I talked about The Big Shift project a couple of days ago as research that I felt was fundamentally important to understand. Here are some key findings of the research as summarized by Big Shift co-author John Hagel on his blog.
For the moment, though, we have a report that draws attention to some of the key findings in the Index. The report is accessible here. Perhaps the most interesting findings can be summarized as follows:
- Return on assets (ROA) for U.S. firms has steadily fallen to almost one-quarter of 1965 levels at the same time that we have seen continued, albeit much more modest, improvements in labor productivity.
- The ROA performance gap between winners and losers has increased over time, with the “winners” barely maintaining previous performance levels, while the losers experience rapid deterioration in performance.
- The “topple rate,” at which big companies lose their leadership positions, has more than doubled, suggesting that “winners” have increasingly precarious positions.
- U.S. competitive intensity has more than doubled during the last 40 years.
- While the performance of U.S. firms is deteriorating, the benefits of productivity improvements appear to be captured in part by creative talent, which is experiencing greater growth in total compensation. Customers also appear to be gaining and using power as reflected in increasing customer disloyalty.
- The exponentially advancing price/performance capability of computing, storage, and bandwidth is driving an adoption rate for our new “digital infrastructure” that is two to five times faster than previous infrastructures, such as electricity and telephone networks.
Given these long-term trends, we cannot reasonably expect to see a significant easing of performance pressure as the current economic downturn begins to dissipate—on the contrary, all long-term trends point to a continued erosion of performance. So what can be done to reverse these performance trends?
The return-on-assets gap was not something that I recall reading anywhere before and was just one of the bits of information that caught my attention the first time I read the summary of the research. More to come.