Ready for anything: what it means to be a modern business
Cognizant commissioned Economist Impact to define what it takes to be future-ready—and how close businesses are to getting there. Our analysis reveals the foundational elements of a modern business that’s ready for whatever happens next.
How future-ready is your business? After the recent onslaught of external shocks, it’s difficult to envision what “future-ready” even means. How can one be ready for a future that’s increasingly difficult to perceive, not to mention apt to change without notice?
But the very existence of unpredictable and even unfathomable change makes it all the more important for senior business executives to define—and become—future-ready. Here’s the catch: It’s no longer just about structured planning. To prepare for what could happen next, businesses need a way to operate as if everything is (and will continue to be) in an infinite state of flux.
In other words, the call-to-action isn’t to prepare for a specific scenario with a Plan A, B or Z but to be ready for any shift, change or shock, at any time. That means being able to read the early warning signs, predict what’s ahead and act in time to emerge with relevancy.
So how to do that? In our work to define what it takes to be future-ready—and how close businesses are to reaching a future-ready state—Cognizant commissioned Economist Impact to conduct a survey of 2,000 senior executives from across industries and geographies, as well as create a benchmarking tool (see methodology).
The call-to-action isn’t to prepare for a specific scenario with a Plan A, B or Z but to be ready for any shift, change or shock, at any time. That means being able to read the early warning signs, predict what’s ahead and act in time to emerge with relevancy.
Key insights emerging from our analysis of the research include the following:
Resilience demands putting ESG strategy into action.
Nine in 10 decision-makers call environmental, social and governance (ESG) issues critical, but there’s a massive disconnect between recognition and action—few organizations have dedicated staff and resources to environmental or social sustainability.
Here are five key insights from Cognizant’s analysis
Clarity is muddled as priorities proliferate
When it comes to assessing businesses’ future preparedness, it’s revealing to look at their strategic priorities. But when Economist Impact asked respondents about which activities and goals were most critical to pursue, we were taken aback by the results.
Rather than one or two choices in the study rising to the top, respondents’ priorities crossed every vector, with no fewer than 90% of respondents naming each option as either business-critical or medium/high-priority (see Figure 1).
In truth, we anticipated the strong emphasis on data-driven ways of working and digital-first business models, as well as the attendant need toalign operations with these new modes of work. For each of these imperatives, 37% of respondents named them as business-critical, and an additional 57%, 56% and 58% of respondents, respectively, named each as medium or high priority.
We didn’t, however, expect the lack of distinction among each of these strategic areas, not to mention the emphasis on a succession of additional goals. The long list of strategic priorities threatens to compete for executive mindshare—and muddle the pressing realities of building a foundation for the future.
While many of the strategic objectives noted by respondents are, indeed, interrelated, it’s incumbent on leaders to disentangle which initiatives (or pieces of initiatives) will be most successful in gaining ground toward their goals. These gains could, then, smooth the way forward for further wins.
Figure 1: Tackling an array of strategic priorities
To what extent does your company’s corporate strategy prioritize the following?
By starting with the operational alignment of business functions, for instance, they could ensure that cross-company data-driven approaches are embedded into every decision, interaction and process, elevating the performance of the company in multiple ways.
Technology foundations are rising to a new level
The move to digital is accelerating beyond what has become the standard shopping list of cloud, Internet of Things (IoT) and advanced analytics, all of which the vast majority (80% or more) said they’ve adopted or planned to adopt (see Figure 2).
In addition to these foundational building blocks, respondents reveal a growing appetite for advanced capabilities, with over 60% naming artificial intelligence/machine learning (AI/ML), robotics, 5G and others as technologies they’d adopted to planned to adopt.
There’s also a steady march toward an emerging set of technologies, with over half of respondents naming blockchain (53%) and quantum computing (surprisingly high at 58%, but perhaps a reflection of a broader willingness to investigate and experiment).
Alone and in combination, innovations in AI/ML, blockchain, quantum computing, natural language processing and 5G are set to usher in decades of change. For example, Cognizant is working with Aston Martin’s F1 team to evolve its production facilities into smart factories that leverage 5G and IoT to drive critical decision-making.
Figure 2: Tech adoption shows no sign of slowing down
Which of the following technologies has your business adopted, or is planning to adopt?
Planned projects include building a digital twin of the F1 car, leveraging AI and machine learning to run simulations against future F1 requirements, and using real-time analysis of data from on-track and off-track sources so the team can intuit in-race predictions and fine-tune adjustments instantly.
Moreover, IoT-driven initiatives will increasingly safeguard against future risks as the cloud service providers (AWS, Google Cloud, Microsoft Azure, etc.) get even better at connecting disparate hardware and software solutions, with better interoperability, forecasting capabilities and operational resilience.
For some industries, the combination of these technologies will fuel significant disruption; for instance, telecom companies are now leveraging connectivity, speed, data-gathering, edge processing and advanced analytics capabilities to deliver healthcare to their customers: Australia’s largest e-health company is now Telstra Health, with a common platform, ecosystem framework and, through a string of acquisitions, specialized healthcare capabilities. The company’s digital health initiatives are shaping the future of connected healthcare services to a broad range of private and public healthcare providers in the country.
Businesses need to persevere to fully realize tech value
Despite the fervor in technology adoption, our analysis of respondents’ reported return on value of these initiatives reveals there is still work to do. Of those respondents that had implemented each of the technologies in the study, almost half say they are not achieving significant value from their technology investments (see Figure 3). Moving from mediocre value attainment toward game-changing impact is still a work in progress for many companies.
In the study, advanced and emerging technologies such as blockchain, AI/ML and virtual reality were less apt to be perceived as delivering significant value than more mature technology categories such as analytics and cloud. As respondents move further into their implementations of new and emerging technologies, they appear to be signaling that none are “silver bullets” that can be easily deployed and produce magical results. Rather, they are sophisticated, complex tools that need detailed understanding, practice and perfecting—just as sophisticated, complex tools always have.
Developing this more mature appreciation for what technology can do is an important step of the journey from inflated expectations to real productivity.
This value gap could also be manifesting through what looks like an emerging disconnect between executives and the managers who report to them when it comes to tech adoption priorities. Take low-/no-code technologies, which enable business users with little to no coding experience to create their own apps using a visual development environment.
While one third (33%) of C-suite executives plan to invest in this type of tool, a higher percent of respondents at the management level (40%) have it on their agenda—a 7-point gap. This disconnect could threaten full value attainment if left unchecked, as it could lead to rogue procurement and haphazard governance.
As we will establish in the next section of this report, workforce talent could be the missing puzzle piece when it comes to realizing the full return on value from technology. And with most enterprises acknowledging that they lack the talent to get the most value from new technology investments, the pain is starting to show.
Figure 3: Businesses struggle to unlock the full potential of their tech
To what extent are the technologies/methodologies already adopted by your business department delivering strategic value to your operations?
Workforce strategies need a major overhaul
It seems a foregone conclusion that workforce talent will play a critical role in constructing a future-ready enterprise. However, our analysis of the data underlines a huge gap between technology and the people who use it.
Nearly half of respondents (46%) recognize they lack the talent necessary to implement and utilize advanced technologies. Moreover, when asked about the biggest hurdles to implementing new processes, products, services and technologies over the last 12 months, the two most significant challenges that respondents named were workforce-related: a lack of human resources and knowledgeable staff.
However, boosting talent retention and upskilling existing staff do not seem high on the agenda, according to our analysis of the data. Only half of the respondents polled in the survey rank skills readiness (51%) and employee engagement (50%) as very important to their success.
These findings demonstrate a significant gap in understanding the value of employees when it comes to building a modern business—particularly when compared with respondents’ bullish investment practices tied to technology.
One way businesses can close this gap would be to anticipate and act through stronger data insights into their current workforce needs, including measuring employee satisfaction and aligning skill development and training with corporate needs—something that, currently, just one-third of respondents do.
Microsoft, for example, has used human resources analytics to build statistical profiles of people most likely to quit. The company uses different interventions for retention, including assigning mentors and opening conversations about opportunities for professional growth and earning potential. The result: almost a halving of the attrition rate.
Businesses have a wide array of workforce best practices to choose from; however, the average firm is implementing between three and four out of the 10 talent management best practices identified in the study (see Figure 4). These findings reflect a chronic lack of focus—but also a vast opportunity—for preparing workers for the new ways of work that businesses, themselves, know they need to put in place.
Figure 4: Ten best practices for talent management
Economist Impact identified 10 best practices for cultivating talent, and only about two-fifths of companies report using any of them.
- Actively tracking employee skills/gaps
- Integrating training into employee schedules/workflow
- Inclusion of training/learning requirements into employee evaluations
- Shifting top talent to high-value roles or initiatives
- Explicit assessment of collaborative ability in performance evaluation
- Explicit incorporation of company core values into goal-setting and performance evaluation
- Using acquisitions to obtain hard-to-find talent
- Leveraging data to align skill development/training with organisational needs
- Coaching, mentorship or shadowing programs
- Advancement pathways based on measurable key performance indicators
Response base: 2,000 senior executives
Source: Economist Impact Survey 2022
Resilience demands putting ESG strategy into action
No discussion about being a fully modern business can ignore the clarion call for sustainability. It’s increasingly clear that environmentally and socially responsible business is “good” business, in the form of resilience to any shift or shock that comes along.
Encouragingly, most respondents in the survey agree that each constituent part of ESG is vitally important. Nine in 10 decision-makers recognize environmental sustainability and diversity and inclusion as important aspects of being a modern business today.
However, what respondents also have in common is a lack of considerable or measurable progress on all fronts. When it comes to implementing an array of specific environmental targets, no more than 54% report doing so, and the percent drops to 44% when it comes to measuring social impact (see Figure 5).
Our read of the survey data indicates many companies are still in the early stages of forming ESG strategies. Take measuring social impact targets: only 44% of respondents have set internal social targets that are specific, measurable and at least as ambitious as their external targets—and just 37% plan to address existing gaps. Similarly, 54% of companies set internal targets to promote environmental sustainability—and just 46% plan to address gaps.
Sweeping business-wide activities like improving sustainability or becoming a more diverse organization are not easy tasks. Digital technologies can enable sustainability initiatives at the more granular level—for example, collecting, measuring and analyzing data unique to sustainability and biting off small sections with specific initiatives.
Figure 5: Measuring up on ESG
What measures has your company taken to promote environmental sustainability and social impact?
But there is a real need for more holistic change, especially as businesses focus on becoming more resilient, using technology to anticipate and act on systemic signals of change in a volatile and uncertain world. Leaders can then make informed decisions on how to embed sustainability into strategy and operations and build resilience beyond risk mitigation.
Recommendations: Five ways to engineer a modern business that's ready for anything
There is no end-state to being future-ready; it will always be a work in progress. But it’s also the most important work businesses face today. While digital transformation is clearly embraced by nearly all business leaders, it’s essential now to close the gaps between the technology foundations being built, the workforce talent needed to optimize the value of these digital-first endeavors, and the ESG efforts necessary for resilience.
The following guidelines can offer businesses an on-ramp to solving the challenges ahead.
Figure out what matters most.
When everything is a priority, nothing is a priority. Identify the strategic and operational gaps to becoming a business that can adapt on the fly to disruptive change, reading the signals ahead of time. Consider running a future-ready benchmark to reveal where your resources should be applied, from being a data-driven enterprise to closing the growing gaps in workforce strategy.
Recognize that the frontier of modern technology is moving forward.
Future value lies in the combination of new and advanced technologies which are rapidly evolving. If you have indigestion from the last 10 years of endless digital change then steel yourself for the next wave of technologies (5G, AI/ML, blockchain, quantum computing) that will radically reshape how your business works.
Persevere to fully realize the value from tech.
Investing in new technology is the easy part, but success requires avoiding the pitfalls of assuming technology alone is a silver bullet. Full return on value will only be achieved when you enable your people to use these sophisticated tools to reach new levels of productivity, creativity and resilience.
Close talent gaps with a skills renaissance.
New levels of employee engagement and a raft of new skills need building out urgently to prepare for the profound changes in how people will work. Get crystal clear on how your business will operate as intelligent workflows and data-led intelligence are increasingly embedded into every decision, interaction and process touchpoint. Take stock now and then look ahead to what skills you are going to need, not just next year, but in three to five years’ time.
Lean-in with powerful ESG tactics.
Technology enables ESG goal attainment at a granular level, so use it to build a picture of what needs doing now as you embed sustainability into the business’s core strategy and operations. Doing so builds resilience beyond risk mitigation and prepares the organization for the opportunities and uncertainties ahead.
To build a business that is ready for anything, businesses need to unify people and technology with a fully resourced approach to meeting ESG needs. These are the foundational elements of a modern business that’s ready for any change.
Becoming future-ready is a constantly evolving effort to respond to customers, markets, societies, global events and the planet’s needs. Businesses that continually assess and fortify their future preparedness will reap the rewards by becoming perpetually relevant, no matter what eventuality or externality comes along.
To better understand the state of the modern enterprise and how leaders are preparing for long-term success, we commissioned Economist Impact to conduct a survey of 2,000 senior business leaders across North America, Europe and Asia-Pacific. The study assesses and compares businesses across ten countries in eight critical industries using a range of metrics that characterize what it means to be a “modern business,” including vision, talent strategy, technological readiness, environmental sustainability and social responsibility.
This survey formed the core data set for a future-ready business index, based on multiple data feeds, that helps leaders understand what they need to do now. There are lots of data sets out there, but not a single engine (an index) that allows business leaders to utilize all the information to evaluate their enterprise and make decisions.
Read the full report.
The views and opinions expressed in this report are those of Cognizant and do not necessarily reflect the view and policies of Economist Impact. Data presented is from an Economist Impact executive survey, commissioned by Cognizant, conducted in early 2022.