COO and operations leaders

Transformation isn’t easy, but it isn’t optional either 

Digital transformation may be a top challenge, but COOs clearly believe it’s worth the commitment. Among the actions COOs plan to take in 2022, investing in digital capabilities and technology transformation are at the top. And tech is a factor in other areas, such as staff interaction and culture, connected products and services and digital tools for supply chain visibility.

External forces are having a hand in COO decision-making as well. Among potential policy shifts that are moving them to make the most changes to their businesses, technology and data regulation is cited by more than half of COOs—the most by far. And more than a third say the evolving global tax environment is leading their companies to accelerate digital transformation initiatives and make sizable technology investments.

These technology deployments, if well-planned and executed, can benefit businesses in many future scenarios and be a strong hedge against the ambiguity that has been a defining characteristic of the 2020s so far. The hope is to capture real-time demand and pricing signals and provide end-to-end visibility to create clarity in confusing times.

COOs know that if they make the business more efficient, they can succeed despite the ongoing pandemic and other forces outside of their control. Evolving isn’t optional—it’s essential. That may be why 53% of COOs tell us increasing agility in the face of a turbulent business environment is very important for their company to grow in 2022.

Where to grow and work? COOs consider options

Despite lingering ambiguity due to the pandemic, COOs aren’t hesitating to explore growth paths for their companies. Nearly half expect to expand into new markets in 2022, and 57% say developing new products and services in response to new consumer behaviors is very important.

There’s also the matter of physical location. Roughly a quarter of COOs are planning new facilities, relocating facilities or pursuing acquisitions. In the same vein, more COOs cite nearshoring and reshoring over offshoring when it comes to where their facilities are located, suggesting that operations leaders may be looking to pull supply lines closer. Overall, 60% of COOs are considering changes to their operational footprint—a signal that flexibility will continue to be necessary. Indeed, a company’s physical network strategy can be transformational in nature and often leads to integrating third-party providers (e.g., contract manufacturers, third-party logistics) into a company’s overall network ecosystem.

The pandemic also continues to be another big factor in where people work. More than a third of COOs said their biggest operational challenge this year will be COVID-19 variants extending the need for remote or restricted work. Given the increased mobility of workers between jobs today, missteps by companies in handling this new work environment can be costly. That may be a reason why 68% of COOs say hiring and retaining talent will be very important for their company’s growth in 2022.

With supply chains, sustainability joins resilience as a goal

If all this weren’t enough, COOs still must confirm their supply chains not only remain resilient but are more sustainable going forward. While it may not have ranked as high as talent or COVID-19, continued supply chain disruptions and vulnerabilities was cited by 27% of COOs as the biggest risk to their company achieving its growth goals in 2022. Given that, it’s not surprising that four out of five executives say improving supply chain resilience is either somewhat or very important for growth this year, and three-quarters say their company plans to invest in supply chain resilience. Nearly one-fourth have planned to increase supplier diversification.

Looking beyond the current disruptions, 28% of COOs tell us that making their company’s supply chain more sustainable will be their say their biggest operational challenge in 2022, while 17% cite reducing their company’s carbon footprint. This mirrors the move by many companies to declare net zero emissions targets in the coming decade or two. 

SEC Chair Gary Gensler has expressed a commitment to promulgating new environmental, social and governance (ESG) disclosure rules, with more specifics expected in the coming months. COOs know they’ll be taking on this new dimension of responsibility, managing the business both profitably and sustainably in 2022, with 45% saying that championing ESG issues is very important for company growth.

If COOs succeed in addressing these challenges and opportunities—from tech transformation to sustainable supply chains—their companies will emerge from 2022 in a stronger position, enabling them to deliver more value for stakeholders.