Korn Ferry has partnered with FORTUNE for more than 20 years to identify and rank the World’s Most Admired Companies (WMAC). The study also provides deep insights into the business practices that make these companies highly regarded and successful. This year, the research analysed the steps WMACs are taking to build organisational agility.
Be it Apple, Fedex or Southwest Airlines – it doesn’t matter in what industry they are in – there is a top strategic priority in the minds of senior leaders that make the list of the 10 World’s Most Admired Companies: agility. In all, 50 companies make the WMAC all-star list, which is based in part on executives’ surveys that rate several factors, including their ability to attract and retain talented people, management quality, social responsibility, and innovativeness.
The survey revealed that to thrive in this most disruptive of times, organisations need to have its people incentivised properly, and a sense of purpose that everyone agrees with. But what executives at the world’s most admired companies say is most important is the agility to transform itself on an ongoing basis.
According to the research, 95 percent of WMACs say organisational agility is a “critical” or “very important” focus area. Organisational agility is defined as a company’s ability to adapt quickly to changing environments to maintain or enhance its market position. By far the dominant motivation reported by WMACs for focusing on organisational agility is responding to changing customer needs and requirements, followed by technological change and opportunities to disrupt the industry.
Following are key findings regarding organisational and people capabilities and agility:
- 70 percent of WMAC executives indicate that their organisations have a well-developed talent strategy that is aligned with business priorities (as compared to 59 percent of executives from peer companies).
- Importantly, in implementing talent strategies, WMACs take a forward-looking perspective. 71 percent of WMAC executives report that their organisations have developed success profiles for key roles that define capabilities needed both now and for the future (versus 57 percent of executives from peer companies).
- 88 percent of WMAC executives agree that in matching people to initiatives and teams, their companies value expertise over formal position (versus 74 percent of executives from peer companies).
It’s not surprising that the World’s Most Admired Companies are taking a proactive approach to embedding agility into their organisations. The compelling commercial imperative for becoming a highly flexible, innovative, digitally sustainable company is clear: Korn Ferry’s Digital Sustainability Index proves that high performers in the dimensions of sustainable transformation see a 5.6 percentage point increase in profit margin (earnings before interest, tax, depreciation, and amortization — EBITDA1) versus the low performers. For a mid-cap company with revenue of $7 billion, this could potentially represent a difference of $392 million.
Leaders in the WMAC understand that to maintain robust performance, and solid reputation, amid changing business conditions, they need to respond to the demand for continual innovation. Eighty-four percent of the executives said that their companies are always looking to innovate and capture the next market opportunity (as compared with 66% of executives from peer companies). And more than three quarters said their organisations do a good job of managing the pace of change to ensure that they focus on a reasonable number of priorities and initiatives (versus 59% of executives from peer companies).
Organisations that are fully mature with respect to agility display well-developed approaches to defining opportunities and strategies, combined with strong organisational/people capabilities to anticipate or respond . WMACs are ahead of their peers in both areas:
- 74 percent of the executives said that their companies evaluate learning agility in promotion and succession decisions (as compared with 66% at peer companies).
- 65 percent of WMAC executives report that their companies have effective mechanisms for capturing data and learning from both successes and failures (as compared with 50 percent of executives from peer companies).
- 70 percent of WMAC executives note that their companies effectively shift resources (financial support, talent, managerial attention) away from less promising initiatives and toward more attractive opportunities (versus 61 percent of executives from peer companies).
The world’s most admired companies recognise that even in a world increasingly driven by technology, people remain the critical determinant of success. These exemplary companies look beyond current needs to develop the organisational capacity to respond in agile ways to opportunities and challenges ahead, with well-developed talent strategies and success profiles for key roles that emphasize the capabilities that will be required for the future.
The World’s Most Admired Companies
- Berkshire Hathaway
- Walt Disney
- Southwest Airlines
- JPMorgan Chase