The Shift Index Macroeconomic Report 2010Measuring the forces of long term change |
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In the midst of an economic downturn, it's easy to fixate on cyclical events and lose sight of deeper trends and long-term changes. The Shift Index, a macroeconomic report created by Deloitte LLP's Center for the Edge, suggests that the current economic turmoil is masking long-term competitive challenges for U.S. businesses. The 2010 Shift Index Report updates the metrics we provided last year and goes deeper into some of the underlying dynamics.
Our first release of the Shift Index, in 2009, highlighted a core performance challenge that has been playing out for decades: U.S. companies' return on assets (ROA) have progressively dropped 75 percent from their 1965 level despite rising labor productivity. Even the highest-performing companies are struggling to maintain their ROA rates and increasingly losing market leadership positions. Some of the 2010 findings include:
- Less than a quarter of the U.S. workforce is passionate about their current work. Worker passion is a key requirement for effectively responding to the ongoing, disruptive changes in the business environment.
- Performance continues to decline. Whether measured through return on assets (ROA), return on invested capital (ROIC) or return on equity (ROE), the long-term downward trend holds true. We discuss this in the context of several macro-trends --transition to a service economy, M&A activity, outsourcing, and growth of intangible assets.
- The economic downturn, in particular the lack of access to capital, decreased consumer spending and the resulting business bankruptcies, has had an impact on some of the indicators. However, we believe these are short-term effects and that the long-term trends will resume.
The Shift Index consists of three indices and 25 metrics designed to track these deeper dynamics over time and make longer-term performance trends more relevant and actionable. It is the result of a year-long effort to apply a combination of established and original analytical approaches to four decades of data, some of it pre-existing and some created for the first time. The resulting Index draws on more than a dozen data sources, four surveys, and five proprietary methodologies and represent 15 industries.
Deloitte's Shift Index pushes beyond cyclical measurement and looks at long-term change and its impact on economic performance. The Shift Index is focused on three sets of main indicators:
- Foundations, which set the stage for major change
- Flows of resources, such as knowledge, which allow businesses to enhance productivity
- Impacts, which help gauge progress at an economy-wide level
Download the complete report below or explore individual chapters under related links.
The 2010 Shift Index - Measuring the Forces of Long-Term Change
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