05/13/2015

The complex dynamics of disruption

Norbert Schwieters, PwCAuthor: Norbert Schwieters, Global Consumer and Industrial Products & Services Leader

In my last blog, I wrote about the disruptive forces affecting CEOs and their companies – based on what CEOs told us as part of our annual Global CEO Survey. This time, I wanted to look more closely at whether those forces are affecting some industry sectors more than others – and why.

I was struck by how complex the picture is; every sector is grappling to a greater or lesser extent with disruption – from shifts in customer behaviour, to new competitors, and changing regulation. I’ve tried to cherry-pick a few elements that caught my eye.

From the most disrupted…
Perhaps it’s no surprise to find that financial services (FS) collectively feels more prone to disruption than other industries, with insurance and banking particularly affected. Obviously regulation here is a big driver of change, but many other factors are at play too. The transformation in the financial sector reflects changes to the design of the financial system, the impact of digitisation and the level of transformation faced by its customers in various industries – so the combined impact is massive. In recent years, the traditional financial services arena has also been upended by new entrants like supermarkets and digital payment providers. John Neal of QBE shares his views on both the negative and positive aspects of these disruptors.

 

  

 

…to the most disruptive
Within the technology, information, communications and entertainment (TICE) sectors, entertainment and media companies stand out as facing the most disruption. This reflects the impact of digital transformation, with digital distribution channels and changing consumer expectations having a major impact on how content is delivered and the customer experience that’s created. Interestingly, technology CEOs don’t appear to be expecting higher levels of disruption compared to those in other sectors – perhaps a reflection that technology companies expect to be creating rather than experiencing disruption. That’s confirmed by the large number of CEOs in other industries expecting competition from technology companies in the future.

Digital transformation as the driver
The consumer and industrial products and services (CIPS) sectors are different from FS and TICE as they all – energy, industrial products, automotive, retail and consumer as well as health industries – deal primarily with physical products and services. In essence, they’re ‘analogue’ rather than ‘digital’. Transformation is taking hold here as well, although its impact is experienced in different ways depending on where along the physical value chain (up-, mid- or downstream) the industry sits.

In general, it seems that upstream/resource sectors like energy and mining are less worried about disruption than midstream/manufacturing sectors - and even less than downstream sectors like retail and consumer and pharma/healthcare. This may be because the customer experience plays a huge role in downstream sectors and offers an obvious entry point for digital transformation. Not surprisingly, many retail and pharma CEOs ranked changes in distribution channels as being disruptive for their industry. The retail industry is transforming as the continued rise of mobile as a key shopping channel drives a move towards what we call ‘total retail’. Meanwhile, in the pharma industry, new types of medications, including personalised medicine, will pose challenges to distribution strategies.

Power and utilities also stand out in terms of experiencing higher levels of disruption within CIPS. To me, this reflects the energy transformation that’s taken hold in this sector across the globe, along with the sector’s digital transformation.

It’s clear that it’s complicated
There’s no doubt in my mind that CIPS sectors are on the verge of being the theatre for a huge transformation play, as the full impact of the megatrends unfolds. The influence of technology especially will cascade down into the mid- and upstream sectors – we can already see the next generation of manufacturing coming, including the impact of the internet of things, 3D printing and advances in robotics, nano and other technologies.

However, this transformation is complex and there’s a thorny question at its core: how to combine the physical (analogue) value chain that, for so long, has been central to the CIPS DNA, with the virtual (digital) value chain that builds the foundation for an increasingly digitised world?

Every industry and every business out there is experiencing disruption at some level. And what’s even clearer is that CEOs who want to maintain their competitive edge will need to spend time exploring the implications of these disruptive trends: thinking through where their company is now, where they want it to be tomorrow, and what business decisions and strategy they need to navigate – and perhaps even harness – the disruptions on the road ahead.

 

Norbert Schwieters leads PwC's Global Consumer and Industrial Products & Services group. He's also the Global Energy, Utilities & Mining Leader and heads up the Energy industry team in Germany. Read more

05/11/2015

Future-proofing Australia’s workforce

 

LS_Building_LowResAuthor: Luke Sayers - CEO, PwC Australia and Vice Chairman, PwC Asia

The older I get, the more time I spend thinking about the future. In particular, I worry about the kind of world my four daughters and the rest of their generation will inherit from our generation, and the kind of opportunities that will be available to them when they finish their education. 

I believe the future success of any country – and consequently the children in that country – depends in large part on its ability to keep up with and compete in the economy of the future. For example, in Australia it’s clear that a large part of what kept us going in the past (the resources boom) isn’t going to sustain us much longer. And we’re already seeing the consequences of a failure to adapt - slower GDP growth, declining real incomes, declining employment, and an increasing shortfall in tax revenues.

Businesses are working hard to come to terms with the new reality and are beginning to build workforces that’ll enable them to compete in a new, largely digital economy. But what does this mean in practical terms for today’s children who are starting to think about their working future?

Smart move imageNew research from PwC Australia shows that over the next 20 years, 5.1 million Australian jobs – that’s almost half of all current jobs in our country– are at risk from digital disruption. That means a greater than 70% chance that the job could be automated by technology.  Finance clerks, insurance and real estate brokers, and even accountants could all become jobs of the past as businesses increasingly look for employees with the skills in science, technology, engineering and maths (STEM) that will define the jobs of the future.

Yet, just as employers’ appetites for employees with these skills takes off, it seems we may not be able to produce enough graduates to meet the demand. In 2012, 52% of higher education students in Singapore graduated from STEM-related courses. In Australia the proportion was just 16% – and this number has remained flat for more than a decade.

Our research shows that Australia needs to lift the level of STEM workers by 126,327 (about 1% of the current workforce)  if we’re going to be competitive with the top performing countries in terms of STEM skills – countries like Germany, Israel,  South Korea and Sweden. Our modelling shows that boosting our workforce in this way could yield an additional $57.4 billion in GDP over the next 20 years. That’s a staggering amount to forego if we fail to act on this knowledge - and ultimately our children will pay the price.

PwC’s purpose is to build trust in society and solve important problems. We want to make a positive difference – not just for our clients, but to broader society and the communities in which we live and work. With that goal in mind, PwC Australia has decided to put STEM at the heart of our strategy. Our vision is to help Australia become a global leader in problem solving and innovation, underpinned by excellence in STEM capabilities.

We’ve started to collaborate with experts in the field to work out how we can help increase the engagement of young people in STEM subjects. And we’re also working with inspiring organisations like the Foundation for Young Australians and the Australian Council for Educational Research to help more young Australians find their passion for a STEM skill and the future it could create for them.

But time is not on our side. The global economy is advancing at an unprecedented rate and Australia has a long way to catch up to world-leaders in innovation and STEM. We need to act now.

 

 

Luke Sayers is the CEO of PwC Australia and Vice Chairman of PwC Asia, PwC's network of firms across the Asia Pacific region. Luke leads the strategic direction of the firm and provides leadership to a team of over 5,000 people, who partner with global, Asian and Australian businesses, governments, high net worth individuals and entrepreneurs to help them grow and succeed. Read more

05/05/2015

More choices and opportunities for all: why I’m HeForShe

ADennis Nally Jan15uthor: Dennis Nally, Chairman, PwC International Ltd.

This year, our 18th Annual Global CEO Survey revealed that 85% of the CEOs whose organisation has a diversity and inclusiveness strategy say it’s enhanced business, while 56% say it’s helped them compete in new industries or countries.

Unsurprisingly, most companies focus primarily on two kinds of diversity:  gender diversity and the diversity of knowledge, skills and experience. While companies must expand their inclusion strategies beyond gender to be relevant, it’s important they continue to include gender as a key dimension since women comprise half the world’s population.

And yet, despite years of promoting gender equality, many women and girls around the world continue to face inequalities. Consider this: while women make up 60% of college graduates, only 3% of leaders around the world are women. In most countries, women’s wages represent between 70-90% of men’s, with even lower ratios in some Asian and Latin American countries.

Two things are clear. First, this problem isn’t going to correct itself. And second, to create a more equal world, everyone has a role to play.

To help solve the problem, I’ve joined other CEOs, heads of state and universities to play an active role in HeForShe, a movement for gender equality by UN Women. HeForShe aims to get men more engaged than ever in the fight against gender inequality, through both education and action. The campaign’s based on the premise that gender equality isn’t just a women’s issue, but that men have a crucial role to play too. While we’ve always known this, it’s clear that HeForShe has tapped into a growing trend; men around the world are joining the movement because they understand that gender equality means more choices for women and men, and a much more innovative world for everyone.

We’re proud to be a founding HeforShe champion:  one of 10 corporations, 10 universities and 10 governments committed to identifying and testing approaches for addressing gender inequality.

As such, we’ve committed to taking a number of actions, including:

Develop and launch an innovative male-focused gender curriculum with global reach
Lending our educational expertise and footprint to HeForShe, we’ll develop an innovative new curriculum to educate and empower men as gender equality advocates.

Launch a Global Inclusion Index to further increase women in leadership roles
For the first time, we’ll complete a comprehensive global evaluation of the rates of women across levels of PwC, with a specific focus on women in leadership. Based on the insights from this evaluation, each PwC firm will be able to develop tailored interventions to address potential barriers.

Raise the global profile of HeForShe with PwC people, clients, and communities
We’ll lend our full global footprint to HeForShe, driving awareness and action within and beyond PwC. Men will be encouraged to commit online, and take specific actions towards gender equality.

At the launch of HeForShe at the World Economic Forum Annual Meeting in Davos in January, I also signed the CEO Statement of Support to the UN Women’s Empowerment Principles.

HeforsheDennis2Since then, it’s been my personal goal to mention the HeForShe campaign to as many men and women as possible and to make them aware of the crucial role we all have to play to end gender inequality. 

Achieving gender equality isn’t going to be an easy task. But, with the support of 195,000 PwC people in 157 countries, I’m confident that we can help make a real difference in the lives of women and girls around the world - and build a much more innovative world where men and women have more choices.

To find out more, visit www.heforshe.org/impact

 

 

Dennis Nally leads the global network of PwC firms. He has extensive experience serving large multinational clients in a variety of industries, principally focusing on technology and life sciences. Dennis is also a frequent speaker and guest lecturer on issues affecting the professional services profession and the global capital markets. Read Dennis Nally's full biography.

04/29/2015

Strategy & execution: Why it matters and why we’re so proud of it

Dennis Nally Jan15Author: Dennis Nally, Chairman, PwC International Ltd.

How often have you recently looked at your business, your customers and your competitors and found yourself questioning the types of services and products you’re offering? Maybe you’ve even started to question the type of business you’re currently in?

Don’t worry. You’re not alone. In turbulent times, driven by increasing digital adaptation and disruption, your customers don’t act as they did a generation ago. And your competitors are likely to be upstart start-ups or new arrivals from a different industry sector. The smartest companies are the ones that are keen to challenge in-built complacency and quick to adapt to take advantage of these new opportunities.

Indeed, in our most recent CEO Survey, CEOs cited new competitors and changing customer behaviour in the top-three trends likely to disrupt their business over the next five years.

 

18th Annual Global CEO Survey - disruptors


Strategy is central to this ability to adapt and grow. That’s why, one year after PwC’s acquisition of Booz & Company and the formation of Strategy&, we’re so excited about what we can now offer in terms of delivering strategy through execution - helping our clients build the capabilities they need to grow, not just advising them.

We now have a strategy group of more than 5,000 people, putting us in line with the top strategy houses globally. So why are we putting so much stock in the need for smart strategy combined with execution? CEOs tell us that’s what they need.

In today’s business environment, CEOs of global companies lead for five years on average. A major reorganisation is likely to happen only once during that leader’s term and that puts great pressure on the CEO to get it right. Yet 60% of 4,000 top executives say they have no confidence in their strategy, according to research conducted by Strategy&.

Those companies that lack clear direction in their strategic goals, or find themselves spread too thinly because they chase growth on too many fronts, are the ones that are likely to fail. Often, as my colleagues Cesare Mainardi and Paul Leinwand explain in the enlightening video below, CEOs have so many strategies – be it growth, M&A, cost or portfolio management – that they end up undermining each other. By doing so they lose their focus when they should really be asking and solving one critical question: Who do we want to be?

 

 

Even when CEOs have a strategy they feel confident about, many doubt that they have the resources and capabilities to carry it through effectively. Still, today, in our always-connected business world, strategy and executive teams often don’t talk to each other, or they operate in an environment of mistrust and misunderstanding. In these situations even the best conceived strategy will quickly fall apart, creating confusion in the company and leaving it vulnerable to competitors who are often leaner and more focused.

That’s why we believe the future of successful companies will combine practical and winning strategy with the capabilities to execute that thinking. And that’s why we’re proud to have Strategy& as part of PwC – so we can put strategy to work and help companies around the globe unlock lasting growth.

 

 

Dennis Nally leads the global network of PwC firms. He has extensive experience serving large multinational clients in a variety of industries, principally focusing on technology and life sciences. Dennis is also a frequent speaker and guest lecturer on issues affecting the professional services profession and the global capital markets. Read Dennis Nally's full biography.

04/07/2015

Can we trust our food this World Health Day?

Craig ArmitageAuthor: Craig Armitage, Global Food Supply and Integrity Services Leader

You may have thought that food trust wasn’t your issue or it only affects other people in faraway countries when you heard about the World Health Organisation’s campaign to improve food safety this year.

But the reality is food supply is under attack as globalisation and increasingly complex supply chains create food trust risks on an industrial scale. And it’s this risk that’s threatening the very food on your plate.

That’s why we’re marking World Health Day today by announcing our global food supply and integrity services business to help food companies and governments with all of this. Made in New Zealand and with the rest of the world, we ultimately believe we can help restore trust in the world’s food.

Our view is we need to prepare for more of the same food challenges as basic fundamentals of trade and supply are transformed and megatrends, such as booming population growth and climate change, amplify their impacts on our businesses and everyday lives through the food we produce, sell and eat.

And it’s not just small or unsophisticated organisations feeling vulnerable to attack. A glimpse of recent headlines confirms an increasing picture of risk affecting the most reputable companies and economies.

The ‘nuts-for-spices’ scandal, for example, where peanut and almond shells were allegedly substituted for cumin seeds, saw dozens of products pulled from supermarket shelves in the US and Europe. In Australia, frozen berry products were recalled due to hepatitis A contamination fears. And ‘eco-terrorists’ recently tried to blackmail the New Zealand Government and dairy industry with a threat to poison infant milk formula.

Today, problems can turn up in more products, more quickly than ever before, causing food safety scandals that threaten large numbers of people. With the World Health Organisation estimating unsafe food contributes to the deaths of two million people every year, it’s clear we need a new approach to reducing this risk.

It’s a public health concern, a significant political issue and a substantial risk for food companies and governments that get it wrong. So what can be done to improve trust in our food?

As consumers, we now want to know more about the food we’re buying and feeding to our families. In response to this concern, we’re seeing governments enhancing their regulatory controls, supplemented by increased oversight and sanctions. But food companies, who naturally take safety and quality issues very seriously, know complying with regulatory change is just the first step: winning customers’ trust requires more.

We believe a more strategic and innovative approach is needed to help companies transform their approach and have more control and visibility over their supply chains. In our experience, leading companies are investing in technological solutions to improve traceability and recall management, focusing on food safety culture and going well beyond compliance to improve standards and reduce risk.

For these problems are only set to worsen if we don’t do more to collectively protect ourselves and build resilience of global food supply. Just last week I was in Taiwan when police raided a company passing off industrial chemicals as a food ingredient for adding to seasoning and spice mixes. This is the reality we face!

Building trust in food is a shared responsibility that needs to be tackled by industry and governments in partnership with us all as consumers. It’s time to raise awareness of these issues and confront them head on.

For more information, see our brochure for an overview of these issues and our paper on food trust and regulatory change


Craig leads our Food Supply and Integrity Services for PwC globally, focusing on food security, safety, quality and recall management services to help companies and governments give greater trust in their food.

04/01/2015

Finding different ways of thinking and working

Nora-wuAuthor: Nora Wu, PwC Vice Chairwoman and Global Human Capital Leader

Business leaders today recognise that a diverse and inclusive workforce is a critical success factor for growth, according to PwC’s 18th Annual Global CEO Survey. It’s essential for nurturing creativity, fostering innovation and informing business strategies, particularly in this era of digital disruption. In this year’s survey, more than 80% of CEOs whose organisations have a diversity and inclusiveness strategy say it’s contributed to better business performance.

So what does this mean for business today, and what can we do about it going forward? We take a look at why diversity is so important, and how we can focus on building more diverse and inclusive workforces in future.  

Making a difference to the bottom line
According to the survey findings, nine out of 10 CEOs say that they’ve been able to attract talent through their diversity strategy – and this is leading to concrete benefits for the business and a stronger brand reputation. As high as 85% of CEOs see a clear link between diversity and the bottom line.  

PwC's 18th Annual Global CEO Survey - Fig E
Today, business leaders believe that when their people are capable of thinking and working differently, they’re able to offer better solutions, services and products to their customers and clients, bringing fresh ideas and new processes that are crucial to compete in today’s marketplace.

Attracting top talent and winning new markets is becoming a key differentiator for organisations – and diversity plays an important role in achieving this differentiation. It’s evident that CEOs are increasingly seeing diversity and inclusiveness as one of their top business priorities, with three quarters of CEOs having a diversity strategy or plans to adopt one.

According to Dr Vishal Sikka, Chief Executive Officer and Managing Director of Infosys, “Great products and solutions are created when they are a synthesis of lots of different kinds of perspectives, and when we’re diverse.”

Denise Ramos, Chief Executive Officer and President of ITT Corporation, says: “We want people who have differing ideas, differing experiences, differing opinions because we need to solve our customers’ problems. The only way you could do that in a world-class way is to bring a variety of people together and utilise their collective know-how. Diversity and inclusion will make us that much more competitive in the work place.”

Diversifying diversity
CEOs are starting to look beyond the more common dimensions of gender and race in order to build diverse teams. For example, elements such as knowledge, skills and experience, attitude to career and progression, age and disability are now being taken in consideration when building diversity strategies.  

 

PwC's 18th Annual Global CEO Survey - Fig 18
Although CEOs with active, formal talent strategies say they’re addressing the more ‘conventional’ dimensions of diversity – as pointed out by PwC Vice Chairman Mitch Cohen in his recent blog – it’s encouraging to see that CEOs are starting to embrace diversity in its wider sense. They’re recognising the importance of ‘diversifying’ diversity, and starting to look more widely across channels, geographies, industries and demographic segments in search of the right talent for their organisations.

Continuing to focus on gender
When it comes to the more conventional dimensions of diversity – such as gender diversity – it’s clear that organisations still face challenges.

For example, attracting and retaining female ‘millennials’. Born between 1980 and 1995, female millennials make up a large part of the current and future talent pool, and are entering the workforce in bigger numbers than any of their previous generations. In PwC's new study, The female millennial, 85% of female millennials interviewed said that a potential employer’s policy on diversity, equality and workforce inclusion was important to them. But their expectations are not always met: 71% felt that while organisations talk about diversity, opportunities are not truly equal.

It’s so important for us to be committed to supporting the growing number of female leaders across the business community. I’ve been proud to be part of PwC’s annual Aspire to Lead initiative, our women’s leadership series which focuses on how female students can move from campus to career. It’s important for all organisations to be making gender diversity a reality for the young women in their workforce.

There’s still progress to be made
According to our CEO Survey, 17% of CEOs say their organisations don’t have a strategy to promote diversity and inclusiveness, while 13% say they have plans to adopt one.   


PwC's 18th Annual Global CEO Survey - diversity
It’ll be important for these organisations to embrace diversity by driving efforts to both tackle enhanced leadership diversity  and drive change among their employees . To get this right, organisations need to first understand better how to attract, develop, engage and retain an increasingly diverse workforce.

Annika Falkengren of SEB, one of four female CEOs among Sweden’s top 100 companies, says: “What gets measured gets done – so we have to put in targets, follow up on them and measure its progress.”

If organisations can remain focused on keeping diversity and inclusion at the top of their priority list, they’re already off to a good start.

Nora Wu currently leads the firm’s global people strategy. Prior to this role, Nora was the PwC China Senior Partner for the Shanghai office, Central China Markets Leader and Asia Pacific Human Capital Leader. Find out more

03/27/2015

Is India ready for a marketplace without boundaries?

Bharti-gupta-ramolaAuthor: Bharti Gupta Ramola, Markets Leader, PwC India

The India summary of our 18th Annual Global CEO Survey has thrown up some interesting and surprising results. CEOs in India were the most positive about their business growth prospects and also the most bullish about prospects for the global economy, when compared to their global peers. A whopping 84% of CEOs in India said there were more opportunities today than there were three years ago, against 41% who saw more threats. They also seemed less bothered about potential industry disruptions coming their way in the next few years.

India CEOs confidence
While the positive sentiment about business growth is understandable, the bullishness about the global economy raises a question. Are CEOs in India super excited because of some positive developments in the global economy and a pro-reform government in India? Or are they locally focused and isolated and not so connected with the real issues confronting the global economy? Similarly, the gap between the opportunity and threat perception and relatively low concern about disruptions raises the question about the preparedness of CEOs in India. However, at least one CEO we spoke with about these results thought that perhaps CEOs in India are seeing disruptions as opportunities rather than concerns.

No doubt India is on an upswing, with aspirational double-digit growth that the business community can’t wait to see. PwC's new report, The World in 2050: Will the shift in global economic power continue? projects that India will be the second-largest economy in 2050 in terms of purchasing power parity (PPP). However, there are two prerequisites for this: firstly, structural and institutional reforms and secondly, large-scale investments. There’s also the big question of whether India has, or can build, the capabilities needed to compete in an increasingly borderless market.

In the survey, CEOs in India saw inadequate basic infrastructure and bribery and corruption as the top threats to business growth, and availability of key skills was a key common concern shared with their global peers.

Global CEOs have reinstated their faith in India, which ranked sixth this year in terms of the most important markets for CEOs’ overseas growth prospects - the same as last year. With the IMF and World Bank also showing confidence in India, all eyes are on government action to improve the environment for doing business in the country. Yet, as our report, The Future of India: the Winning Leap, points out, corporations in India have much to do to build the capabilities needed to create innovative solutions that address the needs of India’s growing market in a resource-efficient way. Only then can India progress on an unprecedented growth trajectory and take that winning leap.        

 

 

Bharti Gupta Ramola is the Markets Leader for PwC India and a member of the India Leadership Team. Prior to her current role, she was the Deals Leader for PwC India. Bharti has also led the Infrastructure, Government & Utilities & Energy Sector Advisory for PwC India and was a member of PwC's Global Diversity and Inclusion Council. In her personal capacity, Bharti serves on the boards of BASIX and Srijan, two of India’s leading organisations promoting livelihood development.  She has been Chair of the Board of PRADAN.

03/25/2015

To succeed in China’s “new normal”, you’ve got to have talent.

Dennis Nally Jan15 Author: Dennis Nally, Chairman, PwC International Ltd.

After a decade of plain sailing for China’s economy, CEOs have recently had to navigate a decidedly more complicated business landscape. 

Perhaps it’s not surprising then that, in our Annual Global CEO Survey this year, the confidence of China’s CEOs in their business growth prospects fell below the global average for the first time in its 18-year history. In fact, nearly 60% of them believe there are more threats to the growth of their company today than there were three years ago. This erosion of confidence in China’s economy is shared by global CEOs: for the first time in five years, the US has overtaken China as the most important market for overseas growth.

PwC's 18th Annual Global CEO Survey - Fig 3

The challenge for China’s business leaders is to establish a platform for success and growth in an economic climate that could well be the “new normal”. The good news for China’s CEOs is that a strong majority (71%) believe there are more growth opportunities for their company today than there were three years ago. Also, more than half are planning to increase headcount in the next 12 months.

To make sure growth is sustainable in a global economy being transformed by digital innovation, new business models and changing consumer behaviour, companies will have to embrace new technology and be open to new ways of collaborating - both with traditional business allies and also with unconventional partners, be it academia, or even consumers.

In many ways, to succeed in this new economy requires a new digitally inventive and flexible mindset. That’s why we believe nurturing and holding onto a diverse mix of talent is one of the most important leadership qualities a CEO can command nowadays.

In this year’s CEO Survey, nine out of 10 CEOs in China said they were concerned about the availability of key skills. On the surface, the future looks bright. After all, by 2020, 40% of Chinese 18 to 22-year-olds will have a college education. The question CEOs need to ask is, “Do I have a corporate strategy and culture that can bring the best out of and retain the Millennial generation?"

Half the China CEOs we interviewed said they already had a strategy in place to promote diversity and inclusiveness - and an overwhelming majority agreed that having such a strategy will help attract new talent to the business.

In the global, increasingly mobile and technology-driven 21st century economy, you’ve got to have talent.

Read more in the newly released China summary of PwC's 18th Annual Global CEO Survey.

 

 

Dennis Nally leads the global network of PwC firms. He has extensive experience serving large multinational clients in a variety of industries, principally focusing on technology and life sciences. Dennis is also a frequent speaker and guest lecturer on issues affecting the professional services profession and the global capital markets. Read Dennis Nally's full biography.

03/23/2015

Five traits that might indicate you’re a resilience builder

Dennis-chesleyAuthor: Dennis Chesley, Global Risk Consulting Leader

More risk or more opportunity, what do you see in the near future? When we asked 1,322 CEOs this question as part of PwC’s 18th  Annual Global CEO Survey this year, the response showed that business leaders are almost evenly split. 59% see greater risk this year than they did three years ago, while 61% of CEOs believe there are more opportunities now than there were three years ago.

 

Ceosurvey-risk-Figure_2

 

Of course, the percentages don’t add up to 100%, and that’s because there’s a unique group of CEOs in the middle - thirty percent - who believe that there are both more opportunities and threats. We were intrigued by this group of 30%. How do they prepare their organisations and strategies for both opportunities and threats? So we dug deeper into the data. What we found was an optimistic group of business leaders who appear to be actively seeking positive disruption. We call them ‘resilience builders’ because their beliefs suggest their organisations are equipped to act on emerging opportunities – even in the most daunting circumstances.

Resilience is an organisation’s capacity to anticipate and react to change, not only to survive, but also to evolve and seize advantage. To survive and evolve today, companies need do more than simply innovate incrementally or tweak their balance sheets; they need to prepare their entire organisations to take advantage of big shifts. And this is what resilience builders seem to understand too, so as to be able to act on emerging opportunities before competitors.

We know that resilience builders are more likely to: 

  1. Anticipate competition from outside of their industry: 66% of resilience builders versus a global average 56%.
  2. Enter a new industry themselves: 60% of resilience builders versus a global average 54% say that they have entered, or considered entering, a new industry in the past three years. 
  3. See a range of trends as being more disruptive to their industries than the global average, including  changes in distributions channels, in industry regulations, in customer behaviours, and in core technologies, as well as increasing competition.
  4. Pay attention to societal concerns, such as unemployment (54% vs global average 34%) and social instability (68% vs 61% global average).
  5. Collaborate with non-traditional partners. 52% versus a global average of 44% have or are considering collaborating with start-ups, for example.

Resilience builders have a heightened sense of risk, but this risk mindset isn’t a hindrance; rather, it’s an indication of how they intend to grow. As they plan for growth, they’ve changed their risk management functions not only to mitigate value destruction, but also drive value creation.

What do you think -  sound like you? Are you actively fostering the critical business capability of resilience within your organisation? Do you know where to start? Contact me if you'd like to investigate further, and take a look at the full article and infographic on Resilience Builders here.

 

 

Dennis Chesley is a Principal in PwC's Advisory practice with experience across a broad range of public and private entities within global operations. Dennis is the Global Leader for Risk Consulting Services and a frequent speaker and author on topics related to strategy, risk, compliance and control. Read more

 

03/16/2015

Keeping talent diversity in mind

Mitch Cohen PwC Author: Mitch Cohen, Vice Chairman, PwC US

CEOs today are well aware that a diversity of talent is critical for competitiveness, according to PwC’s 18th Annual Global CEO Survey.  81% of survey participants say their organisations are now looking for a much broader range of skills than in the past. 78% say their business always uses multiple channels to recruit, while 71% actively search for talent in different geographies, industries, and demographic segments. Adapting talent is also considered a must: 81% of respondents say that their business always looks to equip employees with new skills. Perhaps most importantly, of the CEOs whose companies have a formal diversity and inclusiveness strategy, 85% think it’s improved the bottom line.

CEO-Survey-Web_Diversity-SOCIAL-IMAGE 3

Digging deeper

These numbers are, on the face of it, pretty compelling. But if we dig a little deeper, we can see something else going on.  The large majority of CEOs with formal talent strategies already in place - more than 90% - said they’re addressing dimensions that are, in one way or another, observable: gender, knowledge/skills/experience, ethnicity/nationality, age, disability, and religion.

By contrast, only a small number are addressing dimensions that are unobservable. Less than 6% said their diversity and inclusiveness strategy specifically addresses people who have different personal qualities/mindsets (including adaptability).  

 

PwC's 18th Annual Global CEO Survey - Fig 18
However you look at it, very few CEOs are looking to enhance dimensions of diversity that fall outside conventional modes. I find this especially intriguing in light of the research John Sviokla and I conducted on 120 self-made billionaires over the past couple of years.


Understanding the ‘Producer’ mindset

According to our analysis, extreme entrepreneurs take an approach to building a business that’s quite different from what you typically see nowadays. As we explain in our new book, The Self-Made Billionaire Effect, they exhibit what we call the ‘Producer’ mindset, as opposed to the ‘Performer’ mindset that’s usually encouraged and promoted in most companies.

Specifically, Producers display five habits of mind - empathetic imagination, patient urgency, inventive execution, a relative view of risk, and a partnership approach to leadership. Time and time again, these entrepreneurs have drawn on these habits of mind to create blockbuster offerings, often in highly competitive industries. Howard Schultz of Starbucks, Sara Blakely of Spanx, and Joe Mansueto of Morningstar are just three examples.


Making mindset top of mind

Diversifying the mindset of your talent pool in this way begins with identifying Producers already in your organisation, as well as bringing them in from the outside through catalyst hires, partnerships, and M&A.  At PwC, we’ve had a lot of success with catalyst hires - conducting interviews with the express purpose of identifying individuals who exhibit those five habits of mind.

Raising the number of Producers in your organisation is only the first step. It’s also important to determine which tasks require a Producer mindset and deploy your Producers accordingly.  In some cases, the project will require a leadership partnership - not only a Producer, but a Performer with complementary skills.

Evaluations of a Producer’s performance should also be conducted with this mindset in mind. The success of the project is only one consideration. To what degree did the individual exhibit empathetic imagination and inventive execution?  What attitude was displayed to risk?  If the project failed, how did he or she respond?

We’re certainly not suggesting that companies in pursuit of massive value creation should stop looking for people from different backgrounds or experience: there’s little doubt that these dimensions bring diversity of thought to an organisation. But they’re no longer sufficient. Companies need to expand their notion of diversity and consider a person’s mindset.

As the extreme success of self-made billionaires would suggest, a person’s mindset is an important consideration for companies looking to disrupt their industries. In today’s constantly shifting business landscape, it’s something no company can afford to ignore.

 


During his 34 years at the firm, Mitch has served a number of Fortune 500 clients; he's also held various leadership roles, helping to guide the firm's strategy as well as its initiatives around innovation and corporate responsibility. Mitch serves on the Advisory Board for Penn State's Smeal College of Business. He also serves on the Advisory Board of DonorsChoose.