In brief:
- In a December 2021 survey of 515 U.S. and U.K.-based business leaders across industries, we found that organizations are preparing for a future in flux by laying the groundwork for more adaptive enterprises.
- Their transformation strategies are focused on bringing people, ways of working, digital, and analytics capabilities together to navigate uncertainty more seamlessly.
- They plan to optimize talent for transformation and establish the organizational blueprint for an adaptive enterprise. All the while, they’ll prioritize digital and data capabilities to deliver transformation.
- Leaders should employ the following techniques to support their strategies in 2022:
- Cultivating made-for-change mindsets comprised of design, systems, and scenario thinking.
- Closely aligning the business around organizational strategy.
- Reimagining data and technology infrastructure.
In December 2021, North Highland surveyed more than 500 business leaders across industries, exploring their thoughts on the trends and challenges expected in 2022. While each industry had specific focuses, one takeaway was consistent across the board: The future is very much in flux, and business leaders must learn to be flexible. This blog series explores the insights from the study, offering the advice you need to capitalize on the trends and build agility for a fast-paced, quickly changing future.
Bracing for a future in flux
Business in 2022 is anything but business as usual. Talent shortages, supply chain congestion, and geopolitical conflict persist in a market characterized by an unsettling mix of low rates and high inflation. Those keeping a pulse on the macro-economic climate are treading cautiously.
“Things are normalizing… but they are not normal,” said Morgan Stanley’s chief global economist.
From where we stand today, it’s impossible to know what our future “normal” looks like. Our research suggests that business leaders know how hard it is to see around the corner right now, and they’re designing their transformation strategies accordingly. A December 2021 survey of 515 U.S. and U.K.-based business leaders across industries found that organizations are laying foundations for more adaptive enterprises. They’re aiming to build companies that seamlessly bring together people, workflows, and digital and data capabilities.
“Firms with a strong adaptive foundation…grow at three times the industry average,” according to research and advisory firm Forrester.
Insights from the leaders we surveyed offer a look at the trends to expect in and beyond 2022, and pragmatic guidance on fortifying transformation strategies with greater flexibility.
Answering talent optimization questions with flexibility
With a staggering 10.9 million open jobs at the end of 2021 in the U.S. alone, many businesses are in dire need of qualified employees. Unsurprisingly, leaders across the board cite optimizing talent as their top transformation objective (36 percent of those we surveyed). This includes attraction, development, and retention of talent. To accomplish this objective, many leaders are focusing on flexibility as the path forward, a particularly important tool in an uncertain market.
Keeping employees motivated, managing change adoption, and talent turnover are three of the top obstacles to delivering transformation successfully, according to our research. Business leaders believe that workforce strategy and skills are the two most critical capabilities that need strengthening. Leaders in all spaces know it’s imperative to get creative with sourcing and developing talent. Nearly all (95 percent) of those we surveyed agreed that talent and skill needs will change throughout the delivery of upcoming transformation strategies.
To address changing workforce needs, business leaders are tapping into a broader talent pool via hybrid work (46 percent), reskilling/upskilling employees (39 percent), employing a Managed Service (39 percent), and using virtual delivery models like nearshoring or offshoring (39 percent). Enabled by the right talent mix, business leaders are next focusing on establishing an organizational blueprint for an adaptive enterprise.
Galvanizing the workforce and operations in support of an adaptive future
As business leaders seek to optimize talent with flexibility, they’ll need to consider how employees work together and by what operational guardrails. Improving ways of working closely follows talent as the second most important transformation strategy objective among leaders we surveyed. Ninety-eight percent of respondents with a workforce sourcing strategy say cross-functional teaming is an objective. Business leaders say organizational/cross-functional alignment is the second most important element in helping organizations be more flexible (33 percent). Conversely, 32 percent see operating models as a barrier to becoming more adaptive.
Although our research indicates business leaders recognize the role that organizational and operational blueprints play in enabling flexibility, they may need to evolve existing mindsets, cultural norms, and patterns of working to reach set goals. For example, we found that organizations are more likely to perceive transformation as a singular event rather than an always-on activity: 58 percent of those we surveyed perceived transformation as a final destination, large-scale overhaul, or fixed event.
Key techniques can help business leaders instill an appreciation for always-on change, yet our research indicates that they’re underutilized. Just under one-third of respondents use scenario planning software in the design and delivery of their transformations. An even more modest share – 28 percent – relies on agile planning. According to Forrester, infusing agility into “strategic portfolio decision-making” is essential to flexibility, customer value, and outcomes.
“Transitioning to agile development practices alone without encouraging experimentation from a business perspective fails to build the trust necessary for delivering innovative products to customers,” Forrester reports.
Business leaders in 2022 have an opportunity to fortify the bond between their people and adaptive operational objectives. Digital and data acumen can make this bond even stronger.
Powering operational performance with digital and data
Respondents in our study told us that digital/technological capabilities are the most significant signal of change being considered when developing transformation strategies. Leaders give significant mindshare to tech because of its foundational role in driving operational performance. After all, digital is both “a thing,” (e.g., the tools and platforms) and “a way,” (e.g., how you enable employees to drive transformation with digital). Our research underscores the connection between digital and operational performance.
A need for greater systems and infrastructure (30 percent of respondents) and adoption of digital tools (30 percent) are the top two internal factors business leaders want to address through transformation this year. It’s believed that digital capabilities have a greater impact on operational assessment, enhancement, and continuous improvement (47 percent) relative to other areas of the business such as transformation delivery or strategy and planning. Leaders are primarily focused on enabling employees to use data through visualization tools, a top strategy for workforce enablement, according to our study.
ACT ON THE TRENDS
How can you navigate the challenges confronting business this year? Consider the following:
- Empower leaders and employees with a made-for-change mindset comprised of design, systems, and scenario thinking. As we’ve explored, a test-and-learn approach helps businesses more easily adapt throughout the design and delivery of transformation. Incorporate design thinking, embracing the tenets of empathy, iteration, and co-creation when building products, systems, and solutions. In addition, reimagine your business as a system of interconnected people, processes, and technologies—acknowledging that today’s transformations cannot be accomplished in a single function. Finally, employ scenario thinking by encouraging employees to pilot concepts in different situations and contexts.
- Resolve operational hurdles by aligning around your organizational strategy. In a world where talent is scarce and needs are always changing, focusing on the following questions can help your organizational strategy drive transformation performance:
- Is our leadership team aligned with the organizational strategy? Aligning your business around a new organizational strategy, including roles, skills, performance, and incentives, starts at the top with a shared set of enterprise objectives and key results (OKRs). Throughout this dialogue, ensure an inclusive, diverse set of stakeholders are involved in the conversation, and that there is enough productive discussion to ensure all voices have been heard and all issues are resolved to get to alignment.
- How should we evolve our workforce to drive our strategy forward? Think of your workforce as a modular set of components. It could include a mix of full-time, part-time, contract, offshore, or managed services options. Given talent shortages, employee engagement pressures, and marketplace dynamics, internal talent mobility is becoming more important. Can you deploy team members’ skill sets to different functional areas in new and creative ways?
- How can reskilling help us better navigate talent pressures? Rather than spending months trying to find the perfect employee, place greater emphasis on talent management and development so you can reskill and upskill new employees once they’re on board. Focusing training efforts on building competencies in learning agility enable employees to navigate change and ambiguity with greater speed and comfort.
- Can dedicated governance support the collaboration we want to cultivate? Consider an adaptive governance structure like a Transformation Value Office. This can reduce change reticence, solidify cross-functional ways of working and rethink patterns of teaming that drive toward shared enterprise objectives, rather than functional silos.
- Evaluate your tech stack. Create a blueprint to understand how tech and data enable customer and employee experiences today. Chart your customers’ and/or employees’ end-to-end experience journey, with an emphasis on where data and technology—along with processes, roles, and people—come into play. Instead of designing a technology solution in silos, think about it in terms of the business value, and customer or employee outcomes it will create. As you’re gauging the performance of your technology investments, prioritize people-centric metrics, such as collaboration networks. These guide the heart and soul of the business, not just the standard profit and loss metrics of the past.
Our research of over 500 business leaders underscores the importance of a made-for-change mindset in designing and delivering transformation strategy. It’s impossible to have all the answers, and what is perceived as the “right” answer today may not be the optimal solution tomorrow. By managing the workforce with a flexible stance, embracing more adaptive operational practices, and tapping into the power of data, business leaders will be set up to succeed in a certainly uncertain future.
