Most business leaders understand that the boldest business strategies are both informed by and delivered through technology. Our study explores three significant challenges that stand in their way and ways in which tech-forward companies overcome them.
- Make technology fluency a foundational skill—one as important as being able to read a P&L statement— and a minimum requirement for all C-suite and board members.
- The best strategies need to be developed with knowledge. Technologies such as generative AI are offering the opportunity to compress analysis and planning cycles even more by absorbing more data and leveraging capabilities such as synthetic data generation—all working towards enhanced strategic insights and actions.
- Tech-forward companies have effectively moved from a ‘set-and-forget’ strategy —with long execution programmes— to a synchronised interplay of strategy and execution. They stand out because their strategic north star is supported by deliberate, constant motion to keep it relevant, despite constantly changing, multifaceted variables.
The ongoing technology revolution—everything from cloud and quantum computing to generative AI—has pushed the boundaries of what is possible, bolstering the competitive strengths of some businesses, while bringing others’ weak spots to the fore. As a result, CEOs and leadership teams are increasingly rethinking their strategic choices. The problem is that, at most companies, strategy development isn’t keeping up with rapidly advancing technologies. In fact, according to Accenture’s recent global research study, the bulk of businesses—79 per cent—have not managed to change their approach to strategy to keep up with the pace of technology evolution.1
Consequently, they may be struggling to separate relevance from noise as many technologies are treated as ‘shiny objects’ and potentially divert attention. They may be facing an unnecessarily high risk of committing resources in the wrong places. And they may be limiting their ability to respond quickly to threats from new business models and markets because they are not using technology well enough to spot them.
Companies struggling to keep up with the pace of technology can learn from the 21 per cent of businesses at the other end of the spectrum. These companies, which we refer to as tech-forward, have successfully changed their approach to strategy development, and now integrate technology in a meaningful way. The outcomes are clear. Tech-forward companies were 2.3 times more likely to outperform peers in terms of revenue growth and return on invested capital (ROIC). They also represent a higher proportion (1.3 times) of resilient companies, meaning they can withstand, prosper through, and emerge stronger—by continually “adapting their ability to adapt”.2
Most business leaders understand at an intuitive level that they need to adjust their business strategy in real time—and that these decisions should be both informed by and delivered through technology. But as our study finds, three significant challenges stand in their way. In this article, we identify those challenges and explore the ways in which tech-forward companies overcome them.
First, the company’s leadership team—from the C-suite to the board—may have a gap in tech fluency that leads to uneven participation between executives during conversations about technology.
There is a default expectation that all members of a business’s executive team need to be able to demonstrate a comprehensive understanding of the company’s products and customers, the business model and market dynamics, the profit and loss (P&L) statement and the balance sheet. This level of knowledge enables executives to meaningfully contribute to subsequent strategy discussions.
But that’s not the case with technology. As recently as five years ago, chief information officers (CIOs), chief technology officers (CTOs) or chief digital officers (CDOs) were assumed to be more knowledgeable than their C-suite peers about emerging technology. And it was believed that this gap didn’t affect a strategy’s efficacy. Business leaders would hand over requirements for tech leaders to provide solutions. That’s changed.
Today, a tech-driven disruption across a company’s value chain and ecosystem can immediately impact its strategy. Limiting technical knowledge to a select few leaders in the C-suite can hinder businesses. It would mean missed opportunities for innovation and collaboration, and a risk of trust breaking down if investments and solutions fall short. In fact, 67 per cent of senior technology leaders indicated that the lack of tech-fluency among their peers is a major barrier to integrating technology into strategy.
How can companies overcome this challenge? By closing the tech-fluency gap across the C-suite and developing a true understanding of the potential that technology offers.
Imagine a travel company developing its entire business strategy without ever realising that it’s possible to fly? That’s the case in many organisations where leaders are unwittingly limiting the potential of their business, rather than developing a tech-fluency that allows them to fully understand what’s possible.
Meanwhile, at tech-forward businesses, they’re leveraging technology to both inform and execute their strategy. We found that 75 per cent of tech-
forward companies report having both a tech-fluent CEO and tech-fluent C-Suite executives—nearly 20 per cent more than other organisations. In companies where the whole board knows more about today’s trending and emerging technologies, it becomes a discussion that everyone participates in, equally.
The outcome is an environment where the CIO or the equivalent leader can be expected to let go of the concept of technology as a ‘black box’ and instead use the deeper knowledge they hold to help leaders separate relevance from noise—and avoid getting distracted by the latest emerging technologies that may offer little or no value to the company’s strategy. For instance, this optimal state can lead to more productive and relevant conversations about how emerging technologies, such as generative AI, relate to the company’s current strategy and strategic choices. Tech leaders can challenge other executives’ orthodoxies during recurring innovation brainstorming sessions, for example, to imagine a different future for the company. They can bring a pragmatic approach that prioritises new tech investments—and debate potential risks and mitigation in the same way as an entrepreneur makes a start-up pitch to a venture capital committee.
In addition, these tech-forward companies are better at capitalising ongoing technology efforts to inform, broaden and, in turn, make strategy development better. They envision ways in which technology expands the range of options before them, seeing opportunity in today’s hard choices.
Specific actions for CEOs:
- Make technology fluency a foundational skill – one as important as being able to read a P&L statement – and a minimum requirement for all C-suite and board members.
- Assess the C-suite members, recruit and / or train consciously for a modern skill set, consider M&As to bring in senior leaders with the right expertise.
- Assess senior technology leaders’ ability to identify advancing tech that will matter most to the company and collaborate with their peers on it. Hold them to account for separating relevance from noise.
Second, the leadership team may be tied, by tradition and by habit, to lengthy strategy cycle times that are unable to evolve dynamically and struggle to course-correct.
Remember when a five-year plan could serve a company well and business leaders could manage volatility by making minor adaptations in execution? No longer. The changing dynamics of strategy development have seen the approach shift from a linear process, conducted annually or maybe biannually, to one that focuses on continually reevaluating strategic choices and adjusting execution efforts. While strategy is still about making hard choices, technology is exponentially increasing the options available and the speed at which those choices need to be made. And now they must be made in days, not months, so the gap between “where to play” and “how to win” has closed.
Companies that don’t take this approach risk falling behind. Conversely, tech-forward companies assess and adjust strategic choices continuously, informed by changing external forces and the exponential speed of technology change and disruption. The majority (88 per cent) of tech-forward companies are using the fast-growing amount of real-time data to rapidly adapt to changes.
How can companies overcome this challenge? By bringing modern agile IT practices to strategy development.
Tech-forward companies have brought modern IT practices to strategy development by testing strategies through experimentation and rapid sprints. Based on our research, they spend 1.2 times more budget than other companies on piloting new emerging technologies, supporting minimum viable products (MVPs), and scaling when the indicators show high potential.
Agile development also enables potential ideas to come from all levels of the organisation. Six out of 10 tech-forward companies state that their business strategy development process includes some form of bottom-up participation. One of the benefits to this approach? A flattened hierarchy. Managers collaborating with frontline staff can come up with an MVP—a minimal viable product that can be rolled out quickly—and used to test the strategy along the way. Simultaneously, the real-time data gathered can be leveraged to assess strategic choices and inform future decision-making, instead of following a costly and highly visible central approach.
Further, technologies such as generative AI are offering the opportunity to compress analysis and planning cycles even more by absorbing more data and leveraging capabilities such as synthetic data generation—all working towards enhanced strategic insights and actions.
Specific actions for CEOs:
- Consider technology as important an input to strategy as capital and talent. Assess a range of strategic options through scenario-planning, differentiating hype from relevant opportunities, setting a plan and course-correcting in real time based on context changes.
- Activate far shorter, continuous strategic cycles – not to replace long-term business strategy development, but to keep it fit for purpose and amplified by innovation. Build real-time data analysis into the approach, and ensure that the insights can be easily accessed, understood, and communicated to relevant stakeholders.
- Experiment with rapid sprints and reallocate resources based on their outcomes.
Third, companies may be held back by business strategy development that is tied to a rigid, multi-year capital allocation.
To support accelerated cycles, tech-forward companies have moved away from locking down their strategy on a chassis of a rigid multi-year capital allocation. In fact, 73 per cent said that they reallocate resources dynamically. They have effectively moved from a ‘set-and-forget’ strategy—with long execution programmes—to a synchronised interplay of strategy and execution. They stand out because their strategic north star is supported by deliberate, constant motion to keep it relevant, despite constantly changing multifaceted variables.
A strategic planning session at a tech-forward health services company provides an example of how balancing knowledge of technology with strategy considerations upstream allows an organisation to make better and bolder decisions on capital allocation. The board of directors were debating the merits of investing in graphics processing unit (GPU) machines, rather than having continued reliance on external GPU capacity. The group was able to discuss whether such a purchase would help them better achieve their goals and how the potential of this technology would support a bold strategy to grow new, innovative, AI-powered healthcare solutions. In fact, the more the C-suite learned about this technology, the more ambitious they became.
How can companies overcome this challenge? By breaking bigger decisions into smaller ones that lend themselves to real-time evaluation.
Not all strategic decisions can be agile in the way we’re describing. But in a growing number of cases, technology is turning what would have been “irreversible” investment into chunks of smaller, reversible decisions. This doesn’t mean changing strategic direction every two minutes. It does mean a more dynamic allocation of resources, using technology to strategise and plan before investing. This approach can even be effective in industries that don’t lend themselves to agility. For instance, oil and gas exploration, industrial and automotive manufacturing or drug discovery often require large investments and long-term commitments. But a growing number of these companies are using digital twin simulations to help tweak their strategic investment decisions (for example, by creating digital twin simulations to optimise before making investments to develop or change the physical layouts).
Take BMW’s recently announced investment of more than €2 billion in its Hungarian plant, where the all-electric Neue Klasse will be produced from 2025. But, more than two years before the official launch, vehicle manufacturing is already underway – virtually, at least. The plant is indeed BMW’s first facility to be planned and validated completely virtually using NVIDIA Omniverse Enterprise. With this pioneering project, BMW Group is taking a digital-first approach to sharpen its strategy and optimise complex manufacturing decisions ahead of investments.3
Specific actions for CEOs:
- Dedicate time for creativity in the C-suite to inspire a greater range of bolder, broader strategic options for growth and competitive positioning.
- Encourage innovation that explores new, tech-inspired ideas that are untethered from existing, deeply held orthodoxies.
- Leverage real-time data to support decision-making with strategic insights and recommendations.
Strategy development that makes sense for today
In a volatile, tech-driven, and faster-paced environment, conventional approaches to business strategy no longer suffice as organisations find themselves in the nascent stages of several potential S-curves, sometime simultaneously. But the most successful companies over the long term are those that are the most resilient and don’t just weather disruption but take decisive actions that enable them to grow profitably, while also effectively managing costs.
What’s needed for today is an approach to strategy that’s informed by, delivered through and responsive to technology. One that successfully navigates today’s macroeconomic environment, sustainability pressures and the opportunities—and challenges—that come with technology.
About the Author
Rachel Barton Working with the largest global brands, Rachel advises business leaders on how they can transform and create new growth – moving at speed from strategy to execution.
Within Accenture, Rachel leads the Strategy business across Europe and the Middle East. She brings together world-class capabilities across Technology Strategy, M&A, Private Equity, Growth & Pricing, Sustainability, Cost and Productivity and Functional Strategy anchored in the industry and convergence dynamics of our clients. With a passion for social responsibility, Rachel sits on Accenture’s Global Corporate Citizenship Council, and is a trustee for UnLtd and for the King’s College Hospital Charity. Rachel was listed in Management Today’s 35 Women Under 35 to Watch, the Women of the Future Awards and Red magazine’s Women of the Year awards and has been voted Most Inspirational Leader for Accenture UK.
She is a regular contributor to the media, with appearances on BBC News 24, Sky News, CNN and CNBC, and press contributions in The Times, The Guardian, The Economist, Critical Eye and Management Today.
- Based on analysis of 1,600 companies across nine countries and 18 industries to examine the role technology plays in their strategy development, see “Strategy at the pace of technology”, August 2023
- Based on the Accenture Resilience Index, an analysis of 1,615 companies across 18 industries to identify the shared traits of the most resilient among them, see “Reinventing for resilience: A CEO’s guide”, April 2023.
- BMW Group, “BMW Group at NVIDIA GTC: Virtual Production Under way in Future Plant Debrecen”, March 2023.