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The secret to
accelerating performance
What winning companies do differently
Illustrations by Paul Weston
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In brief
2 min
The power of outperformance
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.
How do these top companies achieve accelerated performance? By focusing on three things.
Making mutually reinforcing investments in their business, operating, and technology models
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
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.
In depth
6 min
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1.
Knowing what matters
The factors driving outperformance
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.
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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.
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2. Building a
better business
How winning companies put the pieces together
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.
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.
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.
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3. Focusing
leadership
Success requires keeping eyes on the prize
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.
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.
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.
In conclusion
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?
Further reading: Go deeper on accelerating performance
Contact us
Mohamed Kande Vice Chair-US Consulting Solutions Co-Leader & Global Advisory Leader Email
Julien Courbe Deputy Global Advisory Leader, Principal, PwC US Email
Tom Puthiyamadam Transformation Consulting Solutions Leader, Principal, PwC US Email
David Allen Execution Managed Services (EMS), Partner, PwC UK Email
Nikki Parham Managed Services Leader, Principal, PwC US Email
Lang Davison Global Advisory Thought Leadership, Managing Director, PwC US Email