97% of Indian companies are not ready for growth, conclude PwC and Strategy& in a recently released report, in which they investigate the readiness of Indian companies based on its ‘Fit for Growth’ index. The economic slowdown has caused the vast majority of the companies to adopt a reactive approach, resulting in mismatch between strategy and execution.
Fit for Growth
The ‘Fit for Growth’ index by PwC and Strategy& is an index that assesses the readiness of companies for growth. Companies are assessed in three key areas: strategic clarity, optimal resource allocation and a supportive organisation, and scored on a scale from 1 to 5 based on their ‘fitness’ in each of these areas.
In the recently released ‘Why Indian companies need to get Fit for Growth and what you can do’, the strategy consultancies applied the methodology to 30 high, low, and moderate financial performing Indian companies, across 15 industries. The overall conclusion: Indian companies are not ready for growth, a state of affairs that could, on the long-run, impact the country’s economy, warn the consultants.
The research report shows that of the companies surveyed nearly 80% is not able to realise its growth, a development that results from the companies being ‘strategically adrift’, ‘distracted’ or ‘capability constrained’. More than half (60%) is found in the ‘distracted’ category, which indicates a high degree of mismatch between strategy and execution. Looking at the best performers – around 17% of the companies are ‘in the game’ and only 3% of the Indian companies can be considered ‘ready for growth’.
According to Bharti Gupta Ramola, Leader Markets at PwC India and co-author of the report, Indian companies will need to adpt their strategy and organisation in order to capitalise on growth: "The long economic slowdown led many organisations to adopt a reactive approach, often resulting in strategic misalignment. As organisations get back on track and refocus on growth, they will need to focus on three critical building blocks – structured corporate planning, robust cost structure and strong risk & governance mechanisms."
For companies to become future-proof, they must overcome specific challenges. The consulting firm states that ‘strategically adrift’ companies should re-craft their corporate strategies and align these strategies with their core capabilities. ‘Distracted’ companies should operationalise their strategies by channelling resources towards core activities. The ‘capability constrained’ companies are advised to review their operating models, organisation structures, processes, and systems, and the ‘in the game’ companies should create performance-centric cultures with strong risk & governance mechanisms.