After more than three-quarters of companies (76 percent) cut costs to survive during the pandemic, 90 percent of C-suite execs say they must now take a whole new approach to costs in order to transform their businesses to respond to ongoing disruption while also uncovering new growth and value, according to a new report from professional services firm Accenture.
The firm’s new Zero-Based Transformation: The Big Reset report, based on a global survey of 2,000 C-level executives across 15 industries, reveals an urgency to shift away from traditional cost reduction efforts that weren’t successful in the past. Executives acknowledge their current and future cost transformations must be interconnected with strategic priorities such as growth, sustainability and innovation and centered around building new technology-enabled capabilities.
According to the report, a vast majority of executives surveyed (92 percent) say that these transformations are no longer driven solely by financial considerations, but also need to account for their impact on their company’s sustainability and purpose. Their priority is not only profitable but responsible growth. In addition, leaders today are looking to reset their business holistically, instead of focusing on one or two areas as in the past. Virtually all executives (96 percent) indicated that their cost transformation plans span all or most areas of their business.
“As companies come out of survival mode and rush to transform all aspects of the organization, leaders have quickly realized that they can no longer look at costs as just an annual budgeting exercise,” said Robert Willems, global zero-based transformation lead at Accenture Strategy, in a news release. “Starting with a zero-based approach that is rooted in technology allows leaders to reimagine their business, reset their cost base, and free up funds for strategic priorities that drive growth, build resilience and better meet stakeholder needs.”
The report also addresses the critical role of technology in successful cost transformations because it gives companies visibility and a forensic view of costs to manage and recalibrate in real-time, as well as plan for future scenarios. Nearly 70 percent of executives said they are investing in technologies including AI, digital tools and cybersecurity to optimize operations. Without these investments, 80 percent of executives see continued challenges to their cost transformation efforts.
According to Accenture, there are four key aspects companies must focus on to make cost transformations succeed where past efforts have failed:
“We are in a perfect storm with record inflation, global volatility, supply chain challenges, and labor and material shortages. To successfully navigate this storm, company leaders have realized they need to focus on resilience, create value and deliver on sustainability simultaneously. Those who fundamentally rethink their total cost base and how they operate will move beyond cutting costs to not only survive but thrive, compete and win in the future,” said Bill Theofilou, CEO & enterprise strategy global lead, Accenture Strategy, in the release.
Accenture Research conducted a survey of 2,000 executives across 15 industries and 12 countries to understand the decisive actions executives are taking to fuel growth and resilience of their organizations. More than a quarter of the survey respondents were Chief Executive Officers (29%) and the remaining sample was equally distributed across Chief Strategy Officers, Chief Financial Officer, Chief Operations Officer and Business Unit Directors. A large majority of executives (95%) were part of corporations of at least $1 Billion in revenue.