Business transformation is not working: time to regenerate

Analysis from global consultancy Kearney has found that over half (56%) of executives say their current business transformations aren’t working. Despite businesses moving from a focus on resilience during COVID-19 to a new perspective of ‘regenerative’, currently only 43% of businesses effectively operate in this way. 

More is needed and more is yet possible.

What is a ‘regenerative business’?

Embedding new digital models and advanced analytics, while making supply chains and people models sustainable for business and society is now mission-critical.

Businesses that wish to fulfil these commitments will require a long-term approach to becoming truly ‘regenerative’. This means looking beyond resilience and proactively asking where value can be added back into society and the wider world. 

Instead of optimising for efficiency, the next generation of business will regenerate for speed, using external data plus analytical and advanced artificial intelligence to quickly and accurately see and make sense of what’s happening outside their own four walls.

By regenerating the entire business system – from supply chain to customer experience and organisational culture – both business and the public sector can ensure our teams, companies and the broader environment can reach and sustain their full potential. 

The view from the C-Suite

Kearney’s new research report Regenerate: For a Future that Works for Everyone surveyed 800 C-suite business leaders from across the globe and found that 99% of global business leaders thought that becoming a regenerative business was important. However, more guidance is needed on this new business paradigm, as only 43% reported that their companies were already operating this way effectively. This is a meaningful gap to close.

Similarly, only 40% of businesses reported effectively implementing a regenerative culture and 45% said they were already operating a regenerative supply chain.

Attitudes across the C-suite differ, too. Almost half (48%) of CEOs globally say their business is very effective at operating regeneratively. While COOs broadly agree that their companies are operating regeneratively, 58% say there is still further progress to be made.

The research shows that regenerative business is also influencing the leadership style of the C-Suite globally. A very small minority (2%) of CEOs said they don’t see any need to factor the regenerative model into their leadership, but almost half (47%) say they are currently doing so effectively.  

Which industries are leading the way?

Although 92% of C-suite leaders believe in the responsibility of business to create ‘a future that works for everyone’, Kearney’s research found that the retail sector is ahead of the curve in making this happen. Over half of retail businesses (53%) are operating regeneratively and over a third (35%) are doing it very effectively, in part by relying on technology to help limit waste of energy and materials.

For example, the energy sector is also following suit and taking a regenerative approach to sustainability, with 46% of C-suite leaders in this sector reporting they are already operating regeneratively very effectively. Alongside changes to the supply chain, energy leaders believe the greatest opportunity for regeneration lies with systematic changes to their business model, including leveraging a responsible and deepened view of advanced analytics.  

Alex Liu, managing partner and chairperson at Kearney, comments: “The results of our survey make it clear that businesses want to shift from a merely resilient strategy to a fully regenerative one that is more transformative at its core – whether that requires truly digitising their obsolete global supply chains, embedding analytics into the entire operating model or upgrading the way they develop and inspire diverse and sustainable workplaces. Unexpected is the new expected; there is no normal as we navigate these necessary self-disruptions. More is needed and more is possible.

“A regenerative business model plugs this gap and takes businesses a step further, by facilitating fundamental change, at the core. Businesses must take a step back and review their business models and assess their products or services and drive maximum value for all stakeholders and the broader ecosystem they operate in.”

Abby Klanecky, partner and chief marketing and client services officer at Kearney, adds: “While our research confirms that businesses are edging closer to regenerative models, it is equally important they don’t lose sight of the end goal while on this journey. Becoming regenerative is not just about restructuring and ironing out the pain points. It’s important that any plan sets the pace for long-term success, breaks down internal silos to share expertise, and really adds value back into the world in which we operate.

“Businesses must build on their strengths and identify new opportunities for growth and impact in the future. Resilience was the watchword of the past few years, now it’s going to be ‘regenerative’.”

Theo Sibiya, partner and managing director for Africa at Kearney, says: “Africa has shown time and time again how resilient it can be, even during the worst times of the COVID-19 pandemic. The continent is the world’s biggest growth market, and our youthful population demographic means we hold enormous potential. But we, too, need to move past ‘responding’ and put our efforts into being ‘regenerative’.

“It’s clear that organisations, both the public and private sectors in Africa, need to think and act in a new way rather than default to familiar norms. Instead of juggling multiple discrete transformation projects and the constant trade-offs that these necessitate, it’s about applying continuous and conscious effort to unpick and reengineer activities along the entire value chain.”