The Need for Total Enterprise Reinvention Has Never Been GreaterThe Need for Total Enterprise Reinvention Has Never Been Greater
As levels of disruption reach new heights and companies around the world face unprecedented change, a small group of leaders are adopting a ‘total enterprise reinvention’ strategy that puts digital at its core and embeds new ways of working across the entire organization.
February 28, 2023
A recent index found a 200% increase in disruption from 2017 to 2022. In comparison, the index rose by only 4% in the preceding five years. This increased level of disruption requires companies to be more agile than ever.
To compete and grow, companies must adopt a new, deliberate strategy that will enable them to continuously respond to -- and anticipate -- change. According to Accenture research, senior executives agree with the need to reinvent, with 75% indicating they plan to accelerate their reinvention even in the event of a recession, and more than 60% planning to increase their investments in AI.
This strategy entails reinventing the enterprise itself: how it operates and scales; engages with stakeholders across its ecosystem; and creates value. We call it ‘total enterprise reinvention’ -- leveraging the power of data, artificial intelligence and other technologies and integrating new ways of working to drive growth, optimize operations, and reach new levels of performance.
This ongoing, dynamic reinvention -- transforming every part of the organization -- is ambitious in reach, digital at its core, and spans the entire company to deliver both financial and non-financial results, an approach we call 360° value.
Adopting a Strategy of Total Enterprise Reinvention
The benefits are clear and compelling. According to a recent Accenture report, organizations that pursue total enterprise reinvention generate, on average, 10% higher revenue growth, 13% higher cost-reduction improvements and 17% higher balance sheet improvements.
‘Reinventors’ -- companies that actively generate 360° value and embrace total enterprise reinvention -- also report delivering 1.3 times more financial value in the first six months, reflecting the speed at which such companies execute and deliver increased value.
Reinventors not only exceed their peers on financial value but as importantly do so on non-financial outcomes. Over the past year, these companies perform 32% better on sustainability and 31% better on experience for customers, suppliers, and employees. They also score 11% higher on innovation and talent outcomes, and 7% higher on inclusion and diversity progress.
Total enterprise reinvention offers great opportunity, but there is still a long way to go. Only 8% of the companies we surveyed are reinventors. The majority (86%) are transformers, only transforming parts of the enterprise, often as finite and siloed projects, instead of taking a holistic, ongoing approach. The remaining 6% are optimizers -- only optimizing part of their operations and not using technology as a significant enabler of their transformations.
At a time when sustainable, high-impact growth has become imperative, the time to move forward on a digital-first, continuous reinvention strategy is now. Combining the power of technology and human ingenuity will enable organizations to reinvent how they go to market, operate, partner, and create value to unlock a new performance frontier.
Building a Digital Core
An overwhelming 97% of executives we surveyed agree that technology plays a critical role in their reinvention strategy. To adopt a total enterprise reinvention strategy, technology must not just be important -- it must be viewed as a core competency. The digital core relies on three foundational technologies: cloud, data, and AI, and is built upon three layers:
An infrastructure and security layer that is automated, agile, and secure by design.
A data and AI layer where enterprise data becomes democratized and accessible at scale across the enterprise, with AI-enabled applications and platforms. AI will transform every company and every function within it. Only 12% of companies have true enterprise-wide AI strategies and deployments, and the advent of generative AI and large language models as a critical inflection point in AI development further accentuates the importance of this technology for reinvention.
An applications and platforms layer that is highly interoperable and where new experiences and ways of operating come alive.
A strong digital core allows companies to develop new capabilities at speed and fail fast when needed. Reinventors treat their digital core as a key competency and have a clear roadmap, with a clear ROI, to continuously enhance and differentiate its capabilities.
Charting a Path Forward
Charting a course towards reinvention requires a deliberate and aligned decision by the C-suite to determine whether a company wants to be a reinventor, transformer or optimizer. Our research found 45% of transformers already indicate a desire to become a reinventor. But to understand the feasibility of achieving this shift, it is important to assess one’s capabilities against six criteria that differentiate reinventors and determine the aptitude, cost, alignment, and effort needed to get there:
Make reinvention the strategy -- not an execution lever to deliver on their strategy.
Invest in the digital core as a primary source of competitive advantage, leveraging the power of cloud, data, and AI to accelerate new capabilities.
Go beyond benchmarks and seek the art of the possible. Define a new performance frontier, enabled by technology, data, AI, and new ways of working to redefine the benchmarks of success.
Prioritize talent strategy and people impact as the central drivers of change -- tapping into the power of human ingenuity and putting leadership and people at the heart of reinvention. Develop a purposeful talent strategy and a plan to not only be a talent consumer but become a talent creator.
Reinvention is boundaryless and breaks down silos to unleash 360° value, connecting people, processes, and data across the organization and beyond. It starts with the right operating model and the ability to build empowered, multidisciplinary teams.
Embrace reinvention as a continuous strategy -- not as a one-off event but as a capability that can be tapped to fuel innovation and growth. Cultural readiness is one of the most significant barriers to reinvention. Leaders must build change as an enduring capability, not one that is stood up for every transformation effort. They must make change part of the company’s DNA in order to lower the change fatigue threshold and improve change adoption.
Achieving the characteristics of a reinventor represents a high bar for many organizations. Every industry will likely have one or more reinventors that drive superior growth, greater speed and agility, and a step change in its operations, customer engagement and cost structure. These reinventors will set the bar for every other competitor and force them to respond.
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