How can businesses prepare for a workplace revolution?

Uncertainty and volatility are rising, increasing strains on business leaders and operating models. After subsiding from the heights of the pandemic, supply chain pressures are increasing. Workforce constraints are tightening. The threats from cyber attacks and deep fakes are growing, as are regulatory and geopolitical risks.

But at the same time, an unprecedented revolution in new technologies – from clean and abundant energy to paradigm-shifting advances in healthcare to AI, automation, and robotics – is accelerating productivity and reshaping how we live, work, and create value for our customers and our shareholders.

As we witnessed the pace of change and the impact on our clients accelerating, our firm began studying these phenomena over six years ago. With our latest AlixPartners Disruption Index, we delve into the biggest challenges that over 3,200 senior executives from around the world, and across 10 different industries, say they face and examine what the best performing companies are doing differently to mitigate the risks and position themselves for the opportunities that this environment presents.

Executives report increases in disruption over the past 12 months and higher risks on the horizon, a reversal of the trend for the previous two years. Some 57% of respondents this year report that their company was highly disrupted, up 7 points over the previous year. The Disruption Index, which is a measure of both the magnitude and the complexity of the challenges businesses are facing, was up 1 point this year to 73.

Following an autumn of political turnover and turmoil around the globe, the number of executives saying they will need to significantly change their business models over the next year jumped 15 points to 55%. Over half of CEOs are worried that the outcomes of national elections may negatively impact their business. An expectation of higher tariffs and increased US-China tensions are necessitating shifts to manufacturing and supplier footprints.

However, despite this more challenging environment, their outlook is incredibly positive. Almost 90% of CEOs tell us that productivity among their company’s employees is increasing. They are overwhelmingly optimistic about the impact of AI on their organization, and by a factor of two to one, they are applying these technologies primarily to grow revenues, rather than cut costs.

Undoubtedly, this helps explain that while disruption is up, so is confidence. A growing number of companies are becoming more proactive, agile, and resilient in the face of an external environment that is in constant flux.

Data from our survey lends support to the idea, increasingly discussed among economists, that a significant jump in productivity may be at hand. That would be a big deal. When productivity rises, so does wealth for individuals, companies, and societies. While profoundly beneficial, productivity growth can also be profoundly disruptive, crowning new winning companies, technologies, and countries, and displacing others.

Evidence suggests that the productivity frontier – “the sum of all existing best practices at any given time,” as Michael Porter defined it – has moved out, and companies are rushing to achieve a new possible.

The impact of AI and machine learning is a large part of this story. These technologies have already proven their ability to increase productivity everywhere from call centres to research laboratories, and their capabilities and adoption are just beginning. According to JP Morgan, AI could add as much as 10% to global GDP.

It is not just about AI, though. The promise of abundant, cheap, renewable energy could cut the cost of that input for every single business. Healthcare innovations are tackling some of humanity’s most intractable diseases, including cancer, obesity, and genetic disorders like sickle-cell anemia; and a healthier population brings with it tremendous economic benefits.

Another factor is the acceleration of corporate transformation on the back of pandemic and other disruptions. In Germany, where productivity has been stagnant, 43% of companies this year say they expect major business model transformation this year – a leap from 34% a year ago. And growing pressures from an ageing population and shrinking workforces mean that both companies and governments must get the most from the workers they have.

The stage is set for a workplace revolution, and CEOs sense the moment. For the past six years through the AlixPartners Disruption Index, we have been scrutinizing what the best-performing and fastest-growing companies are doing differently as they anticipate, shape, and respond to disruption. Over time, we have seen a consistent pattern from these companies: they prioritize execution and speed to results.

The opportunities from this revolution are vast. Tomorrow’s winners will be those who push hardest today.