Fit for the
future

Report

Foreword

by Vinod Kumar CEO, Vodafone Business

In 2019, we took a deep dive to discover which businesses were best prepared for the future, and what those businesses were doing differently to the rest.

We began by identifying the business world’s emerging challenges, and understanding how companies of all sizes were prepared to tackle them. Then COVID-19 struck, and organisations went into survival mode.

We revisited the study in May 2020 to see whether ‘future ready’ businesses really were better prepared to handle crises. It was through this that we saw how being ‘future ready’ really had helped businesses to not only survive, but thrive.

The ongoing pandemic has made us realise how dependent we are on technology to work effectively and efficiently, but our research showed ‘future ready’ businesses were further along their digital journey, so felt more prepared and ready to tackle challenges that came their way.

If anything, the last 18 months have shown us what can happen when we come together as a global community. I admire the way businesses around the world have made it through the most challenging of times, all while keeping customers front and centre.

Now, we’ve taken our research further to see how ‘fit for the future’ companies are managing business, technological and societal challenges – and how the attributes and mindset of these companies are helping them succeed.

So, alongside B2B International, we surveyed 2,526 businesses to understand how ‘fit for the future’ businesses and companies in general have adapted in the last year. Then, we approached the London School of Economics to analyse our research. Working together, we developed a strategic framework and identified control variables to pinpoint the exact relationship between being prepared for the future and corporate performance. Altogether, this provided real insight into the positive financial and social impact of being ‘fit for the future’.

In this report, we’ll explore how these businesses have tackled challenges head-on and explain how any business – no matter the size – can become ‘fit for the future’ by adopting the right attitude.

Vinod Kumar
Vinod Kumar
CEO Vodafone Business
“The last 18 months have shown us what can happen when we come together as a global community.”
- Vinod Kumar, CEO Vodafone Business

INTRODUCTION

From leading academics at LSE, Christine Cote and Saul Estrin
Christine Cote
Saul Estrin

At the start of this project, Vodafone Business approached us with an intriguing question. Like us, it was interested in whether business outlooks and attitudes, especially about the introduction of new technology, affected company performance. Given our background in international business, the global scale of the research was very appealing.

Vodafone Business had already done a lot of work on this question, having undertaken research about corporate strategy and behaviour, especially in the tech sector, for some years. From this, it has developed the interesting concept of a ‘Fit for the Future’ business. Working together, Vodafone Business wanted us to develop a rigorous methodology to discover whether these businesses across countries are more likely to thrive commercially in the face of the current business trends. Moreover, it also wanted to know if these businesses made a greater contribution to the social good. To achieve this, we concentrated on developing a framework to explain why businesses that were better prepared for the future might perform better as well as proposing ways to measure both the commercial and social return.

We quickly realised that Vodafone Business’ concept of being Fit for the Future had some parallels to an established strategy model; “entrepreneurial orientation”. In this strategic framework, company performance is improved by organisational processes, managerial practices, and leadership styles which draw on an entrepreneurial mindset. Vodafone Business’ notion of managerial Future Readiness bears some resemblance to this thinking, though with a more technological focus. Importantly for this report, a number of previous studies have established how characteristics of management strategy- such as openness to new technology, adaptability, and a positive attitude to change- may be associated with superior financial performance. The parallels between the two strategic concepts – entrepreneurial orientation and Future Readiness - adds weight and credibility to Vodafone Business’ analysis. We built on these studies for the analysis in this report. For example, though there are a number of ways of measuring commercial success in previous studies, we quickly worked out which ones were more appropriate to the sample with which Vodafone Business was working. We were also able to identify the relevant control variables, so as to take account of factors that might have confounded the underlying relationship, and to propose an estimation framework that pinpointed the exact relationship between Future Readiness and corporate performance. However, despite its growing significance and policy relevance, no one had previously considered how a business’ orientation to the future might influence social performance. Indeed, the notion of Social Value is itself a highly contested one. This led us to search for a non-technical indicator of social impact which was consistent across sectors and countries. We chose to frame social impact in terms of ESG (environmental, social, and governance) performance; a measure that is already employed globally by many companies. As you will see, the report reveals a close correlation between Future Readiness and commercial performance on the one hand, and Future Readiness and social impact on the other. Even after controlling for factors such as company size, location and sector, financial performance relative to competitors is greater when firms score higher in terms of Future Readiness. Similarly, Future Readiness is associated with higher ESG scores. The impacts are large, and the results are robust. The report therefore shows how business mindsets and strategic actions to prepare for the future can pay twin dividends for companies: for their profits and their social impact.

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“As you will see, the report reveals a close correlation between being ‘fit for the future’ and commercial performance on the one hand, and social impact on the other”

BACKGROUND

Two years ago, we set out to discover which businesses are best prepared for the future – those we originally called ‘future ready’. So, we conducted research across 10 countries to understand what traits made a business ‘future ready’ – and w e discovered what these businesses were doing differently from the rest.

Then, as the pandemic hit, businesses had to cope with formidable challenges and profound disruption. That’s when we discovered ‘future ready’ businesses were likely to fare better than others.

Now, in partnership with the London School of Economics (LSE), we’ve taken a deep div e to understand how these ‘future ready’ businesses are doing, how their orientation to the future has impacted business and perf ormance, and how they’ve stayed strong despite the impact of COVID-19. Why? To inspire your business to prepare for the future too.

11
Countries
2526
Businesses

A lot has changed over the last 18 months, so it’s time to see how being ‘future ready’ has helped companies of all sizes not only survive but thrive throughout the pandemic.

These are the businesses we consider ‘fit for the future’ (FFTF).

WHAT DOES IT MEAN TO BE ‘FIT FOR THE FUTURE’?

Following the outbreak of COVID-19, being ‘fit for the future’ has become more important than ever before. But what does this really mean?
What size businesses are already ‘fit for the future’?
21%
2-9 employees
25%
10-49 employees
21%
50-249 employees
25%
250+ employees

These businesses have evolved further from last year. They have tackled challenges head-on and are primed for evolution. With sustainability in their DNA and an adaptive edge helping them succeed, these businesses are the first to embrace transformative technologies and seize opportunities. They don’t just react to change – they embrace it. With an irrepressible drive for better, they help shape the world of tomorrow for customers and society.

WHAT TRAITS MAKE FFTF ORGANISATIONS STAND APART?

They’re confident and well-prepared for emerging challenges, and can be identified by six common characteristics:
1
Have a positive attitude to change

They see change as an opportunity and are excited by the future.
2
Are open to new technology

They understand the power of technology to solve their business challenges.
3
Actively plan for their technological futures

They have roadmaps in place for how technology can transform their ways of working.
4
Set detailed strategies

They have wider business strategies for the future that are documented, specific, funded and measured.
5
Keep up to date with emerging trends

They work to understand the forces shaping their business. And they get help from key thought leaders.
6
Are adaptable

They can react quickly to new trends or challenges and are quicker to market than their competitors.

How have these traits helped companies stay on track?

While all organisations faced huge upheaval during the pandemic, FFTF businesses saw the light at the end of the tunnel and, generally, managed unexpected challenges better than the rest.

An incredible
82%
of FFTF businesses said their continuity plan worked well.

What did they do differently?

They prioritised building a business continuity plan – and trusted it.

However, success doesn’t simply come from being prepared, these organisation’s attitudes played a huge part in helping them stay strong through the pandemic. By being adaptable, remaining open to new technology, actively planning for the future and maintaining a positive attitude, FFTF companies put their all into creating a mindset that promotes innovation and resilience and, therefore, reported fewer negative impacts on business.

Ultimately, FFTF businesses felt better prepared for a crisis – even one completely unforeseen like COVID-19.

And it’s not too late for you to join them.

The findings in this report can help you develop a FFTF mindset and, ultimately, increase business performance.

Having an adaptable attitude has been invaluable throughout the pandemic, helping businesses pull through the most unexpected circumstances, as they’re prepared to tackle risks.

But our research found disparity between large and small businesses.

68%
of large enterprises say they’re ready for risks to business and markets.
53%
of small businesses say the same.

With greater resources, it’s easy to understand why large enterprises feel more prepared to handle crises, but how did FFTF businesses handle the pandemic?

In short, ‘fit for the future’ businesses are better set to manage crises.

And developing a digital roadmap helped keep business moving in the right direction:

89%
of FFTF businesses created a digital transformation roadmap.
60%
of businesses in general developed a roadmap.

That said, it was also the different approaches to relevant challenges that has shown why becoming FFTF can help your business.

Ready to start your business’ journey to becoming FFTF? Read on.

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