Davos, Switzerland, January 16, 2023–(BUSINESS WIRE)–While 65% of European business leaders agree that they face the most challenging operating environment ever, a large proportion (77%) agree to accelerate growth in an economic downturn are confident about their organizations’ potential, according to a new report from Accenture (NYSE:ACN).
According to the “Accelerating Europe’s Path to Reinvention” report, rising energy costs are the top challenge affecting margins for European companies, cited by 19% of respondents, followed by supply chain disruptions (14%).
Despite these challenges, 81% of European business leaders believe that their organizations are well positioned to achieve future growth after overcoming the pandemic.
Released at the annual meeting of the World Economic Forum in Davos, the report looks at the most pressing issues facing European companies, their strengths and weaknesses, and how to enhance competitiveness, accelerate growth and How can they continually adapt themselves to a volatile world. Improving profitability.
“The resilience business leaders have demonstrated may explain their confidence in navigating current headwinds, including the energy crisis,” said Jean-Marc Olagnier, Accenture’s CEO for Europe. “However, for European companies in the long term their competitiveness is at stake. With an increasingly volatile macroeconomic environment, the pace of technological innovation and the need to accelerate the energy transition, companies need to continually engage in a deliberate strategy. Reinvent your business. It is through total enterprise reinvention that European companies can increase competitiveness and thrive in the long term.”
European growth lags peers with lackluster technology investment
The report, which analyzed the financial performance of nearly 3,000 companies globally, found that while European companies report strong profitability, they are slower to grow revenue than their peers in North America and Asia Pacific.
To better understand where European companies stand, the report also examines how they perform compared to peers in North America and Asia Pacific in six areas: talent, technology, supply chain and operations, sales and customers , liquidity and cost, and stability.
According to the analysis, European businesses are outperforming their peers through stability, talent and liquidity and cost management. However, they are far behind in using technology to drive sales and drive top-line growth.
European companies are also less likely to innovate using emerging technologies, transition to technology-driven business models, and have digital-savvy leadership than North American and Asia Pacific companies.
“European companies’ strong profitability and low growth patterns suggest that they are more likely to squeeze value from existing business streams than grow new ones,” said Michael Bruckner, Accenture’s chief strategy officer for Europe. “Optimizing costs and maximizing current profitability is important, but so must be to generate liquidity to invest for the future. They need to provide stability and employee experience while pursuing technology-driven growth opportunities. You should leverage your strengths in the potential.”
Unprecedented times demand unprecedented response
According to the report, while European businesses have built exceptional resilience in recent years, they must now reinvent themselves to address the unique challenges they face.
The report suggested that European companies should take strategic steps to begin their rebuilding, focusing on their strengths in sustainability and talent, while addressing their weaknesses in technology and customer needs. These steps include:
Build their digital core faster to enable business model reinventionDrive continuous, compact and scaled transformation including establishing a digital foundation using cloud, data and AI to scale new processes, innovations and solutions across the enterprise. It is an ongoing endeavor to create a platform for reinvention through change programs that finance themselves through the value they create.
accelerate energy transition: Work in an ecosystem to center the European economy around net zero and circularity principles for global competitiveness. Advocate for strong industry and government collaboration, policies and incentives to level the global playing field and fast-track execution. Accelerate cross-industry decarbonization partnerships and drive mass adoption of early-stage solutions. Improving energy efficiency, not only to navigate the energy crisis but as a long-term solution to reducing emissions and costs.
Align to new customer needs: View customers in the context of their whole life, use human and machine intelligence to understand them and their motivations in a holistic and dynamic way. Solve for their shifting needs by transforming one-size-fits-all offerings into more personalized products and services, expanded partnerships and rethinking talent, technology and processes to drive value and loyalty.
Make talent strategy the core of business strategy: Put people at the center of enterprise reinvention and position chief human resource officers as catalysts of change. Drive strong connections and collaboration across the C-suite and bring everyone together on a journey of reinvention while creating new ways of working. Access and build talent in innovative ways, using technology and data to gain a deeper, granular understanding of the skills needs of current and next generations. Communicate a culture of inclusion in the organization, so that people at all levels can contribute to their full potential, supported by a strong sense of belonging and purpose.
“Today, most companies are reinventing some part of their organization,” Olagnier said. “But to succeed in a business environment that is currently being redefined, they will need to transform everything from their operating models to new ways of working. These unprecedented times demand an unprecedented response from European companies This will require a bold and far-sighted approach.” For changes that leave the best practice to reach a new performance threshold. This is an important moment for a stronger Europe.”
you can find the report Accelerating Europe’s Path to Innovation At Accenture Foresight, our new thought leadership app, which provides a personalized feed of all our latest reports, case studies, blogs, interactive data charts, podcasts and more. Download the app at http://www.accenture.com/foresight.
Accenture’s “Accelerating Europe’s Path to Reinvention” report is based on survey responses from 2,000 business leaders in Europe (1,450), the United States (300) and China (250) spanning 12 industries. The survey was conducted from October 24, 2022 to November 30, 2022. The report also includes an analysis of the corporate financial performance and business strength of 2,854 companies globally, including 1,344 European companies. The strengths and weaknesses of the business were analyzed in six areas that have demonstrated an impact on profitable growth: liquidity and costs; Sales and Customers; Talent; supply chain and operations; sustainability; and Technology.
Accenture is a leading global professional services company helping the world’s leading businesses, governments and other organizations build their digital cores, optimize their operations, accelerate revenue growth and enhance citizen services – with speed and scale But creates tangible value. We are a talent- and innovation-led company with 738,000 people serving customers in more than 120 countries. Technology is at the core of change today, and we are one of the world leaders helping drive that change with strong ecosystem relationships. We combine our strengths in technology with unmatched industry experience, functional expertise and global distribution capability. We are uniquely able to deliver exceptional results because of our broad range of services, solutions and assets across Strategy & Consulting, Technology, Operations, Industry X and Accenture Song. These capabilities, along with our culture of shared success and commitment to creating 360-degree value, enable us to help our customers succeed and build trusted, lasting relationships. We measure our success by the 360° value we create for our customers, each other, our shareholders, partners and communities. Visit us at www.accenture.com.
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