Strategy work is all about making decisions about the future: decisions about where and how to compete in the marketplace. In a recent survey among more than 2,100 decision makers from different industries and regions around the world, the accounting and consulting firm PwC has now taken a closer look at how strategic decision-making processes in large enterprises are evolving in the context of digitization and automation. Some 168 German decision makers from various sectors and business functions also participated in the survey. Here are the key findings from a German perspective at a glance:
- Compared with global findings, data-driven strategic decision-making is already more-widely used among German companies, with a higher share of advanced analytics
Almost all surveyed German businesses used data analysis to inform strategic decision-making (97 %). Nearly half of the respondents (49 %) even said that their decision-making was “highly data-driven.“ Also about half of the respondents (52 %) indicated that they were using advanced analytics tools, such as predictive and prescriptive methods, putting them ahead of international businesses that still mostly prefer basic analytics tool which are descriptive and diagnostic in nature focusing on the past rather than the future.
- However, compared with international companies, German companies still rely slightly more on human judgement than on data & analytics for making strategic decisions
The survey shows that while German executives are widely using data & advanced analytics, ultimately they still rely on their intuition and experience when making important strategic decisions. Some 41 % of the German respondents, but only 36 % of the international respondents said they relied primarily on their intuition and experience for making strategic decisions. 34 % of the German decision makers relied on internal data analyses and 25 % on external advice.
- Belief about industry change sets the context for strategic decisions
While only 22% of both the German and international respondents belief that the status quo of their industry will be preserved within the next five years, the vast majority of respondents expects major changes in the business environment. When it comes to assessing the scale and intensity of these changes, however, differences between respondents could be seen. A quarter of the German decision makers surveyed said that their industry will be affected by disruptive changes that will pose a threat to their core business or even be game-changing. About half of the German decision makers (53%), however, believes there will be only "creative changes" with the core business remaining stable, but new "playing field" emerging. That is in contrast to the global findings, where more companies (35 %) expect disruptive changes to occur.
In view of the perceived changes in the market environment, strategic decisions both in Germany and in other countries focus primarily on developing or launching new products and services, entering new markets with existing products and services, and IT investments and digitization. About three quarters of the German survey participants (76%) also stated that their decisions were mostly revenue-oriented, while only 23 % aimed to reduce costs or improve business processes.
"Subjectivity and intuition cannot be completely filtered out of corporate decision-making," explains Barbara Lix, responsible for Data & Analytics at PwC Germany, the results of the study. "Yet, forecasts and the identifying and assessing of risks can support and improve strategic decision-making. Only those companies that find the right balance between head and machine in their decision-making will be able to keep up with the digital transformation."
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