The Big ShiftMeasuring the forces of change |
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In this Harvard Business Review article, “The Big Shift: Measuring the forces of change” (June 2009), authors John Hagel III, John Seely Brown and Lang Davison discuss metrics executives can use to gauge the long-term forces shaping the business environment and improve their firms’ overall performance.
To help managers in this decidedly challenging time, the Deloitte Center for the Edge presents a framework for understanding three waves of transformation in the competitive landscape: foundations for major change; flows of resources, such as knowledge, that allow firms to enhance productivity; and the impacts of the foundations and flows on companies and the economy. Combined, those factors reflect what we call the Big Shift in the global business environment.
Additionally, an index (The Shift Index) was developed to measure the changes that have had the biggest effect on business over the past four decades. That set of metrics reveals a dramatic increase in performance pressure on U.S. companies. Their average return on assets (ROA) has steadily fallen to almost one quarter of what it was in 1965, despite the fact that labor productivity has improved. Worse yet, even the highest performing companies are struggling to maintain their ROA levels and losing their leadership positions at an ever-faster rate. The paradox of falling ROA alongside growing productivity is explained at least in part by the rising total compensation of knowledge workers and other talented employees, and by consumers’ growing power over vendors that end up “competing away” their cost savings. An even closer look at the situation shows a fundamental mismatch between the mind-set of today’s companies and the environment in which they compete.
Read the full Harvard Business Review (HBR) article. Provided with permission from HBR.
The Big Shift
Center leaders John Hagel, John Seely Brown and Lang Davison author The Big Shift, a prestigious blog for Harvard Business Publishing exploring issues relevant to today’s turbulent market environment and offering perspective on the long-term ramifications.
Related content
Report: The Shift Index
Innovation Centers: Center for the Edge
Industry: Technology; Media & Entertainment; Telecom
Services: Consulting; Strategy & Operations
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