8 Transformative Actions to Take in 2023

By EY

Your transformation to-do list to reframe the future of your organization.

In brief

Continued disruption and unpredictable scenarios make agile transformation strategies more important than ever.
Strategies that take advantage of our connected world — through pervasive intelligence, sustainability and globalization — offer new ways to build value.
Successful transformations aren’t guaranteed. Companies must reconsider how they put people at the center — both their customers and employees — to maximize success.

Generationally high inflation, exceptional input price increases, ongoing post-pandemic effects and geopolitical uncertainty — they are all interconnected, and they are all vexing the C-suite as we enter 2023.

CEOs strive to weather these numerous challenges, including a likely global recession, by focusing on a range of strategic actions. They aim to build long-term optionality, resilience and value while unlocking new opportunities.

Across EY, while delving into all these challenges and opportunities, we’ve curated the most relevant insights to help you navigate the transformation imperatives of 2023 by asking yourself:

How will you stay ahead of disruption?
What are you doing to transform?
How do you get to the finish line successfully?

Chapter 1 – How Will You Stay Ahead of Disruption?

Challenging scenarios and challenging economic outlook require informed, intentional transformation strategies

Complexity is the name of the game as organizations grapple with a changed world. This year, we explored how CEOs are preparing for ongoing challenges through new strategies, revised investment plans and a cautious yet optimistic look at the metaverse.

Protect Future Growth

Our October 2022 CEO Outlook survey revealed that CEOs are intent on transforming their organizations to stay ahead of disruption through 2023 and beyond while also dealing with a range of new and pre-existing challenges. Leading companies are holding firm on transformational investment plans — or formulating new strategies to navigate the new complexity. They are looking to reframe their strategy, actively adapting their portfolio, ecosystem and global operations to position for a rapidly evolving environment. CEOs committed to buying, building and partnering are making bold decisions and investing to create long-term sustainable value.

Consider the Metaverse …

The metaverse is poised to become the next frontier of the human experience, demanding an entirely new approach to every sphere of human activity. Businesses, governments and society at large will need to anticipate the impact and implications for a broad range of stakeholders and design accordingly. Regulators, already grappling with the implications of current digital technologies, will see the metaverse magnify these challenges and introduce new ones. While we cannot fully imagine the gamut of benefits or risks that will emerge, it is clear that we are about to launch into a fascinating new dimension of the human experience.

… and its Behavioral Implications

In a profound reinvention of human-facing technology, the metaverse is poised to give rise to entirely new human-machine interfaces, sensory experiences, social dynamics and market constructs. The design of the metaverse could therefore have sweeping implications for human behavior. In considering these implications, business leaders should learn from the impacts of past technology innovations. We see a future in which new realms of human experience could help unlock empathy, instill behavioral change and manage mental health. There also will be new opportunities for engaging with customers. While the metaverse is still emerging, it’s not too early to define the values and standards that will guide your endeavors. We offer three principles for leaders to consider.

Chapter 2 – What Are You Doing to Transform?

Transformation strategies may vary, but those that are successful take advantage of what connect us

Economic transformation is on the menu as companies begin to grasp the impact of an ever more connected world. Those connections revolve around new ways to contextualize data, pursue value-led sustainability and preserve the positive effects of globalization.

Prepare for Pervasive Intelligence

Say goodbye to 5G — we’re entering the 6G era of an intelligently autonomous, sensory, massively distributed but highly networked world that blends our physical, digital and human systems. Data will be created on an unimaginable scale, changing how we convene, collaborate, create and contextualize. In this world of “pervasive intelligence,” the capabilities of companies and people will be dramatically augmented, boosting productivity, efficiency and sustainability. To harness the power of pervasive intelligence, companies need to create the right business models and use cases while working with ecosystem partners to build the right tech architectures to facilitate it. These efforts present a multiyear journey, during which companies must put people at the center of their transformations, as both co-creators and beneficiaries. EY teams share which steps you should take now.

Invest in Sustainability

Climate change is everybody’s business, and companies understand that the private sector has an important role to play. But faster and deeper progress on climate action is needed to meet global targets and avoid the most dangerous impacts of climate change. The good news is that sustainability action pays off financially: 69% of the companies we surveyed reported higher financial value like revenue growth and earnings from decisive climate action. Embracing value-led sustainability can help companies unlock more value from their climate actions and accelerate sustainable business transformation. We offer five actions for companies to take across measurement, governance, product and customer offerings, operations and supply chain, and suppliers. These actions range from the incremental to the transformational — and the earlier companies start, the more they can learn.

Fight for ‘Globalization Lite’

Geopolitics has shifted dramatically, and the outlook for the global operating environment is increasingly uncertain. Disruption and volatility are set to persist, which will also affect global economic growth and inflation. Navigating such geopolitical uncertainty requires scenario analysis — the systematic exploration of multiple plausible futures — so we offer CEOs and boards three steps to integrate scenario planning into their company strategy. We see a need to assess the potential business implications and strategic imperatives of four plausible scenarios for the future of globalization. Based on the intersection of geopolitical relations and governments’ economic policy stances, these scenarios range from isolation to more open markets. Weshow that CEOs and other international business leaders have a crucial role as advocates for the most optimistic of our scenarios — what we call “globalization lite.”

Chapter 3 – How Do You Get to the Finish Line Successfully

Transformation is now a constant for all organisations, but success is far from guaranteed.

Over the last few years, there’s been a shift in the nature and speed of transformation But one thing has become increasingly imperative – that transformational success keeps humans at the center.

Understand Your Consumers Even Better

Right now, affordability is a central concern for many consumers around the world. But it isn’t the only issue on people’s minds, and for many it isn’t even the main concern. Since March 2020, we have been tracking the sentiment of five distinct consumer tribes who prioritize any one of these concerns above all others: affordability, sustainability, experience, physical and mental wellbeing, and community. By understanding what really matters to each of these groups, companies can identify how best to address the common ground that unites all consumers as well as the unique needs of each tribe. To that end, we offer three ways to serve each of these consumer groups.

Prioritize Your People

Despite all the advances in technology and organizational learning, little has changed over the last 25 years in how organizations approach transformation. Through our ground-breaking research with Oxford University’s Saïd Business School, we’ve identified six key drivers for organizations that together, can make transformations 2.6 times more likely to succeed. Our findings support that the complex factors influencing a transformation’s success or failure are rooted in human behavior — specifically, emotions. In a successful transformation, leaders invest at the outset to build the conditions for success, both at a rational level and an emotional level. As the transformation progresses, our analysis shows that stress increases and confidence may dip. But as the pressure increases, so should the support. By properly planning and harnessing the power of people, leaders can elevate their transformations to the next level and be much more prepared for what’s next.

The article was first published here.

Photo by Milad Fakurian on Unsplash.