In brief

Knowing what matters

In a winner-takes-most world, some companies vastly outperform their rivals. So, what do winning companies do differently? We surveyed more than 2,000 respondents across the US, UK, Germany, and Australia to examine the effect of 40 areas of management practice and company investment—ranging from leadership foresight to investment in business and operating model transformation to the use of technology. We found these factors enable dramatic performance premiums—and taking an integrative approach to all of them helps leading companies generate outsized advantage.

The factors driving outperformance

In brief

1. Knowing what matters

2. Building a better business

3. Focusing leadership

What winning companies do differently

accelerating performance

What separates the best from the rest? In elite sports, it’s the ability to consistently make the most of all elements affecting performance, from athletes’ fitness, strength, agility, and mindset to the playing conditions and technological sophistication of equipment. Little things count when a fraction of a second makes all the difference. The same holds true for top-performing companies. Getting some elements right can make you competitive, but truly accelerating your performance requires harmonizing dozens of management practices and investments as part of a larger, dynamic system. The rewards for getting everything right are massive. Our research shows top companies capture a performance premium, measured as the combined effect of profit margin and revenue growth, adjusted by industry, worth more than 13 times that of their peers.

In depth

2. Building a

Outperforming companies thrive across three critical dimensions: their business, operating, and technology models. Investments here are mutually reinforcing, facilitating excellence in key capabilities such as innovation, speed-to-market, and flexibility. Top-performing companies also work continuously to reduce friction, also called transaction costs—the time and resources needed as they do business inside the organization and engage and interact with external parties. These interactions happen across two interrelated dimensions.

At the same time, making the kinds of operational, business, and technology model shifts required to drive accelerated performance may also require shifts in how you lead. Are you up to it? Leaders of winning companies understand the need for ongoing transformation and focus their efforts accordingly. Six questions can shed light on where you stand.

Knowing what needs to be done is one thing. Doing it is quite another. Recognizing this imperative to act, leaders at top-performing companies are making big investments in enterprise-wide transformation—and further distancing themselves from rivals.

Success requires keeping eyes on the prize

3. Focusing

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Further reading: Go deeper on accelerating performance

More issues

Top companies recognize that transformation is necessary and constant, not optional and fleeting. By focusing not only on their business model but the operating and technology models that enable it, winning companies aren’t just creating competitive advantage—they’re extending it. The question now is who will narrow that gap, and how quickly?

In conclusion

More issues More from s+b Podcast pwc.com

September 2023

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The secret to

The power of outperformance

Tapping ecosystems to power performance

Beyond the back office: How managed services partnerships drive outperformance

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The obsession advantage in transformation

Accelerating performance in a winner-takes-most world

2 min

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6 min

How do these top companies achieve accelerated performance? By focusing on three things.

Making mutually reinforcing investments in their business, operating, and technology models

It’s never too late to improve. Take our quiz to find out where your company stands on its journey to accelerate performance, and start to get your strategy in place. It may provide the competitive edge you’ve been looking for.

1.

Dive deeper: Accelerating performance in a winner-takes-most world

better business

leadership

Dive deeper: The obsession advantage in transformation

Julien Courbe Deputy Global Advisory Leader, Principal, PwC US Email

Nikki Parham Managed Services Leader, Principal, PwC US Email

David Allen Execution Managed Services (EMS), Partner, PwC UK Email

Mohamed Kande Vice Chair-US Consulting Solutions Co-Leader & Global Advisory Leader Email

Tom Puthiyamadam Transformation Consulting Solutions Leader, Principal, PwC US Email

Lang Davison Global Advisory Thought Leadership, Managing Director, PwC US Email

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Continuously reducing friction, not only within their business but with external ecosystem and managed services partners

Ensuring leaders are up to the task, and able to recognize and act on threats and opportunities

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Watch: PwC’s Julien Courbe explains the mutually reinforcing models embraced by the world’s best-performing companies. Read the transcript.

How does your company stack up?

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Where do you stand when it comes to the critical factors accelerating performance? Get a sense of your biggest needs—and next moves—by taking our five-minute quiz.

Business ecosystems Lower transaction costs boost the ability of leading companies to look externally to meet customer needs, and companies in the top quintile of performance are twice as likely as lagging companies to derive at least 60% of revenue from these ecosystem relationships.

Managed services partnerships (MSPs) Leading companies use their MSPs for strategic advantage: to help close capability gaps, minimize capital costs, and support activities driving competitive differentiation. These companies boast performance premiums more than 12 times those of peers that only use MSPs to reduce costs.

Dive deeper: Beyond the back office: How managed services partnerships drive outperformance

Leaders focus. Winning companies are 33% more likely than peers to concentrate exclusively on the distinctive activities that drive performance and 21% more likely to engage managed services partners to tackle less distinctive activities. That division of responsibility frees up resources for what matters: building an organization where the whole is greater than the sum of the parts, and accelerated performance is the norm.

Business ecosystems and MSPs drive not only revenue and competitive performance, but innovation. We found winning companies with robust ecosystems and MSPs were respectively 2.3 times and 2.4 times more innovative (with innovation defined as deriving at least 60% of current-year sales from products and services introduced within the past three years). And these dimensions create a larger dynamic system in which flows of payments, talent, expertise, and insights enable positive feedback loops for top-performing companies.

In conclusion

mandate

The new

Decline

2 min

In brief

In brief | What matters? | Build better | Focus leaders | Top

6 min

In depth

In brief | What matters? | Build better | Focus leaders | Top