The number of businesses globally considered ‘Fit for the Future’ (FFTF) and better prepared to deal with future challenges – such as increased competition, changing employee expectations, and rising customer demand – has grown, according to a major new study from Vodafone Business.
An overwhelming majority (94%) of FFTF businesses believed they were well-prepared for the risks facing them, compared to only 58% of respondents overall. And 82% of FFTF businesses said their business continuity plan worked well.
This preparedness for risks, change and the unforeseen puts FFTF businesses in the best place for growth. Additional analysis of the research conducted by the London School of Economics found a link between companies being FFTF and business performance. Organisations that scored a 10-point increase in their FFTF score were more likely to outperform their competitors by 36%.
Ultimately, FFTF businesses are more confident and well-prepared for emerging challenges and are better placed to respond quickly to evolving employee and customer demands.
Accelerated digital transformation
The report also found that FFTF businesses have matured from a digital transformation perspective. The majority (89%) have created a clear roadmap, compared to just 60% of businesses in general. This preparation has put FFTF businesses in a better place to accelerate digitally during the pandemic, and 71% have done just that, compared to around half of businesses (55%) in general.
Globally, 80% of FFTF businesses are very optimistic about at least one of the future technologies tested, compared to 66% of all businesses. And 86% of FFTF organisations say they’re taking action to deal with an automated world, compared to 75% of businesses overall.
‘Fit for the Future’ businesses press ahead with sustainability
Despite the many challenges that businesses have faced in the last 18 months, FFTF businesses have remained in tune with the growing consumer demand for brands to take an ethical stance on social issues. 69% of FFTF businesses believe sustainability has become more important to their organisations during the pandemic. This is highlighted by 38% of FFTF businesses viewing sustainability as “absolutely necessary”, which was almost twice the number of general businesses that held the same belief (21%).
This trend looks set to continue, with over half (51%) of FFTF businesses planning to increase their spend on ESG and CSR in the next year. LSE findings showed that organisations that increased their ‘fit for the future’ index by 10 points can expect their ESG commitment to improve by 6 points.
Increased employee expectations
It isn’t just customers whose expectations have risen; employees also expect more from their employers, including more flexibility in terms of where they work (50%), greater expectations on working with the freedom and autonomy that best suits them (50%) and in terms of the hours they work (49%).
This is particularly acute amongst Gen-Z employees, with 57% of businesses seeing this generation having a greater expectation on flexibility of where they work. However, this growing need for flexibility is causing challenges for businesses when it comes to company culture, creating a trade-off that needs managing. The report finds that 73% of businesses believe company culture is becoming more difficult.
Vinod Kumar, CEO at Vodafone Business said: “Despite the challenges all businesses have faced over the last 18 months, there’s no doubt that those who are ‘fit for the future’ have adapted faster than the rest. The pandemic has forced many organisations to re-examine business operations, with a greater focus on digital transformation. As expectations from both customers and employees continue to increase, it is these businesses that will be able to seize opportunities and flourish in the post-pandemic world.
As LSE has proven, companies further along their digital transformation journey are more successful financially and from an ESG perspective. At Vodafone Business, we understand the challenges organisations face in kickstarting their digital transformation and can be a partner in helping them to start.”
Saul Estrin, Emeritus Professor of Management Economics and Strategy, and Christine Cote, Associate Professorial Lecturer, from the Department of Management at the London School of Economics, said: “At the LSE, we have worked with Vodafone Business to develop a rigorous methodology to discover whether ‘fit for the future’ businesses are more likely to thrive commercially in the face of the current business trends, as well as make a greater contribution to social good. From the report, it is clear that FFTF businesses’ financial performance and ESG score is significantly better than competitors. Businesses that prepare for the future now will pay twin dividends: for their profits and their social impact.”
*Notes to editor:
‘Fit for the Future’ businesses were identified by using a regression model to show what behaviours and attitudes were most closely linked with confidence in future financial performance and being well prepared for what the future holds. Twelve criteria were identified, which make up six characteristics:
- Has a positive attitude to change. They embrace change and are excited by the future.
- Is open to new technology. They acknowledge the power of technology to solve business challenges.
- Takes clear steps towards business transformation. They have a roadmap in place for how technology can transform their business.
- Sets a detailed strategy. They have a wider business strategy for the future that is documented, specific, funded and measured.
- Keeps up to date with emerging trends. They have clearly identified the forces shaping their business and refer to key thought leaders to help.
- Is adaptable. They can react quickly to new trends or challenges and is quicker to market than its competitors.
The LSE’s robust analysis states that businesses currently reporting average financial performance (compared to their competitors) that increase their ‘fit for the future score’ by ten points will increase the likelihood of outperforming the competition by 36%. Meanwhile looking at all companies’ Environment, Social and Governance (ESG) measures, organisations increasing their FFTF index by ten points can expect their ESG commitment to improve by six points; increasingly, requests for tender include ESG criteria.
- A deep and wide programme of secondary research. Vodafone Business’ Insights team analysed many sources, drawing and extrapolating themes and business needs.
- Qualitative and quantitative primary research*. Building on the research conducted in 2020 where we identified the key characteristics of businesses that were ‘fit for the future’, we conducted qualitative research (partnering with Jigsaw Research February 2021) and quantitative research (partnering with B2B International July 2021). Key businesses challenges were explored both amongst businesses generally and through the lens of ‘fit for the future’ businesses.
- Using the data from our primary research we partnered with the London School of Economics (LSE) to conduct statistical analysis which examined the link between being ‘fit for the future’ and business performance
*We surveyed 2,526 decisionmakers from businesses of all shapes and sizes, across 11 different markets. We did 25 in-depth interviews with business leaders, three with investors and three with journalists