Business leaders in the UK are failing to keep up with the increasing rate of change, placing companies at risk from factors such as reduced turnover and hostile takeover, according to a new report commissioned by Fujitsu.
The Fit to Change report calls into question UK plc’s ability to adapt and succeed in the uncertain environment they operate within today.
The study, which included interviews with 150 executives and input from the Fit to Change panel, reveals two thirds of executives believe the current rate of change, driven by factors such as customer demand and new competitive threats, is too quick for UK organisations to keep pace with and 57% agree an inability to respond rapidly and effectively to change is one of the most significant risks their organisation faces today.
Professor John Kotter, Harvard Business School said: “Only 32% of those in private sector firms are at all optimistic they are actually ‘fit to change’. In a world that is changing more and more rapidly, these are highly distressing numbers.”
The report also reveals:
• Business planning cycles are reducing – five years ago 43% of respondents believed they could plan with certainty two years ahead. Only 21% believe that is still possible today
• Today, 33% believe they can plan one year ahead, and a quarter feel it is only possible to plan ahead six months with any degree of certainty
The most likely consequences of failing to adapt to change are financial, said researchers. Overwhelmingly, 96% of executives believe decreased turnover would be a consequence of not reacting appropriately to change. Similarly, respondents felt the ability to get finance would be severely impacted by a failure to appear responsive to the market. Sixty two per cent believe a drop in share price would be a likely outcome and 59% fear hostile takeover.
Customers are the biggest driver of change – 83% of respondents felt they were a significant factor – clearly reflecting the increasingly demanding consumer businesses are tackling today, the study found. However, it was also the factor that business leaders felt their own organisation was least able to respond to effectively, revealing the biggest pressure point for businesses today.
“The hardest task for CEOs today is to strike the balance between responding to external change and allowing change to happen around you while you stay true to your long term plan. Being Fit to Change is about understanding the environment around you and arming your organisation in advance with the tools it needs to be able to respond quickly – and at its pinnacle it is about being the player driving change in your sector,” said Duncan Tait, CEO, Fujitsu.
“This is a topic at the core of Fujitsu’s own strategy right now. We are evolving to meet the need to change and to remain competitive in a market we have operated in for 40 years.”
To tackle change successfully, respondents were clear strong leadership is the key ingredient – 97% felt this. Additionally, the capacity to change and available resources topped the list of ingredients required to be fit to change. However, when comparing the ingredients business leaders believe are essential to being fit to change with those they believe are most lacking across UK plc, the gaps occurred in three areas – a robust ecosystem of suppliers; a long term vision and the right technology solutions, the study found.