Today’s large multinationals are complex organisms. Each one is a construct of its own history and legacy. Overly bureaucratic processes and inefficiencies can hinder effective communication and fast, decisive action.
Agility of response is increasingly important in today’s fast-moving markets, but many organisations are struggling. Our CGMA research on decision making in today’s volatile, uncertain, complex and ambiguous business environment has found that:
- 72% of companies have had at least one strategic initiative fail in the last three years because of delays in their decision-making process.
- Close to half (42%) concede that they have lost competitive advantage to more agile competitors because of slow decision making.
Our survey establishes that bureaucracy remains a major challenge to organisational agility today. Nearly one-third (29%) say organisational silos and bureaucracy create coordination problems. This is the single biggest barrier that respondents face. While executives recognise the problem, large organisations often struggle to win the battle against bureaucracy. It takes a long-term effort, focusing not only on the manifestations but also the causes of bureaucracy. “If you want to get to fast and agile, you need a sustained approach to change culture,” says Simon Henry FCMA, CGMA, CFO of Royal Dutch Shell. ”This is particularly so if you’re building on 100 years of successful history. You want to retain 70% of the culture and change 30%.”
The survey includes a gap analysis of responses to highlight those factors which senior leaders said were highly important for decision making, and yet were currently lacking effectiveness today. While the results showed that there is room for improvement in most areas, they also identify those factors that need to be more urgently prioritised as seen in the below diagram:
THE ROAD TO AGILITY: QUICKER, FASTER, AND SMARTER
Executives interviewed say that a lack of agility comes at a price. Organisations may miss market opportunities, suffer from inflated costs, and find that staff are demoralised. They need to take concerted action to address the root causes of bureaucracy and clear the road ahead.
Alexander Visser, the CFO of Philips Africa says that standardisation is the key to cutting out bureaucracy. “One issue for many companies is their system landscape makes it very difficult for them to communicate quickly and effectively across the organisation,” he says. “At Philips, we are building what we call the Philips integrated landscape, standardising processes, data and systems. This connects information from different functions so it’s available at everyone’s fingertips.”
Other means for organisations to become more agile include:
- Combining long-term tactics with quick-fire responses to the changing landscape and;
- Restructuring reporting lines within the organisation.
More on this in the CGMA report: Joining the dots: decision making for a new era which is available at http://www.cgma.org/resources/pages/joiningthedotsresources.aspx
This report is based on a survey commissioned by CIMA and the AICPA, and conducted by Longitude Research, of 300 C-level executives’ at large organisations from 16 countries around the world.
The survey was supplemented by in-depth interviews for deeper insight with:
- Patrick Conway, Chief Knowledge Officer, US Army Training and Doctrine Command
- Kenneth Goldman, CFO, Yahoo
- Simon Henry, FCMA, CGMA, CFO, Royal Dutch Shell
- Deirdre Mahlan, CPA, CGMA, President of North America, Diageo
- Andre Oerlemans, CFO, Weight Watchers Benelux
- Arvind Prasad, Managing Director, Ushdev International
- Claire Suddens-Spiers, Head of South East Asia, Rothschild
- Alexander Visser, CFO, Philips Africa
- Mark Weinberger, Global Chairman and CEO, EY
Samantha Louis
Director: Africa Region, CIMA
http://www.cimaglobal.com/
Samantha.louis@cimaglobal.com
