European business leaders believe their companies are more vulnerable to IT-enabled market disruptions than companies in other parts of the world, according to a new market study by McKinsey & Company.
McKinsey found that 74 percent of European business leaders believed their company was 'very' or 'extremely' exposed to IT-based market disruption. Regardless, only 18 percent of European IT executives believed their companies were 'very effective' at introducing business technology faster and better than their competitors.
According to the McKinsey assessment, European companies need to grasp the opportunity to make bold, transformative moves to ensure their business continues to thrive within the "New Normal" environment of ICT-empowered borderless commerce.
A significant number of businesses have recognized the need to adapt, with 31 percent of European executives saying the development of new products and services in response to changing consumption patterns was a high priority.
'Good Enough' isn't a Winning Strategy
McKinsey believes that the attitude of European business leaders towards IT must shift. Organizations have achieved 'satisfactory' results by attaining some success in improving IT productivity, operational productivity, or innovation.
However, the performance expectation bar is now much higher and "IT must truly excel in all of these dimensions to support a winning company." McKinsey's guidance for European companies includes:
- Align IT and the business, upgrade business skills of IT leaders and close performance gaps.
- Improve governance models to facilitate joint decision making and strategic planning between IT and the business.
- Fundamentally restructure the IT function to dramatically improve productivity.
- Transform the company's operating model and cost structure with IT-enabled business processes.
- Enable transformative moves by promoting a mindset that fosters and rewards experimentation with new ideas.
- Identify opportunities for IT-enabled innovations and be prepared to respond to competitors' disruptive moves.
McKinsey says companies have begun to recognize that the current recession is not simply another turn of the business cycle but a restructuring of the economic order -- and that they need to look beyond relieving short-term cost pressures.
In summary, the current economic environment should be treated as the benchmark conditions for the foreseeable future. Where's the upside opportunity? Become that 'agent' of change.
McKinsey research has shown that downturns are times when industry leadership often changes. Forty-eight percent of global IT companies and 40 percent of U.S. industrial companies that were leaders before the 2000-01 recession did not retain their leadership positions afterward.