After a wild 2023 shook the foundations of business loose, the rickety state of stability in the new year has many leaders feeling anxious about what’s sure to be another year of tech-fueled disruption. The rate of change last year was an all-time high, and it’s only expected to accelerate further in 2024, new research from Accenture finds.
The firm’s annual Pulse of Change: 2024 Index ranks six factors of change affecting businesses, using multiple layers of key business indicators, such as labor productivity and IT spending. It then compares this data to a survey of 3,400 C-suite leaders on how they view the impact of each factor on their organizations, as well as their preparedness to respond.
As we know, technology disruption increased the most in 2023, rising to No. 1 from No. 6 in 2022, almost entirely catapulted by advances in generative AI. In the survey, C-suite executives also ranked technology as the No. 1 cause of change.
According to the indicator analysis, Talent was the No. 2 cause of business change (including issues such as skills shortages and lack of employee engagement); yet in the survey, C-suite leaders ranked Talent at No. 4. However, 42 percent of C-suite leaders say skills shortage is one of the top three challenges that would hold back their organizations’ ability to respond to change, underscoring the importance for businesses of making their talent strategy a priority—especially as they work to tap the potential of new technologies.
The researchers found that overall, across all six factors, the rate of change has risen sharply since 2019—183 percent over the past four years, and 33 percent in the past year alone.
The six factors include:
- Technology—based on indicators such as IT spending and VC funding on emerging technologies, reflects the pace and scale at which technologies, such as generative artificial intelligence, are adopted and implemented;
- Talent—this includes indicators measuring the risk of labor shortages, level of employee engagement, wage costs and labor productivity, reflects the overall talent environment from a quantitative and qualitative perspective;
- Economic—this includes macroeconomic, financial and business indicators, reflects the overall economic disruption, financial volatility and business outlook;
- Geopolitical—includes indicators measuring geopolitical risk, number of economic sanctions and number of cyberattacks, reflects changes in war and conflicts, trade tensions and cybersecurity;
- Climate—based on indicators such as climate-related disasters and direct economic loss attributed to natural disasters, looks at the risks related to environmental issues, as well as the financial cost implications of climate-related regulations for businesses;
- Consumer & Social—includes indicators assessing social unrest and household savings, reflects the overall social climate as well as consumers’ confidence in the future.
“The level of change has dramatically increased over the last few years, and it requires a structural change in how businesses operate—incremental changes in ways of working and performance are no longer sufficient to compete,” said Jack Azagury, group chief executive of strategy & consulting at Accenture, in a news release. “The most significant source of change and disruption—technology—is also the key to this structural change. We believe that the companies that will succeed in the next decade are those that embrace a strategy of continuously reinventing every part of their business using technology, data and AI, including harnessing the power of generative AI, and ensuring their people are at the center of their transformations.”
The C-suite survey reveals that rapid pace of change holds continued potential for wide-ranging impact on leaders in the year ahead:
- A striking 88 percent of leaders anticipate an even faster rate of change in 2024.
- 60 percent see change as an opportunity, and 68 percent expect revenue growth to accelerate in 2024.
- Despite their optimism, more than half (52 percent) say they are not fully prepared to respond to the change they will face in the 2024 business environment.
Technology disruption seen as an opportunity, with caution about responsible use
Sixty-one percent of C-suite leaders expect the pace of technology disruption to accelerate even further in 2024, and 76 percent see generative AI as more of an opportunity than a threat and more beneficial to revenue growth than cost reduction.
However, nearly half (47 percent) say they are not fully prepared for the accelerating rate of technology change, and 72 percent are now approaching investments with more caution because of societal concerns about the responsible use of AI.
