Company-Age Data Can Help Organizations Better Address the Impact of External Forces

Part of a research series that previously analyzed our data on the impact of external forces by BI success and organization size (see the Research Insights “Successful BI Initiatives Better Mitigate the Impact of External Forces” and “Leverage Organization Size Data to Better Address the Impact of External Forces”), this report examines our data on external forces by company age and the passage of time. Survey respondents provided current perceptions when surveyed (3Q/4Q22) as well as future expectations (in 12 and 24 months).

The data show that all companies, regardless of their age, indicate more concern about economic uncertainty, the labor market, and the COVID-19 pandemic, and expect fewer instances of impact due to geopolitical instability, regulatory compliance, and supply-chain issues. In 3Q/4Q23, organizations of all sizes most often expect impact due to economic uncertainty (52 percent on average—up four percentage points year over year). The other five external forces show much lower average levels of expected impact (29-34 percent) in 3Q/4Q23. A comparison of perceptions between the beginning and end of the period surveyed—3Q/4Q22 and 3Q/4Q24—shows that companies have significantly lower expectations for potential impact from external forces at the end of 2024.

Unlike the character played by Tom Hanks in the movie “Big,” a company cannot change its age by simply making a wish (or by any other means, for that matter). However, age is an attribute that shares some commonalities with organization size. For example, the youngest organizations also tend to be the smallest and most agile, while the largest organizations most frequently come from the oldest age category and have the greatest maturity levels. In between, middle-aged and midsized organizations simultaneously look to apply lessons learned from their smaller set of experiences and familiarity with agility to the challenges associated with growing in size, scale, and maturity. Age is a current-state attribute, not a lever at management’s disposal to adjust business operations to respond to things like impacts from external forces.

Rather than “wish” they could gain or have the attributes of an older or younger competitor, organizations instead should look to use our data on company age to inform how they might better address the impact of external forces. For example, the oldest companies tend to be least flexible and slowest to react to new externalities. Unsurprisingly, our data show that in 3Q/4Q22, as the impacts of the six external forces began to be felt in earnest, the oldest companies by far reported the most instances of impact across five of the six external forces (and were only 1 percentage point behind in the sixth category). At the same time, companies five to 16 years of age reported significantly fewer instances of impact—10 percentage points less on average—across five of the six external forces. The much older company in this example could use this insight to look for examples of companies five to 16 years of age in its industry that managed these challenges well and see whether (and how well) it could adapt its approaches to help improve operations at the older company.

External forces provide data leaders with a clear call to improve data sources and quality and invest broadly in a BI and analytics strategy—which includes advanced analytics. But data leaders should not lead this C-level discussion with BI. Instead, they should start the conversation by showing how data and analytics approaches, competencies, literacy, processes, tools, management, and governance supports specific business objectives and enables achievement of specific business outcomes.

You do not have permission to access this document. Make sure you are logged in and/or please contact Danielle with further questions.