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Saturday, May 25, 2013

Agile organisations more likely to experience growth, research claims

Organisations are placing too much emphasis on cost reduction and not enough importance on initiatives to fuel growth, according to new research from transformation consultancy Moorhouse.

The 2013 Barometer on Change finds that more than half (54 per cent) of organisations have initiatives in place to reduce costs, compared to just 22 per cent with initiatives aimed at improving performance. And worryingly, Less than a fifth (19 per cent) claimed to be addressing new products or services. 

Organisations that have experienced higher growth in recent years (cumulative annual growth of above five per cent) are more likely to have initiatives in place that engage staff or pursue growth. In comparison, organisations that have been less successful are more likely to be focused primarily on cost reduction. Those that remain agile and view themselves as "pro-change" are almost twice as likely to experience higher growth, compared to organisations which see themselves as "anti-change".

Stephen Vinall, managing director of Moorhouse, said: "Some UK businesses have become stuck in a mindset of cost reduction and internal efficiency drives with little focus on initiatives that will generate their competitive edge and position them well for growth. To achieve growth, organisations must look beyond cost cutting and at investing in the kinds of initiatives that will help support this ambition, such as accessing new markets or tackling regulatory-driven change. Savings being generated by cost reduction should be reinvested in these kinds of activities to help safeguard the future of the business."

Nine out of ten organisations in the survey may have strategies that are trying to achieve conflicting goals: a staggering 90 per cent claim to be differentiating themselves around at least two of the following competing priorities; creating the best products, having a highly efficient operation or being entirely customer-centric. Yet the initiatives they are focusing on as a business do not reflect this, and it is rare that organisations can be successful at more than one of these ambitions simultaneously.

"Organisations are pulling themselves in opposing directions. A business cannot deliver the most bespoke service available to its customers while also being the most highly efficient; nor focus on either of these while developing the best products. You can't be an Apple or Dyson while also being a Tesco or easyjet. To differentiate themselves clearly, organisations should pick one of these areas and make excelling in this their strategic priority that their change initiatives then clearly support. Whatever their context, every business has to be adept at turning its strategy into a realistic and achievable portfolio of programmes or initiatives," he concluded. 


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