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COOs banking on tech, workforce investments for long-term success
Operations leaders express confidence that they’re on the right path in the long term. About half of COO respondents (48%) strongly agree that they have the operating model they need for the next three to five years, according to our August 2023 Pulse Survey. Yet only 38% say the same about the next 18 months, a discrepancy that may signal lingering anxieties over short-term market trends.
COOs eye a tech-fueled operating model of the future
49%
of COOs strongly agree that they’re confident in their ability to reinvent the business through new technology
In line with the belief that they’ll bring their three- to five-year plans to fruition, COOs feel good about their position when it comes to transformation. Nearly half (48%) of operations leaders strongly agree that they have the right leadership to drive transformation or business reinvention. They’re equally as confident in their ability to leverage technology to evolve the business. It’s clear they see tech investments as critical to their transformation efforts.
While confidence is generally a good thing, COOs likely won’t achieve those plans without executing in the near term. That involves not only committing to investments but also taking an intentional approach to that spending — examining use cases, clearly stating goals and understanding how they’ll have to remodel their teams to pursue a new, tech-heavy approach. In other words, COOs understand the why. They should better understand and act on the how.
Perhaps it’s not surprising, then, that COOs are putting cash toward new tech to improve functions like planning, sourcing, manufacturing and distribution and, at the same time, investing in technology they’re already using.
What you can do
- Define an overall strategy that illustrates a vision for how to fundamentally transform — not just automate — operations and decision-making.
Understand what skill sets will be required within your business to support the technological reinvention you’re pursuing and develop a plan for the necessary training and sourcing activities.
Include productivity assessments within your investment strategies to confirm the expected labor impact is measured and achieved.
Get more on this topic
- Executives are increasingly optimistic about the business environment and their companies’ ability to mitigate risk. Find out more.
- What are the top strategic priorities for sector executives?
- What else is important to COOs right now?
COOs look to balance tech investments with cost control
68%
of COOs say striking the right balance between short-term cost cutting and investing to drive growth is somewhat of a challenge or a significant challenge
In their pursuit of greater efficiency in operations, 38% of COOs say they have trained existing employees on new technologies, including artificial intelligence (AI) and GenAI, and 35% have a plan in place to do so. Meanwhile, 71% of COOs agree or strongly agree they’ll use GenAI to support new business models in the next 12 to 18 months.
COOs are also looking at technology to help manage costs. Forty-three percent of operations leaders say they’re increasing investments in technologies they’re already using to a great extent, while 40% say the same about new technologies.
These technology investments come at the same time COOs appear to be backing off more traditional cost-cutting measures related to products or parts. Technology is something they can somewhat control as market conditions have forced other costs to rise. Just 25% of COOs are to a great extent reducing purchasing costs for direct materials, lower than any other category they were asked about, while 29% are simplifying their product portfolios, 29% are reassessing supplier portfolio and footprint and 31% are reassessing their distribution network.
What you can do
Strengthen focus on — and consider dedicated initiatives to improve — data governance, quality and integrity to reduce inefficiencies and ineffective tech spending.
Work across the C-suite to improve understanding of recurring as well as one-time costs and determine where increased coordination on tech investments could boost efficiency.
Consider smaller test cases or pilot projects to determine which technology investments in cost efficiencies could be scaled either within operations or across other functions.
COOs confront a changing talent landscape
42%
of COOs say frontline labor shortages are a significant challenge
COOs are also confident in their ability to recruit good people, yet just 40% strongly agree that they have the necessary talent to transform their business model. More than three-fourths (78%) say their ability to upskill existing talent is somewhat of a challenge or a significant challenge, while 60% cite talent acquisition as a moderate or serious risk to their company.
When asked which workforce issues have the most impact on the business, 42% say that frontline labor shortages pose a significant challenge, more than any other workforce issue. That compares to just 23% when it comes to a shortage of knowledge workers. In addition, more than a third (35%) cite an aging frontline workforce as a significant challenge.
Operations leaders recognize the need to find the right people to enable future success, and their responses indicate they have employees who know what they’re supposed to do. Their companies just need to find more of them.
What you can do
- Reassess current employee skill sets and determine what’s required to develop the frontline connected workers to support updated processes, technology and operating models.
Gear recruitment strategies towards nontraditional sources of talent and explore potential alternate sourcing strategies.
Build the expertise and capacity for innovation that you need both now and for the future to confirm coherent training strategies for current and new employees.
About the survey
Our latest PwC Pulse Survey, fielded August 1 to August 8, 2023, surveyed 609 executives and board members from Fortune 1000 and private companies about the current business environment, the risks executives are facing and their company’s strategic plans and priorities. Of the respondent pool, 77 were COOs and operations leaders.
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