The need to address accelerated renewal in a complex world remains the primary concern of business leaders across all sectors and geographies.
Looking back at the past year, the dynamic macroeconomic environment has presented a variety of challenges, from security and sustainability to generative AI and geopolitical unrest. As executives deal with increasing volatility, they will also need to focus on expansion and innovation to gain market share and remain competitive.
The biggest question we hear from our clients is exactly where to focus their efforts in an era when accelerating technology is creating an urgent need for business transformation. But first, they need to understand what’s driving change.
Taking the pulse of change
For them, we present the Accenture Pulse of Change Index: 2024.
The index ranks six replacement factors that affect companies: technology, talent, economy, geopolitics, climate and income, and social society, employing a number of key business indicators, such as hard-work productivity and computer spending. He then compares this data to a survey of 3,400 executives about how they understand the effect of each thing on their organization, as well as their readiness to respond.
Our metrics-based research found that since 2019, the replacement rate affecting businesses in all six spaces has increased dramatically: up to 183% over the past four years and 33% in the following year alone.
A striking 88% of C-suite executives expect the pace of change to get faster in 2024, but they also feel optimistic, seeing change as an opportunity, and expecting revenue growth to accelerate in the coming year.
At the same time, they are tempering their optimism with realism, with more than half saying their organizations are not ready for the faster pace of change in the business environment in the year ahead.
Accenture Pulse of Change: 2024 Index
Technology goes from sixth to first cause of business disruption in one year
Catapulted by advances in generative AI, technology is the leading cause of business disruption in 2023, emerging from sixth place in a single year, and most executives expect the speed of technology disruption to increase further in 2024.
Although resiliency, cost optimization and short-term cost are currently the most sensible priorities, expansion strategies remain an important consideration. Executives now view generative AI as an opportunity rather than a threat, and more conducive to expanding profits than reducing costs.
The current main cause of replacement in companies is capacity problems, such as skills shortages and lack of worker commitment; Nearly a share (42%) of leaders say a skills gap is one of the top three demanding situations that would hinder their organization’s ability to respond and replace. This highlights the importance of companies making their training strategy a priority, that is, when trying to take advantage of the insights of new technologies.
Generative AI is changing more than technology for businesses. We estimate that, on average and across all industries, Gen AI will have an impact on 40% of working hours, so it is essential that leaders give as much attention to their people and to training them in Gen AI as they do on the technology.
Europe approaches generative AI with caution
While the majority of respondents to the index expect greater technological disruption in 2024, business leaders want to accelerate their own pace of upgrading to prepare for the opportunities that AI-driven technological changes bring to their organizations.
Many organizations are not prepared, with just 27% of C-suite executives responding in our survey that their organizations are ready to scale up generative AI. But over the last year, we have seen a clear acceleration by our clients, who are now focusing on the “how” and moving from “proof of concept” to “scale” for productivity. We see significant interest across all industries, with Financial Services, Banking particularly, and Life Sciences the most advanced in their ambition.
To realize the full potential of generative AI, companies will need to build a strong foundation by adopting and scaling it now. However, we estimate that less than 10% of corporations have mature AI knowledge and capabilities.
Additionally, most business leaders are making investments more cautiously due to social and political considerations around the culpable use of AI. This is especially true in Europe, where business leaders are more likely to engage in such issues than their peers in North America and Asia-Pacific.
The key to embracing change in 2024
Generative AI is quickly emerging as the key catalyst of business reinvention, and it will affect every part of every company and transform the competitive landscape across all industries. Business leaders need to achieve a new level of understanding about this technology and the power of data to reinvent their organizations not just quickly, but also responsibly.
The opportunity for organizations is to adopt a strategy of continuous reinvention, building their virtual core (including cloud, data and AI) and adopting a human technique to devise new work tactics.
The promise of Generation AI is to put other people at the center of reinvention, and that requires rethinking leadership. Key moves business leaders can make to embrace AI-driven, human-centric upgrading include:
o Lead and be informed in new ways: To be effective and build trust in the generative long term of AI, leaders will have to engage, lead differently, and challenge old mindsets to receive new information. It is vital that leaders immerse themselves in generating and replacing the way they are informed by integrating information into the workflow.
o Reinvent paints: By rethinking the entire flow of paints, leaders can have a transparent view of where generative AI can have the maximum impact, aligning it with business goals for greater power and innovation across the enterprise and getting rid of silos in a sustainable and meaningful way. From there, there is an opportunity to refocus on how the paint wants to evolve to better serve customers, people, and drive business results.
o Reshaping the pictorial force: Mastering generative AI is not a one-time event: learning will have to be dynamic. And as the use of this generation grows, organizations are increasingly leveraging teams and technologies, such as skills mapping, that can facilitate smoother transitions between emerging and declining roles. As paints and roles evolve, greater ability can waste time and skills for more value-added activities.
o Prepare workers. Comprehensive learning is vital to ensure people have market relevant skills and the capability to collaborate with machines. Leading companies are 2x as likely to prioritize soft skills alongside the tech skills. Finally, leaders also need to listen and involve their people at every step of the way to strengthen trust.
By understanding where and how change is affecting their organizations, business leaders can more readily embrace the continuous reinvention that is needed to stay ahead of disruption and strengthen their resilience—and gain valuable insights that can help them turn that disruption into an opportunity for growth.
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