How do companies prioritize the business strategies that drive their long-term success? What’s driving their strategy as they face constantly shifting global market disruptions? How do they balance initiatives like digital transformation, ESG, developing their workforce, and adopting new business models to ensure business sustainability in 2023 and beyond?
Read our 5th annual survey to see how executive strategies have changed as companies face shifting global market disruptions.
Please enjoy the summary* below. For the full research, please visit our sponsor Dassault Systèmes (registration required).
For related research, please read our prior survey results from the past five years: Strategies for Business Sustainability 2022, Business Sustainability and Transformation Strategies 2021, Business Sustainability and Survival 2020, and Executive Strategies for Long-Term Business Success 2019.
Table of Contents
- Disruptions Vary, But Risk is Constant
- Preparing for Success
- Strategy and Initiative Drivers Have Shifted
- ESG Pressure Comes from Many Angles
- Holistic Business Sustainability
- Putting Strategy into Action
- Technology is Key to Business Sustainability
- Technology Drivers Significant Business Benefits
- Conclusions and Recommendations
- About the Research
A Time to Create Agility and Improve Sustainability
No Major Shocks, But Risk Remains
The past decade confronted businesses with a constant barrage of disruptions, including natural catastrophes and human-created disasters. Although the business environment is still turbulent, industry faced fewer significant new events since our survey in 2022. Our fifth annual survey, though, shows that risks remain. Although the percentage saying business risk and disruption has increased “significantly” dropped 27% from the prior year, about three-quarters of responding companies still say it has grown over the last five years.
Despite the lack of new shocks, companies in 2023 report that they still struggle with supply chain challenges, the fallout of COVID, and the impact of armed conflict. They also face lingering economic uncertainty despite relaxing global recession fears. Moreover, while it’s not new, the threat from climate change is coming to fruition, and predicted impacts appear to be ahead of schedule. In 2022, the world’s oceans were the hottest in history and exceeded the 2021 recorded maximum, and experts warn that “this year’s United in Science report shows climate impacts heading into uncharted territory of destruction.” Events like Canada’s 2023 wildfires are constant reminders of climate change impacts and are becoming more common.
Time to Continue Transformation and Drive Sustainability
Our surveys on long-term business success show that companies responded to prior disruptions by accelerating technology adoption to increase agility and become more resilient. Now is the time for companies to continue with digital transformation to prepare for future inevitable disruptions and continuously improve efficiency in the face of continued economic uncertainty. At the same time, they must act on sustainability initiatives that are becoming critical to both human experience and continued economic success. Given the landscape, how are companies prioritizing the essential pillars of long-term business sustainability to ensure business success in 2023 and beyond?
Strategy and Initiative Drivers Have Shifted
A Period of (Relative) Stability
Responding to global disruption dropped as a strategy driver from 52% of companies in 2020 to 10% in 2023, the lowest point since COVID began impacting global markets (see next page). This is a strong indicator that disruption may have eased off, at least so far this year. Instead, companies appear to be back on track with ambitious strategies for business sustainability. Long-term growth goals are about the same and remain the most common strategy driver. Growth goals have been a constant from the beginning of this research series, and now financial market perception has grown from a low of 20% in 2020 to one-half of companies this year.
ESG becomes a Larger Factor
Other factors that influence corporate strategy and initiatives have shifted. Respondents now report that strategic plans are more driven by financial market perception and ESG factors. This is very different from the “survival mode” companies faced in 2020, where essential initiatives like environmental sustainability were pushed to the side. In fact, almost one-half of respondents report that government regulation drives their strategy this year, growing by 48% since 2019. We expect that these regulations are largely focused on greenhouse gas emissions and other environmental mandates.
Other ESG business pressures are becoming more prevalent as well. Environmental issues were reported 83% more frequently as a strategy driver than in 2019 and have continued to climb since a low in 2020. In addition, 44% report corporate responsibility drives strategy, growing 63% since 2019, reflecting an additional ESG-related factor being considered more frequently in strategy decisions.
New Focus on New Energy
This year, we began tracking how the transition to new energy drives strategy and found that over one-third report it as a driver. We believe government regulation will add to existing transformation pressures such as cost and scarcity and spur more direct activity in this area. At the same time, government investment in new energy initiatives will also likely influence corporate direction. These drivers will further ESG efforts both directly and indirectly.
Technology is Key to Business Sustainability
Technology Critical to Business Success and Profitability
The second factor we investigated in detail is technology. Technology plays a crucial role in supporting the pillars and driving long-term success and profitability. To demonstrate this, a full 87% percent share that technology is important to business success, and 30% say it’s critical.
Technology plays a crucial role in supporting each of the pillars of long-term success. About three-quarters of companies share that technology is critical or important to five of the seven pillars, and about two-thirds report it’s important to the others.
Reaching ESG Goals Demands Technical Support
Perhaps one of the more surprising findings is technology’s high importance in supporting ESG. Companies now recognize that they need to take a systematic approach to environmental sustainability. Making sustainable decisions and green reporting require a tremendous amount of data from across the business and the supply chain. Technology is vital to capturing information and reporting on sustainability, but also to developing the insights needed to improve it.
ESG technology is full of innovation. From our experience, companies are not finding a single application for ESG. They are applying existing technologies to make more sustainable choices in everything from product and service innovation to business execution.
Technology is Crucial to Transformation
Technology is also seen as most important to digital transformation and product / service innovation and agility. Each of these is reported as “critical” by one-third of companies. The speed and scope of innovation demand a broad array of information and collaboration across disciplines.
Technology Supports Business Sustainability
Technology adoption continues to play a role in preparing for and responding to disruption, providing companies the agility they need to identify and react to issues. Technology alone doesn’t achieve these goals, but the key finding is that modern businesses can’t survive into the future without adopting technology to support them in the digital age.
Conclusions and Recommendations
Disruption is Lower, but Remain Vigilant
Risk and disruption continue to grow, but significant disruption may have leveled off (for now). Although the most common disruptions today are the supply chain and financial market, our research shows that the problems companies face vary. Businesses should anticipate ongoing disruption and the need to develop agility and resilience. Global business means companies are constantly at risk, it’s simply the reality.
Take the Long View
It’s essential to prepare for disruption but stay focused on long-term business needs. Company success drivers are optimistic and show a belief in the long view, including long-term profits, innovation, and transformation. Disruptions come and go. As companies mitigate risk by becoming ever more agile and responsive, they must also stay focused on the enduring fundamentals of business success, such as customer relationships and long-term profits, while digitally transforming to stay relevant for the long term. At the same time, they must also attract and develop the workforce of the future.
Stay Focused on Sustainability
Companies are taking a balanced approach and continue to focus across the pillars of business sustainability. But the world has changed, and strategic drivers have shifted to put more emphasis on financial markets and the environment. One of the most significant increases in attention is ESG. Environmental and social responsibility are becoming increasingly critical to long-term business success. Companies must continue to drive their internal green initiatives while satisfying regulatory demands. Fortunately, regulations are beginning to reflect environmental imperatives and create a level playing field that supports both business and the environment.
Adopt Technology to Drive Long-Term Success
Our research clearly shows that technology plays a crucial role in driving long-term company profitability and sustainability and achieving value across the pillars of business sustainability. It also delivers significant business value. Companies must continue their digital transformation, adopting new business models and technologies, to achieve long-term business success.
*This summary is an abbreviated version of the research and does not contain the full content. For the full research, please visit our sponsor Dassault Systèmes DELMIA (registration required).
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