We are at a unique moment in history. Factors such as technological disruption, climate change, fractured geopolitics and the continued effects of COVID-19 are creating fundamental shifts in society, and changing the game for businesses, governments and individuals.
It’s at this moment – and because of this moment – that PwC has launched The New Equation strategy. At the heart of The New Equation is a deep understanding of how societies and the operating environments for businesses are changing – and a clear vision that future success depends on building trust and delivering sustained outcomes.
In my last blog post, I looked at the first pillar of the strategy, trust. I reflected on the growing desire for trust in the world today, the widespread distrust that exists, and how people and organizations can begin to address that gap. Today, I want to focus on the second pillar, sustained outcomes: Two simple sounding words with profound implications for businesses and society.
First, let’s look at “outcomes.” Most organizations today are already quite familiar with the concept of outcomes. These are usually defined in the form of a deliverable or specific result. Often, institutions seek outputs, e.g., “We will migrate our customer relationship management software to the cloud and have it fully operational by January.” But achieving an output is not the same as achieving a real outcome aligned to the organization’s broader needs, such as reducing costs, increasing efficiency, making decisions faster, enhancing customer satisfaction, generating growth, etc.
When organizations try to make change happen, either by themselves or with the support of a professional services firm like PwC, those transformation projects may well have an underlying expectation of at least one real outcome. But, transformation projects often fail to deliver the real outcomes they were intended to create. This could simply be because nobody asked the question about what real outcome was expected so it was not explicitly included in the scope of work, or that the link between the project and the real outcome has not been sufficiently thought through.
Delivering an outcome is far more difficult and complex than executing a project designed to achieve an output: a real outcome involves widespread adoption, broad understanding, change management, leadership, capability, and strategy. These issues extend well beyond the team working on the project and often include other people, organizations, and broader social factors. The most important question that should be asked before any transformation project is, “What are the outcomes we intend to achieve – and are those outcomes tenable?”
But even with all of that taken into account, delivering real outcomes by themselves is no longer enough. When we created The New Equation, we deliberately chose to add the word “sustained” to our description. It’s not enough just to achieve an outcome; that outcome must also be capable of being sustained in the long term. Today, any outcome must hold out against the challenges of an ever-changing world. Challenges I have described at length earlier and summarized under the acronym ADAPT.
ADAPT is the challenge
These profound challenges – and the volatility they generate – threaten the long-term success of any outcome. You might achieve the desired result on your transformation project, only to watch it erode because a supply chain was not resilient enough; the technology architecture did not anticipate the nationalization of data; the employment model did not stand up to growing social pressure; etc.
But while the problems are convoluted, the solution is clear: organizations must adopt a conscious approach that takes ADAPT into account, and develop resilient, flexible strategies. The ADAPT challenges not only increase the complexity and threaten the sustainability of any project but can also profoundly impact the nature of the outcomes that we need to achieve.
At PwC, we have created a detailed framework of the interconnected factors organizations must consider in order to create sustained outcomes today, summarized under the acronym F2AST.
F2AST thinking delivers sustained outcomes
We still have the traditional Financial outcomes essential for any company to thrive and keep shareholders happy including generating and preserving value, creating capacity to invest and ensuring good governance. In addition, there are several wholly new concerns that organizations must consider. These concerns are important in their own right, but also have the potential to impact critical financial outcomes:
- Operating in a Fracturing world, with the need to address increasing legal, regulatory and tax issues, ensuring success and security when operating across nations in conflict with one another, and managing pressures to increase resilience and localization;
- A degrading Atmosphere creating the need to achieve net-zero, manage the physical risks of climate and navigate resource or species scarcity;
- Addressing Social issues arising from rising inequality, demography, polarization and the unintended consequences of ubiquitous technology; and
- Keeping abreast with developments in truly disruptive Technology and its potential impacts.
Organizations that do not rise to the challenge and deliver sustained outcomes, risk a rapid decline in relevance. The F2AST framework is an invaluable guide for organizations to think broadly about sustained outcomes as they navigate the challenges presented by ADAPT.
And beyond the risks, lie many rewards. There are manifold opportunities to generate enormous value by putting sustained outcomes at the heart of an organization’s strategy. F2AST-conscious strategies have the potential to reshape whole industries and sectors, make our societies and lives better, as well as creating profitability and growth for the organizations themselves.
Our reaction to the extraordinary set of challenges we face should not be to bury our heads in the sand or throw up our arms in despair. Instead, we should dream bigger. This unique moment in history requires us to have the courage to imagine outcomes that anticipate and account for the ADAPT challenges and create the sustained outcomes that society is looking for.
Sounds amazing in theory, right? But how do we begin to make this happen in practice? What steps should organizations take?
First, an organization cannot effectively navigate one of the needs outlined in F2AST without anticipating and addressing the impact of the other four. Think of a decentralized finance solution based on cryptocurrencies that do not address the need for clean energy generation; AI systems that create unemployment and greater disparities; or a new technology-empowered orientation to customers that destroys shareholder value. The issues need to be addressed simultaneously and create value for all relevant constituents, including shareholders.
Second, creating sustained outcomes requires massive imagination and integration across all aspects of the organization. For almost a century, organizations have tended to be organized by function. When a new challenge came along, a new functional leader was added to address it: a need to manage capital and report to investors led to the CFO function; the need to hire, train, promote and reward people led to the HR function; as Information Technology became more complex, the CIO role became necessary to procure, install, operate and update complex new IT systems. Today we are no longer in such a state of equilibrium and we must work across functional silos to solve the challenges in front of us.
And, finally, it requires real leadership. To guide us through today’s challenges, leaders must be prepared to embrace contradictions, and balance competing factors: they must be able to successfully manage their organization today while preparing and transforming it for the future; and they must be able to inspire and facilitate the collaboration that will be required – both across their organization and beyond.
Trust and sustained outcomes are inherently linked, and this interdependency will only increase as the world looks to address ESG issues and other concerns. Today, trust is declining across the board because we are not achieving the outcomes people want. The situation is fragile. Creating greater and broader transparency is an essential first step, but we can’t stop there if trust is to be achieved. We also need to make real progress towards the outcomes people care about: communities need to be safer; education more relevant and adaptive; technology more secure; investments more stable; and climate change less dramatic and more predictable. All that transparency – without real progress towards important outcomes – will increase distrust. We do not need to achieve the outcomes overnight; that is impossible. But organizations need to show that progress is possible and that they are ready to act.
In setting out The New Equation, PwC is not only sharing its perspective on why organizations need to build trust and deliver sustained outcomes, but it is also reaffirming its own commitment to support that mission. Our team of problem solvers are bringing their experience, capabilities, technological expertise and diverse talents from different corners of the Network to help organizations transform in new ways and deliver the right business outcomes, sustained over time.
I am immensely proud that PwC has embraced The New Equation so wholeheartedly. It is a bold move. It will involve a lot of hard work, and it’s not without risks for a professional services Network operating across more than 150 countries. But, over the last 170 years, PwC has never shied away from a challenge. On the contrary, we have helped clients weather storms and navigate big shifts in the way we work and live. Indeed, the Network exists to build trust in society and solve important problems. Today, there is no more important problem to solve than helping organizations build trust and create sustained outcomes. The future success of those organizations – and indeed of the world – depends upon it.