According to the latest global research from Workday, 81% of CEOs believe that their company’s approach to strategy enables them to respond to external market shifts—but their direct reports aren’t so sure. The study “Organizational Agility at Scale: The Key to Driving Digital Growth,” conducted by Longitude, surveyed almost 1,000 business leaders across Asia, Europe, and North America. We found a distinct perception gap between the CEO and other senior leaders: across five key pillars of organizational agility, CEOs are most likely to positively rate their organization’s progress towards agility in comparison to the views of other C-suite leaders.
The research focused on how organizations can translate their digital transformation investments into the right business outcomes. The findings highlight a strong correlation between digital revenue growth and organizational agility—a set of behaviors that help leading businesses drive digital revenue growth and shift digital transformation from a one-time event to an ongoing, new way of operating.
In the survey, Workday identified a group of leading organizations whose characteristics indicate they have embraced agility as part of their day-to-day operations in order to successfully transform their business for digital revenue growth. This group, the “leaders,” make up 15% of the global survey sample.
By contrast, those that show significantly slower progress or are yet to begin their transformation to a more agile way of operating, the “laggards,” make up just over half of all respondents. The remainder—those that have yet to embrace organization-wide agility, but are on the path to doing so—”aspirers”—make up the final 30% of the sample.
In the study, we found that there are five best practices that set the leaders apart:
Continuous planning. They plan in a continuous, real-time manner, which gives them the speed, agility, and dynamism they need to innovate successfully.
Fluid structures and processes. Leading organizations build fluid organizational structures and processes. Nearly half claim the ability to reallocate people quickly to where their skills are needed.
Building the future workforce. Leaders are much more likely than laggards to have plans to upskill the majority of their workforce and push specific initiatives to increase employee engagement.
Informed and empowered decision making. At 80% of leader organizations, all employees have access to timely and relevant data and are empowered to make appropriate decisions.
Measurement and guidance. Leaders have made significant progress in developing tools and metrics to measure the performance of digitally driven innovations. This is giving them a “fail fast” mentality: 94% say they are able to steer away quickly from unsuccessful projects.
Let’s break down where the CEO fits into organizational agility against each of these five attributes.
Dynamic planning helps organizations react quickly to changing market conditions and potential threats to the business, according to our research. Businesses can’t wait 12 months to discover if a product or service is profitable or achieving market share. The parts of the business that rely on revenue through digital efforts, in particular, require rapid and continuous planning cycles.
Overall, we found that the main obstacles to real-time planning are inflexible legacy technologies (which leaders often cited as their biggest roadblock) and bureaucratic organizational culture (most often cited by the laggards). This was the case for CEOs, with the majority citing a lack of relevant employee skills to be the key barrier to shifting to a more dynamic planning model.
By comparison, CEOs and CFOs say that it’s unskilled employees, not red tape, that’s keeping the company from moving to real-time business planning, whereas CIOs tend to agree with the CHRO that it’s mainly bureaucracy that’s holding the company back.
To move to real-time planning, the CEO needs to oversee the alignment of strategic approaches across functional leaders.
A change in business plans often forces changes to organizational structures or business processes, or even the creation of completely new ones. Businesses demonstrating organizational agility are able to quickly realign their two most important assets—people and financial resources—to meet organizational requirements.
Our research found that leaders build flexible structures and processes to adapt to changing business plans, including having the systems in place to understand skills gaps in their business, while laggards do not. Once again, inflexible technology and a culture of bureaucracy also prevent businesses from building agile structures and processes.
When it came to overall agreement with the statement, “We can quickly reallocate people to where their skills are needed to take advantage of new opportunities when they arise,” CEOs were the most confident (78%). The CFO was least in agreement, at 64%.
The proportion of CHROs who agreed with the idea that their company/organization’s back, middle and front offices’ processes are “completely integrated” was 71%, followed by the CEO (70%), CFO (65%), and CIO/COO (62%).
Many organizations have discovered that vast proportions of their recent revenue are directly linked to skill areas that didn’t exist even five years ago. Skills are constantly changing, with new ones appearing while others become obsolete. Businesses have to help their workforces develop new skills to support and deliver new digital revenue streams.
In our study, leaders were four times more likely than laggards to have plans to upskill at least 75% of their workforce in order to meet talent requirements in the future world of work. More than three quarters of respondents agree that, to retain talent, their organization needs a more fluid approach to growing and deploying their people. And, about one in seven CEOs plans to upskill more than half their workforce in the next five years to contend with the evolving world of work.
Functional leaders expect emerging skills to increasingly become a priority to their role over the next five years, with CEOs naming “advanced analytics and data visualization” as the most valuable skill in their function over the next five years. In fact, CEOs are significantly more likely than CIOs/COOs to be planning to upskill at least half the workforce in the next five years to contend with the evolving world of work.
Functional leaders are largely in agreement that their ability to succeed in the marketplace is closely tied to keeping employees engaged. 78% of CEOs agreed that this was the case, but CHROs—the people most likely to be driving employee engagement—are most in agreement at 88%.
Ultimately it’s the workforce that will drive successful execution of business plans—including digital, the focus of this study. Workers need to be empowered with the right information at the right time to make the best possible decisions for the business.
Data is absolutely key in empowering decision making closer to the customer: Laggards say that out-of-date information and siloed teams are major barriers to the democratization of decision making. Among leaders, 80% say all employees have access to timely and relevant data without gatekeepers blocking access to such information, compared to just 24% of laggards.
Looking at respondents from the C-suite, nearly two-thirds (64%) of CEOs believe that employees have full access to the data they need to do their jobs. The broader C-suite is not so certain—fewer than half of CIOs/COOs (42%), CHROs (47%), and CFOs (47%) agree with this.
The C-suite is divided over how effective data accessibility is at facilitating decisions that are better for the business. When it comes to effectiveness of the free flow of information and data in facilitating this decision making, 64% of CFOs think that this free flow of information is “effective/extremely effective.” CEOs led in this area, as 84% agree with this sentiment.
Agility and speed are dependent on robust, accurate, and timely measurement and control. Businesses need to know quickly whether a new product or service is performing well—in which case it could rapidly need additional financial and talent investment—or performing badly, signaling that financing and talent may need to be reduced or reallocated, and the product or service changed or terminated. New metrics may also be required to supplement traditional financial metrics to truly understand the impact of digital strategies on the organization.
Our study shows that businesses recognize they don’t have the right measurement frameworks in place for the new digital world of work. In fact, just 25% of all respondents say their organization has made significant progress establishing performance metrics to measure digital revenue growth performance. This is crucial, because the research found that fast action on failing investments (which could mean pulling the plug on the project or giving additional resources to make it a success) reaps higher returns.
The majority of organizations with anticipated digital revenue growth above 50% in the coming three years (77% of respondents) agree that their organization is fast to act on failing investment in new technologies.
Looking at the C-suite, senior leaders on the ground are less inclined than the CEO to agree that failing investment in new technologies is acted upon fast enough. 86% of CEOs say this is the case, but CIO/COOs are the least confident, at 69%.
And, when it comes to the suitability of the organization’s KPIs for the digital era, CEOs and CFOs have conflicting views. While 60 percent of CFOs think current organizational KPIS are adequate, only 31 percent of CEOs believe that existing KPIs currently measure what matters effectively enough.
What is certain is businesses today must wisely harness their people to deliver on digital transformation and the growth opportunities it brings—and the entire C-suite needs to be moving in the same direction to lead this effort. The evidence from the research is clear: Those leading the race to continuous digital growth are those that have successfully embraced most—if not all—of the capabilities of organizational agility. For those playing catch up, there is still time, but the clock is ticking.
Critically, the move to agility is a continuous one—as organizations shift from siloed structures, bureaucratic processes, and traditional ways of working to embrace all five capabilities of organizational agility. Those who plan continuously, build adaptable and fluid organizations, upskill, inform and empower their workforces, and put in place the right measurement and guidance will be best positioned to harness continuous innovation, grow their digital revenue, and future-proof their business.
Interested in learning more? Check out other articles based on this research, with more coming throughout the year:
Get an overview of “Organizational Agility at Scale: The Key to Driving Digital Growth” findings or download the full report.