Deloitte Private report: Pandemic accelerates global private company transformation

Survey of private company executives highlights organizational resilience and how its driving companies’ strategies

New York, NY, 17 May 2020—Deloitte Private today published its third report on the global private company market segment, “Crisis as catalyst: Accelerating transformation,” revealing that, despite market challenges in the past year, many private businesses believe they are well on their way to becoming more resilient in a post-pandemic environment. In fact, more than two-thirds of private business leaders surveyed expressed high confidence in their company’s outlook over the next 12 months.

In examining how the pandemic has accelerated certain operations and activities, the report shows:

• 70% of private companies surveyed said the pandemic significantly accelerated their digital transformation   not just sparking but exploding the pace of adoption.
• 61% of private companies expect to form new partnerships and alliances.
• 60% of respondents believe that supply chains need to be redesigned as a direct result of the pandemic.

In the survey of 2,750 private company executives across 33 countries between 21 January and 9 March 2021, Deloitte Private found that a majority of organizations are in the process of building their resilience across seven key elements: strategy, growth, operations, technology, workforce, capital and society. Survey respondents rated their company’s status in implementing these elements of resilience to develop a “resiliency score.” Using responses to these questions, surveyed companies were grouped into categories of highly resilient organizations, mid-resilient organizations and lower resilient organizations.

The survey found highly-resilient organizations are more optimistic about their long-term growth potential than lower-resilient organizations, with 52% extremely confident in their outlook over the next three years compared with just 20% of those in the bottom tier. Regionally, US leaders are the most optimistic about revenue, profits and productivity in the coming year compared to other global private company leaders. Additionally, executives believe that both growth and technology, including digital transformation, are among the most important elements for resilient organizations.

“The COVID-19 crisis accelerated the need for private company leaders to embrace and embed acceleration and resilience throughout their organizations,” says Nathalie Tessier, Deloitte Private Leader, Deloitte Global. “Our latest global survey reveals that executives in every region used the crisis as a catalyst. From stepping up their digital transformation to seeking out new alliances to finding ways to increase their impact on society, private enterprises see themselves as well on their way to becoming resilient and competing in this rapidly changing environment.”

Other key areas highlighted in the report include:

Anticipated growth and workforce

A majority of respondents believe their company will snap back from the crisis during the next 12 months but also believe the wide-ranging impacts from the pandemic may continue to be felt for the next several years. Private companies have laid the groundwork for workforce changes through flexible workforce arrangements and by redesigning their organizations to be more agile and accomplish more with smaller, independent teams, including:

• Highly-resilient organizations (19%) say they have fully transformed the nature of work at their organizations already and 38% say they are midway through such changes.
• Highly-resilient organizations are more likely to supplement their workforce in the coming year than lower-resilient organizations (66% versus 48%).

Emphasis on digital transformation’s benefits

Executives have broad expectations about the gains technology investments will deliver for their private organizations, and they plan to continue to increase the breadth of their technology investments. For example:

• Highly-resilient organizations were nearly twice as likely (80% versus 43%) as those with lower-resilience scores to say that their digital transformation had begun prior to the crisis or is currently underway.
• The difference in how highly-resilient companies view the importance of digital transformation to their growth versus those with low resilience was 18 percentage points, the widest gap in the survey.

Companies are also spending on technology in other areas. In the next 12 months, information security is primed to be the most popular technology spending area according to 39% of respondents, followed closely by cloud computing (38%) and data analytics (37%).

A sharper focus on purpose

Purpose and trust have always been intertwined in the culture and foundation of private companies, but took on greater importance in 2020. The report unveiled that:

• Nearly 70% of the respondents said purpose increased in importance for their organization as a direct result of the COVID-19 crisis.
• Highly-resilient organizations were at the forefront in this respect, with 84% of the executives from these organizations saying they sharpened their focus on purpose.
  

For more information on the Deloitte Private global report, “Crisis as catalyst: Accelerating transformation,” please visit www.deloitte.com/global/deloitteprivate.