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Total restructuring may be necessary for many Swedish companies

Most companies are investing heavily in cloud, data and AI, but only eight percent are implementing the changes in a way that allows them to get the value they would expect from these big investments. This is according to a new report from Accenture.

– It is only when the technology is used to recast the entire operation fundamentally that companies really get leverage on their investment, says Patrik Nylander, CEO of Accenture Sweden.

External link: Read the full report: Total Enterprise Reinvention – The strategy that leads to a new performance frontier

That companies must invest in new technology is today an old truth, and in Accenture’s new report “Total Enterprise Reinvention” it also appears that the great mass has adopted that idea. As many as 86 percent of the companies examined in the report qualify in the “transformers” category, that is, companies that realize that regardless of what they want to do in the future, investments in more and new technology are required.

The only problem is that it’s not enough.

– Among the companies today, there are some that have invested a lot in the cloud, others that work a lot with data, and some that have come a long way in terms of AI, automation and analytics, says Patrik Nylander.

– But only a few percent manage to tie these three areas together into a robust digital platform. Most people instead see it as separate parts that should solve different problems in different places in the organization.

And if you have that approach, then you will fall behind. Because what really creates value in the long run, Patrik Nylander goes so far as to call it a matter of survival, is whether companies are able to take these different technologies and connect them to a digital platform.

– You then have to create completely new ways of working around it, based on the enormous opportunities that the digital platform provides.

Patrik Nylander, CEO of Accenture Sweden.
Patrik Nylander, CEO of Accenture Sweden.Photo:Björn Leijon

The report calls the companies that succeed in this “reinventors” and the strategy and approach precisely “Total Enterprise Reinvention”, i.e. completely reshaping the business based on the new opportunities. If you manage to do it, it is very profitable, the report says, among other things, that “reinventors” generate ten percent higher turnover growth, thirteen percent more cost savings and seventeen percent higher growth in the balance sheet.

But despite that profitable, and despite so many companies investing heavily in new technology, only eight percent of companies globally belong to this group. Patrik Nylander is not surprised.

– Many of the companies we come into contact with think that these investments are too complex, too large, and too expensive. They find it difficult to see the value of all the investments they make, and I think it is precisely because they often run them as individual projects without connection to each other and to the whole. They cannot see that the entire organization needs to be reshaped and that they need to do things differently to access the enormous value that a strong digital platform can provide.

But it will be needed. Not only because “reinventors” perform better financially, but also because they become much more adaptable when it comes to coping with change.

– Changes in the outside world really are the new normal, you have to accept that. In such an environment, you cannot survive as a company by optimizing every single part, but you have to change with the whole company and the value chain in mind.

This recasting must also be continuous, and here too a clear difference between the companies is visible.

– The transformers see change as a program or project with an end goal rather than a continuous process. But “reinventors” do not see an end date, but see change as something continuous, it is their everyday life.

What do the conditions look like for Swedish companies? Patrik Nylander sees both pros and cons.

– Swedish and Nordic companies are far ahead both when it comes to sustainability issues and taking care of their employees. It is about living up to new legislation, creating circular business models and having a culture that provides safe and thus creative employees. Consensus culture and non-hierarchical companies may well be an advantage when the entire company is to be recast.

In contrast, American lies and Asian companies further ahead in leveraging new technology to create new business models and drive efficiency.

– European and Nordic companies are often older than the American and Asian ones and have a different back pack of historical structures that can be more difficult to change. There, Asian and American companies, which are often newer, have an advantage and they have also come further in creating business opportunities around the new technology.

So what does it take to take the step from “just” being a transformer to actually succeeding in reshaping the entire company’s way of being?

– It is very much about leadership. You can’t make this change through a bunch of small, fragmented projects that aren’t connected. Management must have the ability to show the way and create a whole that allows new ways of working to emerge around the opportunities that a digital platform actually provides. Such a massive change in such a short time has not happened before, but that is because we have not experienced such an extreme environment before, and now it is up to the management to take the companies through it.

External link: Read the full report: Total Enterprise Reinvention – The strategy that leads to a new performance frontier

The article is produced by Brand Studio in collaboration with Accenture and not an article by Dagens industri

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