘low-growth’ firms at this end of the scale.

These organisations’ bleak growth predictions may be influenced by a current over-cautiousness towards their investment initiatives. In a climate of disruptive technology and game-changing innovators, firms need to make bold investments in change in order to compete. At a time when innovation is essential simply to maintain a market share, a lack of innovation will result in these organisations going backwards.

In general, those firms anticipating low or no growth demonstrate a reluctance to prioritise investment in new and potentially risky strategies. Of the organisations looking to develop new products, just 8% are part of this ‘low growth’ group. Meanwhile, only 2% of those looking to move into new markets are low-growth organisations. We further explore attitudes to risk in Theme 3.

And for high growth organisations, there remain some challenging decisions…

In contrast with their low growth rivals, nearly a fifth of our respondents are planning for growth of over 10% in the three years to 2018. Following years of cost reduction initiatives, these organisations have generated considerable resources – and must consider how these can best be used to support growth.

As organisations emerge from the recession, many are opting to channel profits back to shareholders, prioritising payouts in favour of reinvestment in their operations. However, as cautioned by Andy Haldane, Chief Economist at the Bank of England, the strategic reinvestment of internally generated resources is crucial in supporting growth both at a firm level and across the wider economy. The clear message here is that organisations must prioritise effectively, and ensure that their strategy is focused on long-term growth as opposed to short-term shareholder interests.

Many of our respondents recognise this challenge, with the majority of respondents choosing to reinvest a large proportion of their profits into their organisations. Specific examples of reinvestment include 56% of organisations funding new products and 48% of organisations seeking to invest in improving existing services.

Enable investment

in new products/ services

Respond to changes in the market/

market conditions

Protect profitability

Respond to competitors’

actions

Enable investment in other areas of the business

0%

40%

30%

20%

10%

50%

60%

56% 53% 48% 41% 29%

WHAT DO YOU SEE AS THE MAIN DRIVERS OF COST REDUCTION IN YOURORGANISATION? (CHOOSE ALL APPLICABLE)


A new set of priorities

In an increasingly competitive landscape, it is no surprise that organisations continue to focus on increasing efficiencies – with more emphasis than ever on cost reduction. With 49% of respondents focusing on cost reduction, and two-thirds of those organisations reinvesting in growth initiatives, where do we see those strategic bets being placed?

As seen above, this year’s Barometer on Change identifies clear trends towards growth via product development and improvement of business performance. In addition, our findings show that 24% of respondents are currently focused on accessing new markets, growing to 30% when looking ahead to the forthcoming year.

With these clear trends, it is therefore no surprise that mergers and acquisitions are also anticipated to rise up the agenda – with 15% of respondents expecting major M&A activity over the next year, compared with 9% this year.

These major organisational transactions provide the means by which growth can be accelerated through the addition of innovative brands and products, and the integration of new skills. Naturally, following any merger or acquisition there will be implications for these organisations as they reshape their operations to accommodate major changes.

Further considerations

• Organisations are more focused than ever on increasing efficiencies and reducing costs; the need to retain expertise in these areas remains essential to continue creating the capacity for further growth.

• For organisations investing their cost savings in new initiatives, a range of options exist – all of which can support long-term growth. However, it is clear that ‘doing nothing’ is not an option and that investment must remain aligned with a clearly articulated organisational strategy.

• There is a real opportunity for ambitious organisations to move ahead of the competition through product and service innovation, accessing new markets and the development of new skills. Whilst internal investment can enable all of these, mergers or acquisitions are seen as clear accelerators.

WHICH CHALLENGES ARE YOUR CHANGE INITIATIVES LOOKING TO ADDRESS,BOTH THIS YEAR (2015) AND NEXT YEAR (2016)?

2016

51% 49%

2015

Cost reduction

2016

32% 30%

15%

29% 24%

9% 9% 10% 12% 8%

2015

New products and services

20162015

Accessing new markets

20162015

Culture change

20162015

Regulatory change

20162015

M&A


Theme 2:For investments to deliver superior returns,

organisations must seek innovative opportunities – and underpin these

with internal transformation


Theme 2:For investments to deliver superior returns, organisations must seekinnovative opportunities – and underpin these with internal transformation

Organisations are forecasting considerable growth – not an easy task in a period of limited organic expansion. They must redefine their strategies and operations to deliver this ambition, and compete against disrupters and rising challengers in the market.

The 2015/16 survey asked respondents to identify the top challenges driving their strategy. While 24% see cost reduction as their single most important objective, several parallel – yet related – challenges are nipping at its heels. Launching new products and services (19%) and accessing new markets (19%) are both increasingly high on the agenda.

19% New products or services

18% Performance improvement

24% Cost reduction

19% Accessing new markets

8% Culture change

7% Regulatory change

5% M&A

WHICH CHALLENGE IS THE SINGLE MOST IMPORTANT PRIORITY FOR YOUR ORGANISATION?


Are new products and services the answer?Nearly a fifth of leaders interviewed cite investment in new products or services as their single most important priority. This sits alongside a further 18% who are primarily looking to invest in the performance improvement of their existing products or services.

While the latter group can build on existing strategies and strengthen the mechanisms for delivering their current product and service offerings, the former will require a greater shift. Organisations looking to invest in new products and services must ensure that new initiatives align with their overall vision, and that they have a clear understanding of the change initiatives required to deliver them.

Equally, organisations require a detailed insight of the demands of the new product or service on their own organisation, and the structural, workforce and process challenges which new initiatives are likely to trigger. This is clearly recognised by business leaders with 81% of those organisations who will be introducing new products or services stating that they will need to transform their organisation to ensure successful delivery of the new offerings.

The introduction of new products and services therefore presents a range of challenges – all of which must be overcome in order to realise the significant growth potential. Organisations require an effective new product and innovation (NPI) process, with a clear strategy for their new products and services which ensures the products align with customer expectations. They must also develop the capabilities and processes required to deliver the new offerings, which in many cases will require complex internal reconfiguration.

A step change via mergers and acquisitions

Nearly two thirds of our respondents have recently undergone or are about to undergo a merger, acquisition, integration, divestment, or other major reconfiguration.

Of this group:• 43% have undergone a major reconfiguration in the past two to three years;• A further 11% will see this taking place in the next three years; and, most dramatically,• 19% have recently undergone this change and also expect to see further

reconfiguration within the next three years.

81% of organisations looking to adapt new products see the need to transform their business to a ‘great extent’ or to a ‘fair extent’ to do so

TO WHAT EXTENT WILL YOU NEED TO TRANSFORM YOUR ORGANISATION TO ADAPT TO NEW PRODUCTS AND SERVICES?


The motivation for M&A activity is clear: acquiring the means for growth is attractive, particularly when organic growth is limited. As we saw in Theme 1, immediate access to new markets, new products and new skills can provide a step change in competitive advantage – as well as potentially removing competition. For rising ‘challenger brands’ and new players in the market, a merger provides an opportunity to grow operations at pace, and to strengthen their brand through integration with a comparable firm – or, perhaps more interestingly, to adopt a new angle on their brand by aligning with a seemingly disparate organisation.

For established organisations seeking to move into new markets or deliver new products, M&A also provide an opportunity to compete against new challengers emerging in the industry. Traditional firms typically do not have the capability, mindset or inclination to become ‘game changers’ by incubating ideas from scratch in the same way as Uber or Airbnb. Instead, M&A allow existing major players to invest in agile, niche firms - thereby building their own credibility in a new area, and gaining the skills of a new employee base.

However, while major reconfiguration has become increasingly prevalent, it by no means guarantees the desired outcomes. Only 29% of those who have undergone M&A have seen the anticipated benefits realised to a great extent. For the expense and resource associated with such transactions, this is remarkably low.

This contrasts with the view held by organisations regarding their ability to achieve the desired future benefits from their change programmes, with over 80% anticipating that results will be delivered to either a great or fair extent. The question is therefore raised as to whether organisations are overly optimistic in their ability to effect change. Evidence suggests that, with regards to successfully realising benefits from M&A, a step change will be required in how organisations prepare for and implement their major reconfigurations.

It is a cliché to state that major change programmes fail, not because of the planning or processes, but because of the people. However, this truism is worth considering in relation to major reconfiguration, where successful integration of the new teams will invariably have a clear impact on the success of the programme.

Just 64% of leaders who will undergo a major reconfiguration in the next three years are confident that they themselves have a clear vision for the change. The Barometer on Change interviews Board-level leaders and those directly reporting into them; if this group cannot articulate a clear vision for the transformation taking place, then it is inevitable that the wider employee group will not have a clear grasp of the messages.

Without this strategic understanding, the organisation cannot be expected to understand and commit to the change, and the change itself is unlikely to sustain.

New markets: new opportunities for growth?

Nearly a fifth of respondents identify breaking into new markets as their key challenge. However, many respondents also expressed concern in relation to a potentially protracted debate over the UK’s role in Europe, and the shifting policy and regulatory landscapes at home and overseas.

Despite a decision on Britain’s membership of the European Union potentially not taking place until 2017, 81% of respondents feel that their organisation is already being affected by the uncertainty of the result.


Wherever an individual organisation’s leadership sits in the debate, as we saw in the debate preceding the Scottish referendum, UK businesses have a clear opportunity as both wealth creators and employers to shape the debate on our relationship with Europe.

Further considerations

• To maximise the chance of new products and services succeeding, organisations must ensure they have a clear strategy underpinning their development. In addition, leaders must be able to articulate that strategy in order that their workforce can be committed to delivering the outcome.

• As established firms seek growth, we will see more M&A transactions enabling organisations to acquire their desired market presence, offerings and skill sets. However, this is by no means a ‘quick win’, and requires focused integration programmes to leverage the strengths of all organisations involved.

• As the public debate about Britain’s relationship with Europe progresses, it is likely that business confidence may continue to be impacted. UK business leaders must play a key role in this debate, while simultaneously ensuring that their strategies and business plans can respond to all referendum outcomes.

11% To a great extent

34% To a fair extent

36% To a slight extent

12% Not really any extent

7% Not applicable

TO WHAT EXTENT IS YOUR ORGANISATION CURRENTLY BEING AFFECTED BY UNCERTAINTY OVER BRITAIN’S MEMBERSHIP OF THE EU?


Theme 3:For growth to be sustained, organisations

must prioritise and accelerate development of the right capabilities


Theme 3:For growth to be sustained, organisations must prioritise and accelerate development of the right capabilities

For growth to be achieved, organisations need to ensure they have the right people in place, with the right skills to deliver the strategy. While the capabilities required will vary, there are three clear priorities:

• Flexibility to manage shifting priorities;• Effective management of customer and market

insight; and• Pragmatism in responding to the risks of this new

and changing world.

The right people, with the right skills

Despite change having become established as the ‘new constant’, organisations have strikingly low confidence in their in-house skills to meet the demands posed by major transformation. And, those low levels of confidence are diminishing each year.

Consistent with previous years, 97% of our respondents recognise that their organisations require new or additional skills to deliver their strategy. However, there is a considerable jump in those organisations needing these new capabilities to a great or fair extent: up to 66% from 60% in 2014, and from 51% in 2013.

2015

66%

2014

60%

2013

51% Respondents who need new skills or capabilities to a great or fair extent

TO WHAT EXTENT WILL THE BUSINESS NEED NEW SKILLS AND CAPABILITIES TO REALISE ITS STRATEGY?


Only 30% of respondents express real confidence that they will be able to access the skills required (‘very’ or ‘extremely’ confident). Confidence levels have dropped over the past three years; in 2013, half of respondents were confident that they would be able to secure the capabilities needed to deliver their strategies.

In most cases, the pace of change and urgent need for specific skills mean that there is little time for in-house development. With large internal change teams now a thing of the past, organisations must instead establish new strategies for securing the skills required. 40% of organisations will choose to access the skills externally, while 36% will rely on a broad mix of internal and external sources. Only 13% are already confident that they will be able to access the required skills in-house – a stark drop from 23% in 2013.

Organisations should consider how this substantial gap has arisen. Perhaps the recent focus on reducing costs has cut too deep, resulting in capability gaps which could now hinder growth? Has too little attention been paid to recruiting skill sets that will enable growth? Or did training slip off the agenda in a time of constrained budgets?

A more positive perspective on this situation is that, with the economy expanding and organisations turning their focus to innovation and growth, new priorities mean new capabilities. The growing skills gap may indicate a need for a ‘new generation’ of capability to meet the new demands of the business.

2014 35% ‘very’ or ‘extremely’ confident



HOW CONFIDENT ARE YOU THAT THE ORGANISATION WILL BE ABLE TO ACCESS THESE SKILLS?


The reality is that the current low levels of leadership confidence in their teams is likely to be a result of both factors: previous years’ cost cutting, and the fact that innovation and growth may mean that certain skills are simply not in sufficient supply.

To address the lack of confidence amongst leaders, we believe that three shifts in organisational mindset are required:

Mindset shift 1: Accept that new capabilities are required for new challenges

In a climate of constant change, a three-pronged ‘new generation’ of capability is required. In combination, these three factors allow the organisation to be flexible and responsive to the needs of any given change initiative. They recognise the dual priorities of ‘running the business’ and ‘changing the business’; critical in a time of fast-paced change.

1. Capability to deliver the change. With any transformation, a focused team will be required to manage the implementation of the end-to-end change as a defined programme.

2. Capability to adopt a flexible approach to leadership. Adaptability and agility are key for managers as they perform their roles in a shifting environment. They must also have the capability to support their people through any transformation, enabling the changes to become ‘business as usual’.

3. Capability to identify the skills required. Where organisations are delivering game-changing products or services, or moving into new markets, new expertise is required. It is unlikely that these skills can be developed in-house at the necessary rate, so the ability to identify and secure external capability at pace has become an important capability in itself.

Organisations need to enable all three capabilities through focused recruitment and development. This is critical in order for transformation to be executed effectively, and for its benefits to be realised through sustained delivery of the change.

13% of organisations are confident that they will be able to access the required skills

in-house, down from 23% in 2013.

WILL THE CAPABILITY BE BUILT INTERNALLY OR BROUGHT IN EXTERNALLY?


Mindset shift 2: Embrace the unknown to develop market-leading insight

In Theme 2 we looked at major organisations’ planned growth through developing new products and entering new markets. The majority of high-growth firms are exploring at least one of these avenues, showing a desire to innovate and excel beyond their current parameters.

In order to succeed, these organisations need to develop market-leading insight in relation to their target growth areas – without this deep understanding, they risk building and implementing strategies in the dark. However, the 2015/16 Barometer on Change has revealed a startling gap when it comes to using the data available on their target customers and markets.

Much has been written about ‘big data’ and its massive potential. Organisations find it hard to define the benefits of leveraging ‘big data’ and, as a result, it is challenging to build a financial case for investing in its analysis. However, not exploring its potential will result in organisations falling behind their better-informed competitors.

Only 11% of our respondents claim that they leverage ‘big data’ effectively to inform their strategic decisions. At the other end of the scale, nearly a quarter of firms do not use ‘big data’ at all or do not know if it has had any impact on the direction they are taking.

With ‘changing customer demands’ cited as one of the key factors driving product innovation, it is clear that organisations are missing out on potentially valuable data which could – and, arguably, should – be informing their strategies. Without this insight into customer requirements, wishes and behaviour, many organisations are simply guessing at how best to attract and retain them.

It is vital that senior leaders incorporate ‘big data’ into their strategic planning, and ensure that the organisation has the capability to interpret and respond to the data available. It is equally important to ensure that the lessons learnt from new data are used in a pragmatic and agile way, with the direction of travel amended as necessary.

11% of organisations leverage big data effectively to inform their

strategic decisions.

TO WHAT EXTENT DOES YOUR ORGANISATION LEVERAGE BIG DATA TO INFORMYOUR STRATEGIC DECISIONS?


Mindset shift 3: See failure as part of the process, not the end of the road

It is not possible to take bold steps without incurring risk. With any new strategy, there is a risk of failure – and with innovation, a degree of failure is an inevitability. Our view is that to adopt a strategy of risk avoidance and to steer clear of making any mistakes will constrain growth; in order to be an innovation-driven high-growth organisation, risk must be accepted, and failure tolerated.

In an ever-changing economic, social and political climate, organisations must be agile, responding positively to both external and internal change. They need to be flexible and to adapt their strategies where they haven’t initially seen success. This positive approach to risk must be built into organisational culture and capability development, with leaders delivering the message that it’s OK to fail – and that the lessons learnt will be invaluable in shaping future success.

Steps to success

To thrive in the current complex climate, organisations need to:• Balance flexibility and sustainability. Organisations need people who are comfortable

working in an ever-changing context, while building the specialist expertise required for game-changing innovation.

• Be informed and agile. Organisations must find a way to leverage ‘big data’ to inform their strategies from the outset and, importantly, to iterate their initiatives on an ongoing basis as new information emerges.

• Be bold and accept failure. This starts with leadership. Against a context of major change and innovation-led growth, without a willingness to embrace risk and to accept failure, organisations will struggle to achieve a clear competitive advantage.

Conclusion

The fourth annual Barometer on Change reveals increasing levels of agility and ambition amongst the highest performers in the marketplace. In a climate of ongoing and fast-paced transformation, market leaders are reaping the benefits realised by previous cost reduction initiatives, and expanding through reinvestment in innovation.

Our findings can be summarised into three connected themes:

THEME 1:

Organisations continue to attack their cost bases – but with an increasing emphasis on reinvesting in growth

THEME 2:

For investments to deliver superior returns, organisations must seek innovative opportunities – and underpin these with internal transformation

THEME 3:

For growth to be sustained, organisations must prioritise and accelerate development of the right capabilities

As high-growth organisations set their sights on new products and markets, maintaining an agile and flexible approach will be increasingly important. This must be led from the top, with leaders showing a willingness to embrace risk and accept failure as part of the process of innovation. This attitude must be reflected across the organisation, from how the firm redefines its approach to capability development, to how it leverages and responds to the insights provided by ‘big data’.

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Documents

Moorhouse Barometer on Change 2015-16