While 65% of European business leaders agree they are facing the
most challenging operating environment ever, an even larger
proportion (77%) are confident about their organizations’ capacity
to accelerate growth in an economic downturn, 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 impacting margins
for European companies, mentioned by 19% of respondents, followed
by supply chain disruptions (14%).
Despite these challenges, 81% of European business leaders
believe their organizations are well-positioned to capture future
growth, having overcome the pandemic.
Released at the World Economic Forum’s Annual Meeting in Davos,
the report looks at the most pressing issues European companies are
facing, their strengths and weaknesses, and how they can reinvent
themselves to continuously adapt to a volatile world, while
increasing competitiveness, accelerating growth and improving
profitability.
“The resilience business leaders have demonstrated could explain
their confidence in navigating current headwinds, including an
energy crisis that is hitting Europe particularly hard,” said
Jean-Marc Ollagnier, CEO of Accenture for Europe. “However, what is
at stake for European companies is their competitiveness over the
long term. The increasingly volatile macroeconomic environment,
combined with the pace of technological innovation and the need to
accelerate the energy transition, requires companies to engage in a
deliberate strategy to continuously reinvent their business. It is
through a Total Enterprise Reinvention that European companies can
increase competitiveness and thrive over the long term.”
European growth is lagging peers, with a deficit in
technology investment
The report, which analyzes the financial performance of nearly
3,000 companies globally, found that while European companies
report strong profitability, they are slower to grow revenues
compared to their peers in North America and Asia Pacific.
To better understand where European companies stand, the report
also examines how they perform compared with peers in North America
and Asia Pacific across six areas: talent, technology, supply chain
and operations, sales and customers, liquidity and costs, and
sustainability.
According to the analysis, European businesses are outperforming
their peers on sustainability, talent and liquidity and cost
management. However, they are significantly behind in growing sales
and in using technology to boost top-line growth.
European companies are also less likely to innovate using
emerging technologies, shift to a technology-driven business model
and have a digital-savvy leadership compared to North American and
Asia Pacific companies.
“European companies’ strong profitability and lower growth
pattern suggests they are more likely to squeeze value from
existing business streams than growing new ones,” said Michael
Brueckner, Chief Strategy Officer of Accenture for Europe. “While
optimizing costs and maximizing current profitability are critical,
it must be done to also generate liquidity to invest for the
future. They should also capitalize on their strengths in
sustainability and ability to deliver on employee experience, while
pursuing technology-driven growth opportunities.”
Unprecedented times call for an unprecedented response
According to the report, while European businesses have built
extraordinary resilience in recent years, they must now reinvent
themselves to address the unique challenges they face.
The report suggests strategic steps European companies must take
to begin their reinvention, focusing on their strengths in
sustainability and talent while addressing their deficits in
technology and customer needs. These steps include:
- Build their digital core quickly to enable business model
reinvention: Drive continuous, compressed and scaled
transformation, including by establishing a digital foundation
using cloud, data and AI to scale new processes, innovations and
solutions across the enterprise. This is an ongoing effort to build
a platform for reinvention through transformation programs that
fund themselves through the value they create.
- Accelerate the energy transition: Work across ecosystems
to center the European economy around net zero and circular
principles for global competitiveness. Advocate for strong industry
and governmental cooperation, policies and incentives to level the
global playing field and fast-track execution. Accelerate
cross-industry decarbonization partnerships and foster large-scale
adoption of early-stage solutions. Improving energy efficiency, not
only to navigate the energy crisis but as a long-term solution to
reduce emissions and costs.
- Align to new customer needs: See customers within the
context of their full lives, using human and machine intelligence
to understand them and their motivations in a holistic and dynamic
way. Solve for their shifting needs by replacing one-size-fits-all
offerings with more personalized products and services, extended
partnerships and rethinking talent, technology and processes to
drive value and loyalty.
- Make talent strategy core to business strategy: Place people at
the center of enterprise reinvention and establish chief human
resources officers as the catalysts for change. Ensure strong
connections and collaboration across the entire C-suite and bring
all people along on the reinvention journey, creating new ways of
working. Access and create talent in innovative ways, using
technology and data to obtain a deep, granular understanding of
current and next-generation skill needs. Infuse a culture of
inclusion across the organization, so people from all levels can
contribute to their full potential, supported by a strong sense of
belonging and purpose.
“Today, most companies are reinventing parts of their
organization,” added Ollagnier. “But to succeed in a business
environment that is currently being redefined, they will need to
change everything from their operating models to new ways of
working. These unprecedented times call for an unprecedented
response from European companies. That will require a bold and
visionary approach to transformation that abandons best practice in
order to reach a new performance frontier. It is a pivotal moment
for a stronger Europe.”
You can explore the report Accelerating Europe’s path to
reinvention in 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.
About the research Accenture’s “Accelerating Europe’s path to
reinvention” report is based on survey responses from 2,000
business leaders across 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
corporate financial performance and business strengths analysis of
2,854 companies globally, including 1,344 European companies.
Business strengths and weaknesses were analyzed across six areas
that have demonstrated impact on profitable growth: Liquidity and
costs; Sales and Customers; Talent; Supply chain and operations;
Sustainability; and Technology.
About Accenture Accenture is a leading global
professional services company that helps the world’s leading
businesses, governments and other organizations build their digital
core, optimize their operations, accelerate revenue growth and
enhance citizen services—creating tangible value at speed and
scale. We are a talent and innovation-led company with 738,000
people serving clients in more than 120 countries. Technology is at
the core of change today, and we are one of the world’s leaders in
helping drive that change, with strong ecosystem relationships. We
combine our strength in technology with unmatched industry
experience, functional expertise and global delivery capability. We
are uniquely able to deliver tangible outcomes because of our broad
range of services, solutions and assets across Strategy &
Consulting, Technology, Operations, Industry X and Accenture Song.
These capabilities, together with our culture of shared success and
commitment to creating 360° value, enable us to help our clients
succeed and build trusted, lasting relationships. We measure our
success by the 360° value we create for our clients, each other,
our shareholders, partners and communities. Visit us at
www.accenture.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20230115005041/en/
Francois Luu Accenture +33 1 53 23 68 55
francois.luu@accenture.com
Andy Rowlands Accenture +44 7952 594784
andy.rowlands@accenture.com
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