Since the publication of its first report in 2009, I’ve closely followed the Shift Index initiative of Deloitte’s Center for the Edge. The initiative, co-led by John Hagel and John Seely Brown, is an attempt to quantify what Deloitte calls The Big Shift, the long term transformations in the global business environment over the past several decades, brought about by the rapid advances in digital technologies as well as major changes in public policy.
One of their major findings is that the return on assets (ROA) of US companies have been steadily dropping, and are now 75 percent lower than their 1965 levels. ROA is a general indicator of the profitability of a company, so this means that something profound has happened in business to cause the ROA of US companies to drop to a quarter of their 1965 levels. This ROA decline is expected to continue into the foreseeable future.
The Shift Index is composed of 25 metrics grouped into three major indices that render explicit some of the major drivers behind this historical transformations. The Foundation index, measures the fast moving advances in technology performance and adoption, as well as the shifts of global public policy that are reducing the barriers to entry and movement. The Flow index measures the flows of capital, talent and knowledge across institutional and geographic boundaries that, enabled by an increasingly powerful digital infrastructure, are transforming the business landscape. And, the Impact index aims to quantify the impact of these changes on companies and individuals, as well as on competition, volatility and business performance.