By Daniel Hunter
Organisations are failing to drive innovation and develop new products and services to help respond to a changing world, according to research from transformation consultancy Moorhouse.
Less than a fifth (19%) of large UK organisations claim to be addressing new products or services, despite almost three-quarters (72%) saying this is a strategic challenge.
Yet organisations themselves are blind to this strategic gap; 82% believe they are focused on doing the right things. This comes despite the fact that 65% of respondents say the pace and pressure for change has increased over the last three years, and 74% expect this to increase further.
The 2013 Barometer on Change research spoke to over 200 Board-level directors and senior managers reporting directly into the Board at FTSE 250, UK multinational and public sector organisations, responsible for a total spend on change of £4.4bn.
Organisations in the survey that have experienced higher growth in recent years (cumulative annual growth of above 5%) are more likely to have initiatives in place that engage staff or pursue growth. Organisations that have been less successful are more likely to be focused primarily on cost reduction, and are failing to reinvest these savings in growth-focused initiatives.
“The world does not stand still, and consumers are continuously changing their needs and desires. This is especially true with the emergence of new markets and technologies. Yet organisations seem to be too distracted by short-term cost cutting or performance improvement issues," Stephen Vinall, Managing Director of Moorhouse, said.
"This is likely a symptom of the tough times we have seen in recent years. To thrive, businesses need new ideas and Boards must ensure enough resources are put behind developing new products or services to help fuel growth. If a business focuses too heavily on reducing costs without planning for growth and new opportunities, it will likely wither.”
High growth organisations are also better at adapting their strategy and remaining agile. Respondents from high growth organisations were one and a half times as likely to be “very” or “extremely” confident in their ability to cancel change initiatives if they no longer added value or supported the strategy. Three quarters (75%) of those in high growth organisations said they reviewed their strategy regularly, compared to just 55% in slower growth businesses.
Vinall continues: “Whether you are leading the market or playing catch-up, speed to market is critical. Being able to meet the needs of customers has to be the top priority, and this just isn’t possible if the business is focused only on cost reduction. This is not to say that more cannot be done with less; efficiency is vital, but any cost cutting must not negatively impact performance. In an increasingly competitive marketplace those that will succeed are the ones who truly know their customers, understand what they want and are brave enough to react fast.”
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