Beacon 2019: Thriving in a Climate of Continuous Transformation

Key Insights

  • Organizations are generally positive regarding their outlook for 2019 with 86 percent of respondents in our research expecting to see some level of revenue growth in the year ahead.
  • In spite of positivity, organizations have a people problem that most are unprepared to solve, citing a lack of bandwidth, know-how, and clear strategies as the top barriers to addressing strategic priorities.
  • By designing experiences informed by customer perspectives and applying data and analytics (D&A) to garner organizational alignment, organizations can solve for people-related barriers and build the capacity to transform continuously.
  • Within this piece, we offer the actionable considerations for leaders laying the foundation for continuous transformation in 2019:
  1. Invest in employees as activators of continuous transformation, bringing a focus on intentional employee engagement.
  2. Arm employees with insights from organizational data as a tool to activate transformation.
  3. Identify use cases for D&A that power differentiated customer experiences: a top transformation area for the year ahead.

Your Priority for 2019:

Enabling your people to drive success in a climate of continuous transformation

To analyze organizational attitudes and determine the most critical strategic priorities for 2019, we surveyed more than 700 senior leaders in seven industries that had 2017 revenues greater than $1 billion and that are headquartered in the U.S. or U.K.

The Industries Surveyed:

  • Consumer Packaged Goods
  • Energy
  • Financial Services
  • Healthcare – Payor
  • Life Sciences
  • Media, Entertainment, and Communications
  • Retail

Optimism Is In For 2019

Nearly 90 percent of organizations project growth and nearly half feel confident in their ability to influence the direction of their industries

While society is challenged by the lack of certainty brought by new and evolving perspectives, the business world has reached an optimistic consensus: 86 percent of organizations are expecting growth in 2019, according to our research. Though financial performance outlook is positive, organizations must also seek to adapt and meet the revenue targets fueling these growth projections.

Further, just three percent of organizations are expecting revenue declines, with 11 percent anticipating no change. Experts validate the optimism that leaders expressed in our research while also acknowledging the potential for overconfidence: analysts polled by Standard and Poors’ Capital IQ predict average earnings per share to grow through the end of 2019 by about 30 percent to record highs,2 yet other financial experts warn of the possibility of a recession.3

Beacon 2019: Thriving in a Climate of Continuous Transformation

Although optimism abounds, it’s unclear how to ground that optimism in reality. There’s no unanimous agreement on why organizations feel the way they do—especially since so few are prepared to prioritize and resolve the elusive people issues that are functioning as barriers to achieving transformation imperatives.

Measuring optimism isn’t precise science, but The Organization for Economic Cooperation and Development’s Business Confidence Index (BCI) comes close. The BCI functions as an indicator of the potential rise or decline in the business world’s perception of economic health, based on industry surveys. Any BCI number above 100 indicates confidence in the economy, and anything below 100 indicates pessimism. Despite continuous market volatility and (then) impending, divisive, and unpredictable midterm elections, the United States’ business confidence remained at 101.06 in October 2018— decidedly optimistic about the future and one of the highest October measures in recent history. This figure is the product of a steadily increasing confidence trajectory from 2016 onwards.4

The U.S. isn’t alone in feeling the optimism: On the brink of Brexit, businesses in the United Kingdom are slightly more confident than the U.S.—with an October 2018 U.K. BCI score of 101.16. Much like elections in the U.S., the rocky trajectory of the Brexit has the potential to fluctuate the U.K.’s economic outlook.

It’s Not Going to Be Easy

But, leaders can boost their likelihood of success by investing in employees as activators of continuous transformation

“An organization's ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage.” -Jack Welch, Former CEO General Electric

Despite a generally optimistic sentiment, most organizations aren't confident in their ability to overcome obstacles that stand in the way of delivering on strategic priorities. Complicating these obstacles in 2019 are investment challenges that further hinder the resolution of these obstacles, regardless of whether an organization is in a growth cycle.5 Challenges are taking the form of shrinking operational budgets, less access to project funding, and suboptimal execution models driven by a rise in procurement processes, risk management considerations, extended decision-making cycle-times, and a misapplication of business agility and experience design.

Beacon 2019: Thriving in a Climate of Continuous Transformation

What’s Holding Back the Planning and Innovation Mindset In 2019

Sales, ops, IT, finance, and marketing may not always agree, but they all view product and service innovation as a competitive advantage. Clarifying the collective importance of innovation creates a rallying point for the entire organization to stand behind. Transformation becomes a lot more feasible to attain when there’s common ground.

Our research observes that nearly 40 percent of organizations believe the innovation function should play a more significant role in long-term planning, and less than half believe innovation currently does.

Transformation doesn’t offer instant gratification. Achieving continuous transformation takes time, strategic thinking, and, most importantly, a change in organizational culture, so it’s no surprise that most organizations push off long-term planning for another day. Our research indicates there is a significant drop in organizations conducting strategy development that looks beyond five years.

Indeed, less than a third of organizations conduct regular planning on a five-year (or longer) time horizon. Many organizations are looking to Agile methodologies to help them transform effectively and efficiently,6 and short-term Agile thinking is critical. However, long-term planning enables organizations to work incrementally toward big-ticket goals, like more than tripling revenue in ten years, as Ecolab did through a deliberate customer-focused strategy.7

As we discussed, people and resources are cited by 76 percent of organizations as the primary barriers to success. Lack of clear strategy and knowledge gaps closely follow as culprits, cited by 72 percent and 70 percent of respondents, respectively.

It’s a catch-22—people and resources are the most significant constraints to driving success, yet organizations readily acknowledge that investing in the strategies needed to effectively attract, enable, and retain the right people and resources is a weak spot. What’s missing? A focus on people and their role as activators of change, an essential element of continuous transformation. Establishing this focus begins with a people-oriented, intentional effort from the top down that’s committed to building the organizational capacity, resilience, and culture needed to thrive in a continuously transforming business climate.

In this climate, organizations can benefit by taking a closer look at their capacity, resilience, and cultures. As Microsoft CEO Satya Nadella successfully demonstrated by stopping the stagnation mindset at Microsoft and boosting organizational success and innovation:8 it’s never too late to renovate organizational culture.

Organizations are acutely aware of the role of culture in empowering and aligning their people more closely to transformation imperatives and to generate greater activation of the transformation process. Indeed, 70 percent of respondents in our research cite organizational culture as a strategic priority for 2019, yet only 20 percent feel very prepared to address it.

Beacon 2019: Thriving in a Climate of Continuous Transformation

Engage Them or Lose Them: The Choice Is Yours

Intentional employee engagement is central to hiring and retaining your activators of continuous transformation

With economic optimism comes an escalated competition for labor. In a full employment economy, employees have the upper hand, and organizations need new strategies to attract, enable, and retain the best and brightest. In fact, according to our research, nearly three-quarters (74 percent) of organizations cite talent acquisition as a somewhat or very high strategic priority.

Intentionally creating and delivering on the promise of a positive employee experience (EX) is table-stakes for attracting and retaining top talent. A culture that fosters innovation, learning, and curiosity gives talented employees the environment they yearn for.9

Your people, the ones that are your most valuable activators of continuous transformation, are also seeking an experience where they feel cared for, valued, and understood. More specifically, they are attracted to organizations that care about creating outstanding experiences for customers and employees. We consistently find that organizations that elevate their commitment to customer and employee experience are considerably more successful in engaging the hearts and minds of their employees while driving bottom-line performance. Research also shows that work teams in the top quartile in employee engagement outperform bottom-quartile teams by 17 percent in productivity and 21 percent in profitability.10 Interestingly, zeroing in on employee engagement while simultaneously focusing on digital enablement amplifies the positive impact to engagement and deepens the skills and perspectives employees need to support continuous transformation. It doesn’t hurt that customer experience and digital enablement are also cited as 2019 strategic priorities by 82 percent and 73 percent of business leaders in our survey, respectively.

Unlocking Potential Requires Clarity: Data & Analytics Are Pivotal

Data-driven decision-making is key to enabling your people with the insights they need to activate transformation

To unlock the potential of continuous transformation, organizational clarity is critical. One of the greatest antidotes to a lack of clarity is employing the power of data & analytics (D&A). With operational efficiency sitting as the highest priority among respondents in this year’s survey, D&A can highlight the operational inefficiencies that organizations seek to remedy—task-based reductions, work location optimization, or human capital reallocation decisions.

Building organizational clarity through D&A is imperative as leaders invest human and financial capital into transformation, especially efforts grounded in customer experience and digital enablement. D&A can be utilized to determine the best course of action—or what to avoid. Organizations are confident in the investments they are making and will continue to make in strengthening D&A capabilities, with 97 percent of organizations in our survey indicating that D&A is at least “somewhat” of a competitive advantage.

The democratization of organizational data is a promising area of focus in 2019 on the journey to D&A maturity. By banishing D&A silos, making it readily available to cross-functional teams, and integrating it into decision-making processes, organizations won’t just see in-year returns in 2019; they'll also be preparing themselves for the next evolution of data-driven transformation. D&A applications can drive the success of a swath of strategic priorities—if trust in D&A is an organizational pillar; without trust from stakeholders, D&A enablement may prove ineffective.

From greenlighting strategies driven by customer insights and undelivered customer wants, to minimizing operational inefficiencies, D&A is more than just a suggestion. It has the potential to align an organization, define strategic direction, and infuse stakeholder trust around data-driven decision-making, ensuring buy-in for challenging decisions. Yet, our research shows that the level of prioritization around D&A varies across functions, signaling an opportunity for greater organizational alignment on the path to D&A maturity and the democratization of organizational data.

While allowing every employee access to insights may furrow the brow of leadership, reformulating the idea of what data is clarifies its purpose. Data is more than a collection of numbers—it’s a way to answer complex questions, and the closest thing leaders have to a crystal ball.

Beacon 2019: Thriving in a Climate of Continuous Transformation

Data Regulation Is Trending

In our research, we found that cybersecurity is a priority among 81 percent of respondents, a sentiment that has cascaded into the regulatory arena in the form of data regulation. Regulating data through legislation has finally made its way to the United States, right after the EU’s General Data Protection Regulation took hold. The California Consumer Protection Act became law in mid-2018,11 empowering consumers to take control of how their personal information is used. Similar legislation could soon spread to the rest of the United States. Heavily regulating a notoriously unchecked process may spell out trouble for organizations exploring ways to expand data collection and utilization.

Some organizations don't have much of a choice when defining transformational priorities. Healthcare must adhere to strict HIPAA protocols, and financial services are strongly regulated as well. However, even the most regulated industries must approach transformation and planning from an increasingly human purview.

Healthcare and financial services organizations account for 15.3 percent and 24.3 percent of data breaches respectively—something new regulations seek to curb.12

Let Your Data See the Light of Day

Bringing analytics from the back office to the front office to enable customer-focused, continuous transformation

As reflected in the importance of customer-centricity among our survey respondents, customers (and employees) are king. With customer experience deemed a priority by over three-quarters of respondents in our research, it's also the second-highest transformation area for 2019, cited by 45 percent of respondents. Below are just three examples of data-driven use cases that exemplify the value of D&A maturity and the democratization of data for improved customer experiences:

  • A significant hotel merger illuminates the value of D&A. While the two organizations were united on paper, the merged rewards experience left much to be desired and divided the customer base. Extremely loyal customers—many that chose hotels exclusively for the rewards—were dismayed that the experience wasn’t uniform across all the new entity’s properties.13 A thorough examination of customer D&A could have informed decision-makers of the importance of an integrated, unified rewards program and the risks of not considering specific analytics when planning for how the combined organization would come together in the eyes of loyal customers.
  • Data is being connected and applied in new ways to improve citizen care outcomes. For example, state and local government agencies are increasingly tapping into blended data-sets—linking data across relevant sources to yield richer insights. In working with a state department of elder affairs, we blended survey data with other relevant data-sets to model nursing home placement, enabling the agency to be more targeted and objective in making decisions about prioritizing care in a climate where there are more needs than resources available.
  • While car dealerships may be known for providing memorable experiences at the point of sale, post-sale experiences, such as routine maintenance visits, are often less favorable. Cars are becoming more futuristic by the day: AI assistants, infotainment systems, and even self-driving capabilities are rolling out onto the market. In tandem, cars are becoming more reliable and more efficient—reducing the frequency maintenance-related touch-points. There is one looming implication of more infrequent service appointments: it raises the stakes on the customer wow factor. If customers are coming in once a year or less, service departments must hit it out of the park or the memory will stand out like a sore thumb. Ford is one step ahead of the game in creating a seamless service experience; they’re in the testing phase of utilizing kiosks to allow customers to drop off vehicles for service—eliminating the need to wait for an agent and enabling 24/7 drop off.14 Sales and service departments don’t have to compete to provide the best CX—simple servicing methods let customers spend less time waiting for repairs and more time driving and making the positive associations car manufacturers and dealers want.

2019 Critical Considerations: Where to Go from Here

Three ways to prep your people to drive success in a climate of continuous transformation

1. Get to the Source of People-Related Barriers

Creating an engaging experience—for employees and customers—demands a weaving together of quantitative and qualitative data to engage customers with a consistent, personalized, and seamless experience. Ninety-two percent of organizations surveyed feel that attaining better customer-centricity is at least somewhat attainable—it’s the priority organizations are second-most prepared to address. But they must step back and evaluate if they’re truly prepared, as bettering CX can be data and labor-intensive, though decidedly worth the investment. Our research points out that well executed CX converts customers to brand champions, reinforcing the customer-company bond and creating the most loyal of customers.15 Forrester cites that companies performing highly on its Forrester CX index™ tend to generate about 5.1 times the revenue of low-performers, as customers are more likely to stay loyal to a company and recommend it to peers.16

Moving from customers to employees, organizations have an opportunity to create standout employee experiences by focusing on the importance of individual contributions and employee engagement.

2. Plan with a Long View

Viewing the world through a future lens can give leaders the edge they need to plan for tomorrow. Don’t strategize in a vacuum without considering the broader market and the direction it’s heading. Plans in sync with the pulse of not just similar industries, but the entire market, are plans designed to stand above and beyond others.

Dedication to the long-term view can improve resiliency and create new value to defend against market disruption and stagnation. Our research determined that strategic planning is perceived as the function primarily responsible for long-term planning, yet at the same time nearly 40 percent believe the strategic planning function isn’t sufficiently focused on the long-term view. This is a conundrum because strategic planning and long-term planning perform best when they are integrated. It could also be an indication that in many cases, strategic planning is stifled by reactionary modes of thinking, isolated from broader market contexts or focused only on market insights that can be more easily measured. In fact, our research shows that near-term cost reduction and current market disruption are the top two factors prompting a change in strategic priorities. While these reactive factors are imperative for organizations to address, they cannot drive transformation unless they are executed in balance with a long view of the broader market.

A misunderstanding of the long-view, approached through the lens of a traditional three-to-five-year-plan, applies excessive rigidity. The three-to-five-year plan carries a very different meaning today than it did in the past—the rate of change dictates that organizations be much more flexible to accommodate markets that can evolve overnight. In an about-face, there’s also a misconception that Agile ways of working will render longer-term planning obsolete. Neither is a good philosophy; instead, organizations can balance the scales by adopting Agile methodologies and managing plans in a present and iterative way while also having a design for the future.

Additionally, our research observes that less than a quarter of organizations believe the design function, or the group responsible for design projects within the organization, does or should think about long-term planning, yet in recent years, some of the most successful companies—from IBM to Dyson17 —have demonstrated that design can create new sources of value and yield sustained competitive advantage. Furthermore, design and futures thinking have been intersecting in new ways to improve organizations’ ability to rethink long-term planning and engage a wider range of stakeholders than ever before.18

Many organizations are currently applying design talent to dream up singular projects, but we’ve found that organizations would be better suited to integrate design thinking on a strategic level. When design is not positioned as a vital function, its full potential cannot be realized. To reap the rewards of design, organizations must commit to design thinking—and integrate design deliberately into planning processes. Making this transformation requires the right culture and investment. Treating the design process itself as a science allows organizations to step out of deep-seated patterns of thinking and become more iterative to meet the demands of markets that continuously change.19

3. Open Data is a Rule, Not an Exception

The importance of data democratization can't be understated. Cross-functional D&A strategies not only help solve a lack of strategic planning competence, but could also be a direct revenue driver soon: By 2020, 90 percent of large enterprises will be generating revenue from data-as-a-service.20

Ninety-seven percent of our survey respondents believe that prioritizing D&A creates a competitive advantage. Extending this advantage to an entire organization through a transparent data philosophy opens the floodgates of new growth and innovation.

In spite of perceived competitive advantage around D&A, our research shows that only 44 percent of organizations investing in their analytics capabilities believe they have been successful or very successful in building a data-driven culture that fosters trust in everything from data collection to data-informed decision-making.21 To garner alignment and infuse trust in decisions based on insights from data, organizations can start by breaking down data silos, engaging business users for input in the design of analytics tools, and working towards real-time insights deployed through an intentional change management approach. To do so, analytics practitioners can consider language in the form of data storytelling to engage and win audiences as part of a data-driven cultural transformation.22

Floating on Optimism, Grounded in Trust

Enabling a continuous transformation through D&A and CX in lockstep

Market conditions are unpredictable, but organizations are encouraged by what’s in store for 2019. We believe this year’s optimism gives organizations the space to overcome barriers and tackle the critical operational efficiency, D&A, and customer experience initiatives that will insulate them from the uncertain future and help them build the capacity to continuously evolve. The often overlooked, but crucial, part of any transformational endeavor always hones-in on the human element of trust. Trust in the value and validity of D&A, trust in customer experiences, and trust in the importance of continuous transformation are all pieces of the puzzle that many organizations struggle to connect.

Succeeding this year means finding ways to bask in 2019’s optimism while transforming in ways that put D&A and human-centered initiatives like CX at the helm and in lock-step. When designed and implemented holistically, an organization’s D&A and CX capabilities amplify one another and can solve entrenched human challenges while also enabling the operational efficiencies that many covet.

Resolute leaders know that 2019’s growth mode isn’t just about revenue generation—it’s about uncovering new efficiencies, unleashing D&A’s potential, optimizing human capital, and continuously transforming to prepare for the decade ahead. In 2019, leaders should prepare their organizations to thrive in a climate of continuous transformation by engaging their people, maturing their D&A capabilities, amplifying their focus on CX and EX, and evolving their approach to strategic planning and design.

1. “The Human Experience Imperative," North Highland, 2016
2. “Too Much Optimism In Earnings Forecasts Could Be Setting The Market For Trouble,” Forbes, June 8, 2018
3. “Markets Are Signaling Higher Odds of a 2019 Recession," Bloomberg, Jan. 2, 2019
4. “Business Confidence Index,” OECD, 2018
5. “Humanizing Business Transformation,” North Highland, 2017
6. “Leading the PMO into an Agile World,” North Highland, 2018
7. “Disruption-Proof Talent Management,” North Highland, 2018
8. “Intentional Cultures are Resilient,” North Highland, 2018
9. “Intentional Cultures are Resilient,” North Highland, 2018
10. “State of the Global Workplace,” Gallup, 2017
11. “California Consumer Privacy Act,” Californians for Consumer Privacy, 2018
12. “Data Security,” National Retail Federation, 2018
13. “Points-Obsessed Customers are Terrified of Losing Perks,” Bloomberg, Aug. 1, 2018
14. “Ford Introduces Automated Kiosks to Simplify Service Visits,” MotorTrend, Mar. 14, 2017
15. “The Human Experience Imperative,” North Highland, 2016
16. “Improving CX Through Business Discipline Drives Growth,” Forrester, June 19, 2017
17. “Fortune’s 2018 Business by Design List,” Fortune, Dec. 22, 2017
18. “Futures as Design: Explorations, Images Participations,” Kozubaev, Sandjar, ACM Interactions, March-April 2018
19. “What Design Thinking is, and why it’s so Popular,” Interaction Design Foundation, Sept. 2018
20. “IDC Predictions Provide a Blueprint and Key Building Blocks for Becoming a Digital Native Enterprise,” IDC, Oct. 31, 2017
21. “Taking the Lead with Analytics,” North Highland, April 2018
22. “Taking the Lead with Analytics: Shifting the Cultural Paradigm,” True North, Oct. 4, 2018