07/26/2016

Get great people – and let them make mistakes

Author: Will Butler-Adams, CEO, Brompton Bikes Will Butler-Adams

Ultimately, running a successful business comes down to meeting the customer’s needs – which in our case means reacting to the consumer. And when it comes to doing this, I think a smaller business like ours has an inherent advantage.

Why? Take a look at big, established business. They’ve spent generations developing a culture and an enormous marketing plan with great big billboards – but they also have slightly ‘phony’ people. That is going to take time to change. 

Instead of having people toeing a party line, I think you’ve got to allow your staff to make mistakes and enable them to be honest.  You’ve got to have a free sort of culture in the business, where people can just be their normal selves and aren’t all peddling the same message.

Something we do at Brompton is effectively allow ourselves to fail.  Of course we have to get our homework done and deliver the monthly numbers, but we also have the “let’s muck around and find out” bit.  That bit is effectively written off before we even start, so you have nothing to lose. If we spend some money and then we learn something useful, we go: “Yippee, look what we found out. This could be interesting – let’s do a serious job of understanding the possibility.” Investing in people

Making this work comes down to employing the right people and managing them in the right way in the right culture. The role of a manager is to surround themselves with people who have different skills from their own. If I’m employing someone who’s a coder, I haven’t got the first clue about coding.  I can’t tell them what to do. I want to tell them what I need to achieve – that’s the vision bit.  And then I need to give them the resources, money and people to get on and do it. 

The other thing is that, as humans, we like order.  My alarm goes at a quarter to six every morning.  Within five minutes I could tell you where I am within about four paces.  It’s so predictable – and predictability isn’t good for innovation.  So, the other part of my job is to create disorder. Whenever I see my staff getting all comfy and thinking everything’s settled, I just get a little grenade, lob it in, and cause a whole lot of chaos – because from that you create innovation.  When people are running around picking up the pieces they discover something. 

That’s how our company has grown up: guessing as best we can with the best people we can find.  In my view, there’s no masterstroke in growing a business.  It’s about surrounding yourself with good people – and having a bit of luck. 

07/07/2016

Wearables: Helping us be more efficient & live longer

Author: Vicki Huff Eckert, PwC US and Global New Business Leader VH Color Crop

Not long ago we all wore “business clothes” to work each day. Today business casual is the norm and many of us are sporting “wearable” technology. This trend is only the start of a change that I believe has the potential for tremendous benefits for each of us personally and professionally. And, possibly, as a result, we will be able to work and play better.

At PwC, we just finished studying wearables in our newly released report “The Wearable Life 2.0: Connected Living in a Wearable World,” part of our Consumer Intelligence Series (CIS). We surveyed over a thousand consumers about wearable technology and compared the results to our 2014 report on the same topic. In this study we found that the adoption rate for wearables has skyrocketed, more than doubling from 21 percent to 49 percent. And we confirmed devices focused on fitness are receiving the most positive reception with 45 percent of those who own a wearable owning one in this category. Interestingly, we also found that parents tend to be more willing adopters than non-parents--62 percent to 41 percent, because of demands on their time, household stress, and as a means to keep their children safe. Wearables_infographic

Wearables hold significant promise for enterprises, with the potential to transform tech-enabled companies, to digital environments with technology integrated throughout all operations and decisions. Not surprisingly, about half of our respondents believe wearable tech will increase workplace efficiency in some way. Wearables, combined with Artificial Intelligence, have the ability to make employees more efficient while facing less stress, by delivering real-time information (through eyeglasses or earpieces, for instance) directly to each employee specific to the task they’re performing. Imagine a time when you’re entering a business meeting, with the agenda and list of participants called up right as you walk in. Facial recognition can allow the names of colleagues to be whispered into your ear as you say “hello.” Not that you’d ever forget.

In a world where the speed of business is only getting faster and every waking hour is a working hour, wearables may hold the promise of easing work demands, while increasing efficiency. The byproduct of the increased productivity created by smartphones was the ability to be reached anywhere and at anytime. We are able to work remotely and are often expected to regardless of the time. Whether at the dinner table or on vacation, that technological advance actually married us more to our jobs. My hope is that wearables will do the opposite, creating a more effective workforce, so productive that non-work time can ultimately be work-free time.

As a mom of two children, juggling work, personal and community commitments, I believe wearables destiny is to create a smart device that is truly my virtual assistant. While many people using wearables to track their health today haven’t seen health benefits, there’s a great opportunity to improve the technology, to track more indicators and enhance notifications to deliver greater results. As Anand Rao, PwC US Artificial Intelligence leader notes, “The intelligence hidden behind many of our day-to-day interactions can be used to marry machine learning, voice recognition, and conversational agents with a smart wearables interface that has yet to be seen in the current model.” It is when these emerging technologies are served up on an interface that we wear every day, that wearables will have achieved their potential.

Looking ahead, we see great promise in wearables. Most respondents -- 70 percent -- say they believe widespread adoption of the technology will allow people to live 10 years longer, up from 56 percent two years ago. But developers need to build an experience that makes us better employees and, more importantly, human beings. At the end of the day, our dinner tables and vacations should be work-free because of wearables not in spite of them. Try that on for size.

With more than 25 years of experience in helping technology companies innovate and execute growth strategies, Vicki Huff Eckert leads PwC’s US and Global New Business, a unit formed to innovate and expand PwC’s offerings that build trust in society and solve important problems. Vicki’s passion for innovation has led to her successful development of several strategic partnerships between PwC and some of today’s most visionary tech companies – and the incorporation of innovative technologies into PwC consulting solutions. She continues this work today, leading the PwC’s New Business to help clients embrace emerging technologies to empower their business strategy.

06/28/2016

Bracing for Brexit

Author: Bob Moritz , Network Chairman elect, PwC International Ltd.

Bob Moritz

The global economy has enjoyed tremendous growth and opportunity by expanding the freedom to pursue business success through unfettered market access. This approach is being tested with the United Kingdom’s vote to “Brexit” the European Union. The outcome of this referendum has created uncertainty on a global scale.

The immediate plunge in the world’s major stock markets in reaction is only the beginning. New deals between Britain and its trading partner countries will need to be hammered out, while at the same time its relationship with the European Union is unwound. Legal, political, immigration, and other matters will require years of effort to sort. As a result, the intertwined global economy is now very much in a tangle. Yet, it is important to remember that the British have a very long history of adaptability and innovation when confronted with new challenges and opportunities. The UK’s economic stability is shaken but there’s no question it will remain one of the world’s great financial hubs and top economic powers. The global economy too has faced and overcome difficult challenges, even as recently as 2008. The coming months, however, will require patience from an impatient world as detailed, complex issues are worked through. It will be incumbent on government and corporate heads to provide true leadership through this process.

Confidence begets stability and vice versa. Academics and economists were broadly concerned about Brexit before the vote. The dramatic stock selloff reflects these predictions. Now that Brexit is a coming reality, our experts see fundamental steps forward to mitigate risk and best position business for a prosperous tomorrow. We have developed a series of positions for businesses broken down by industry sector, including sections on economic impact, tax, and global mobility. You can find each of these approaches here. The way forward requires studying on a level of granularity how these changes will impact each business sector specifically. A clear process for every organisation to adapt and evolve for this new market is essential. Brexit

This also isn’t just about macroeconomic impact, it’s about higher and better living standards for more people in more places. Changes on those fronts may not be evident immediately, and progress may be stagnant or slow. But government and the private sector can and should now also play a role here. There’s no question that the vote for Brexit stemmed from real anxiety about the direction and impact of the global economy, along with other concerns.

Our world is stronger when there’s more opportunity, not less. For those of us watching from outside the UK, we want to ensure robust, competitive markets around the world for goods and services. The world has truly competitive, big “global” markets creating tremendous business opportunities, whether it is the EU, the United States, China, or other markets around the world. This exit has caused tremors through all the world’s economies that will have to be weathered. The UK will remain a key trading partner for many, though many deals will need renegotiation.

It’s no secret that business investment and activity gravitate toward stability. This vote represents change for better or worse. Certainly, the UK isn’t plunging into darkness. Its economic system remains capitalistic. It is one of the world’s strongest democracies-- evidenced by this vote, in fact.

The timetable for the process of Brexit now will take at least two years. There will be domestic political turmoil in Britain. And its economy will likely suffer in the short and medium term, even if it prospers down the road. The global impact will last for some time. But each element of a Brexit will come into sharper relief as we move forward, uncertainty will give way to new market realities and real opportunities. As a global company, we at PwC will continue to lead by helping our clients work toward this better future, embracing the challenges and seeing potential.

Robert (Bob) E. Moritz is  the Network Chairman elect, PwC International Ltd. Read more

06/15/2016

Digital natives take an ‘outside in’ approach to leadership

Author: Nora Wu, PwC Vice Chairwoman and Global Human Capital Leader Nora Wu 6 (2)

The Annual Global CEO Survey focused on how international business leaders are finding new ways to compete in an era of digital change. This year, in a unique collaboration with AIESEC, a leading international student organization, we compared their views with 200 young leaders under 30, in over 100 countries.

The results of this survey; Tomorrow’s leaders today, give us interesting insights into how both established and emerging leaders define the challenges and opportunities of the business environment.

Optimistic or realistic?

60% of AIESEC respondents believe that economic growth will improve over the next 12 months, compared to only 27% of CEOs. The results illustrate how leaders of tomorrow are optimistic and confident, despite current economic uncertainties and the ‘digital disruption’ that is challenging many established businesses today.

As the report points out, such a positive outlook is not solely down to the ‘optimism of youth.’ This generation of future leaders are digital natives and they see cyber threats as a real concern. 86% say that companies should be worried about this compared to 61% of CEOs.

‘Outside in’ business view

Perhaps one of the most striking differences between the two groups is the emphasis young leaders place on an ‘outside in’ approach. The prominence of social media in their lives means that transparency and information sharing is part of life, making them highly attuned to the power of public opinion beyond the customer base, through Twitter and Facebook for example.  

This focus on visibility and transparency has had an impact on today’s business environment already, and AIESEC respondents see this increasing. For example, they view stakeholders like local communities, the public, NGOs and the media as having a much more important role in influencing corporate strategy. They rank the influence of the media three times higher (74% vs 25%) than current CEOs. 

The world-wide workforce

Developing a skilled and adaptable workforce with a strong pipeline of future leaders, was a priority for both groups. But there are some differences in views. Pipeline for future leaders

21% of AIESEC members recognise that international opportunities will be key in attracting the best talent in the future, but only 7% of CEOs agree. We’ve already seen an increasing demand for international assignments and global mobility in PwC, which is a career imperative for many millennials when choosing where they’d like to work; 2013 NextGen global generational study.

 Leadership matters

I’ve always viewed change as an opportunity. As is the case with any opportunity, the measure of success is a result of how you approach it. The future generation of leaders are digital natives, and their experience will be reflected as business’ view of change shifts from digital disruption to digital norms. The issues AISEC respondents prioritized like; communication, transparency and their outlook for economic growth, shows how leadership is adapting over time.

When AIESEC members were asked about the skills that will be important for all employees in the future, leadership skills came out on top. How organisations tackle the shifting expectations of leadership and how they adapt to recruit, develop and retain future leaders is a complex issue. However, it is one which will underpin the future competitiveness and growth of companies.

At PwC, our development approach; ‘The PwC Professional’ is shaped around the concept of ‘whole leadership’ - combining technical capabilities, relationships, business and global acumen. AIESEC’s members remind us how these attributes summarize the skills and capabilities needed to develop both personally and professionally within an organization, no matter what stage of your career you are at.

An eternal optimist with a genuine belief in human potential, Nora is the first woman from China to hold her current role. Prior to this, she was the PwC China Senior Partner for the Shanghai office, the Central China Markets Leader and the Asia Pacific Human Capital Leader. Last year Nora was invited to speak at the annual TEDx Shanghai Women event and inspired many with her personal story and lessons learned along the way. Read more

 

06/10/2016

The profession of the future: blending human insight with technology innovation to create and build trust

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

At the end of June 2016, I’ll conclude my tenure as Chairman of PricewaterhouseCoopers International Limited, after two terms lasting a total of seven years. The world has changed dramatically since I became Chairman in 2009 – and even more since I joined the firm in 1974. In my view, as I prepare to leave the profession, there’s never been a better time to join it.

Why? Let’s start by taking a look around us. It’s a world where everyone has a mobile device and old certainties about society and business are being subverted by the day. Where the global population rises by 145 every minute, where 1.5 million people migrate to cities every week, and where emerging economies are rapidly overtaking the ‘developed’ world in purchasing power.

It’s all a far cry from my first day at PwC, when the invention of the World Wide Web was still 15 years in the future and mobile computing was in the realm of science fiction. Today, the implications of ubiquitous mobile connectivity – and the future world we’re all using it to create – are only gradually becoming clear.

But here are a couple of pointers to where we’re heading. According to the recent PwC global Pulse Survey, 85% of CEOs see more interaction with consumers as a result of being connected. And by 2025, just five sectors of the sharing economy – peer-to-peer accommodation, car sharing, peer-to-peer finance, music, TV and video streaming, and online staffing – could be generating collective global revenues of some US$335bn.

The rising importance of purpose and values…

Looking across such developments, we can pick out five global megatrends that are disrupting societies, economies and organizations worldwide: demographic & social change; shifts in economic power; rapid urbanization; climate change & resource scarcity; and technological breakthroughs. All of these megatrends – and the collisions between them – are driving profound and sweeping change. No area of life or business is immune, and our own profession – across assurance, tax and consulting – is no exception.

As this maelstrom of change plays out, perhaps the biggest shift affecting our profession is that people today expect more from business than ever before. In an environment of unprecedented transparency and constant scrutiny on social media, business is expected to play a role in society beyond generating profit for its shareholders – and to contribute visibly and actively to helping to tackle pressing global problems ranging from climate change to inequality.

One frequently-cited manifestation of these rising expectations is a decline of trust in business and other institutions in the wake of the global financial crisis. But while the new demands placed on business clearly raise challenges, they also open up massive opportunities for those businesses that rise to them.

What opportunities? By having a positive impact on society, communities and the environment, companies can demonstrate a core underlying purpose and related set of values that go beyond making money. And by continuing to behave authentically in line with purpose and values, a business can build trust progressively over time while also trading profitably in commercial terms. As these dynamics have evolved, and the importance of companies’ core purpose has grown, so the focus has shifted from what business does to how it does it – and at what cost to others.

…brings major implications for our profession

What does all this mean for our own profession? The effect is that we now have a vital role to play both in exhibiting our own purpose and values in everything we do, and in helping other organizations do the same. And our profession’s ability to deliver on both counts is increasingly driven and shaped by technology and transparency.

Let me use PwC as an example. We’re currently re-visiting our network’s values through a major consultation with partners and staff worldwide. I see values as being the cornerstone of success.

These values in turn support a purpose: to build trust in society and solve important problems. Again, we strive to express this purpose through everything we do. In my view, having a set of common values and a publicly-stated purpose is vital for any organization to remain relevant, embed a positive culture, and create a  workforce who feel confident and supported in doing the right thing.

However, it’s inevitable that trying to do the right thing will create challenging issues in some areas – with one of the most prominent being the question of what moral obligation there exists when advising clients on tax. Here I believe we have a responsibility to ensure we discuss the wider perspective with clients, exploring not just what they can do within the rules, but how any course of action will be viewed by their wider stakeholders. In this way, we can help them decide what ‘the right thing to do’ means for their various stakeholder groups, and by extension for their business.

The changed CEO environment…

Ultimately, of course, a business’s decisions on tax – and indeed on any other issue – should be guided and sharpened by its core purpose. In my view, the successful organizations of the future will be those that have a clear purpose, articulate it well, and embed it at all levels throughout the business.

This is a message that’s getting across to business leaders. The latest PwC Pulse Survey shows that nine out of ten CEOs worldwide say their organizations have a clearly-stated and defined purpose – a finding that’s consistent across all regions and sectors. But while they care about purpose, they’re struggling to scale it up and translate it into concrete values-led actions, behaviors and decisions. And if a purpose isn’t driving behavior, it risks becoming a slogan.

Our research confirms that in many cases this risk is very real. Only one in five CEOs strongly agree that when a crisis arises, their company's purpose always comes first in their decision-making. One third cite embedding stated values that influence employee behaviors as the issue that requires the most effort – and only half say employees will be positively viewed for acting in accordance with those values. Perhaps most tellingly, two-thirds say legacy culture and old ideas are hindering new ways of doing things.

All of this underlines the scale of the task facing today’s CEOs, as they strive to reshape companies that were originally built on delivering profit alone, into ones where profit and purpose combine. It’s a transformation that won’t be quick or easy.  It’s taking place amid close scrutiny from a widening range of stakeholders – from regulators to non-governmental organizations (NGOs) to social media bloggers – all seeking greater transparency and accountability. But it's also a change that’s clearly under way, that businesses must keep pace with, and that our profession has an opportunity and duty to support.

…requires a new model for building trust

For this fusion of profit and purpose to succeed in recalibrating public perceptions of business, we’ll need a new model for building trust. As skeptical stakeholders struggle to keep up with headlong change, companies can no longer rely on trust they’ve earned in the past. Instead they’ll need to re-establish trust continually as they transform and enter new markets. This means organizations can innovate and grow more successfully by having a better understanding of the drivers of trust, and by providing stakeholders with deeper, wider and more transparent insights into their business.

So, what will the new model for trust look like? And what can our profession learn from other market participants who are exploring how to redesign organizations for this extension of trust? In my view, clear lessons can be gleaned from the growth of the sharing economy – spearheaded by the likes of Airbnb, Uber and TripAdvisor – based on a new form of trust that’s more peer-to-peer and less institutional. Put simply, people trust other people more than they trust organizations. Business needs to reflect this change, and our profession needs to help them do so.

Taking this lesson on board, the new model for trust will have various characteristics. It will provide insights into the issues on the minds of boards and management. It will look at the critical alignment between a business’s purpose, strategy and key performance indicators. And it will communicate transparently and credibly around the tone, culture and behavior of the business, its approaches to remuneration and risk, and how these elements link to overall business performance.

The new trust model will also take into account environmental impacts, and the broader aspects of sustainability in society and communities. It will apply sophisticated technology to analyze ‘big data’ from within and beyond the organization, and help make sense of it through insightful commentary. And it will provide information that’s as near real-time and as forward-looking as possible, while allowing different stakeholders to interrogate it from their own perspective. Together, all of this will enable organizations to demonstrate that they are fulfilling their stated values and purpose, and thereby that they deserve the trust of stakeholders.

This future brings many profound implications. For example, constant real-time scrutiny will mean the behavior of every organization and its people will always be under the spotlight, whether they’re dealing with an environmental issue or solving a problem for a customer – thus creating an ongoing series of key moments at which they can either earn or lose trust. And the heightened importance of technology in building and sustaining trust will demand new and different skillsets from the ones that companies often needed in the past.

The future: blending people and technology

Combine these attributes, and a picture of the future of the profession begins to emerge – one with human insight at its core. The rising power of technology has prompted some to ask whether the days of assurance delivered by human auditors are numbered. They aren’t.

To remain relevant for clients and resilient for all our stakeholders in the future that’s now taking shape, our profession needs to avoid regarding advancing technology as a threat that could effectively replace our role, and instead embrace a world where technology matters more than ever before. To keep pace with a changing world for our clients, we need to invest in changing ourselves. If there’s a lasting legacy I want to leave with PwC, it’s that I emboldened the PwC network towards that investment and change.

So, what kind of profession will all this create? Some things will remain recognizable from today’s world: the best professional services across assurance, tax and consulting will continue to be delivered by blending highly-skilled professionals with world-class enabling technology. But what will continue to change over time is the sophistication, reach and power of that technology, enabling our professionals to collect, manage, analyze and create actionable intelligence from an ever-wider array of information with increasing speed, flexibility and responsiveness.

This is a future that is exciting and different. As its various elements come together, it’s why I believe that today is the best time ever to join our profession. We’ll be at the nexus where technology, professional judgment and public trust converge and combine. And for any young person setting out on their professional career with the energy and ambition to make a positive difference to the world, as I did in 1974, I can’t think of a better place to start.

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.

06/08/2016

Every company is a media company. So, what’s next?

Author: Deborah Bothun, Global Entertainment and Media Leader Deborah-Bothun

When you hear the name Red Bull, what do you think of? A maker of energy drinks? Or a media company? Today, both answers are right: beyond the drink that bears its name, the company is also the owner of media properties that include one of the first marketer-branded channel apps on Apple TV.

 In some ways, this cross-over into media is a very current phenomenon. Across the world, the boundaries that that have historically surrounded – and to a degree protected – the entertainment & media (E&M) sector are eroding at breakneck speed, as companies across a growing range of industries seek to build, buy and borrow media capabilities to reach existing and potential customers.

But looked at another way, today’s widespread move into media is just the latest manifestation of the decades-old relationship between consumer/industrial companies and E&M. The 1950s-era daytime serials were known as “soap operas” because they were sponsored by companies that made soap. Hello Kitty was born in Japan in 1975 as a way to cute-ify merchandise, and then expanded into television series, comics and video games.

So, what’s changed since then? The answer – as across so much of the media landscape – is digital. Empowered by digitization, compelled by competitive pressures, enabled by data, and eager to connect directly with customers, companies are now expanding their marketing playbooks to include ever more E&M-like capabilities, including a recent onslaught of in-house media divisions being created.

But once they’ve got these capabilities, the question is how to use them to greatest advantage. I’ve been examining this conundrum for an article in a Special Report in Strategy&Business, produced to mark the launch of the PwC Global entertainment and media outlook 2016-2020. And the answer I’ve come to is that companies must choose a “way to play” based on two dimensions: first, the level of direct insight and data they have about their customers and users; and second, whether their products and services are sold in a structured, linear value chain, or a more circular and fluid ecosystem.

Media-Matrix-exhibit-ej-croppedDrill down further into these dynamics, and apply some insights from MIT Sloan research scientist Peter Weill and Stephanie L. Woerner, and we find four main strategic options for media companies looking to thrive in an increasingly digital ecosystem: Maker, Maximizer, Module, and Mash-up.

While choosing which quadrant they want to play in is an important decision for CEOs in any industry as they venture into the E&M space, the fact is there is no “right” quadrant – no one-size-fits-all strategy. Every company needs to decide for itself where it will play best.

So, should E&M incumbents fear that the powerful invaders now coming onto their turf – retailers, technology giants, financial services companies, and more – pose a competitive threat to their future? Certainly, they all compete for talent. But there are two reasons why media companies should not be worried.

First, there are now huge opportunities for E&M businesses to expand the other way and play in sectors like technology, retail, and consumer goods. And second, these new entrants are also great potential partners and customers. After all, they have a lot to learn. And who knows better than media businesses what it really takes to capture and hold audiences? 

To read more on Deborah’s views on this topic, and a range of other articles and interviews inspired by PwC’s Global E&M Outlook 2016-2020, please click through to the Strategy&Business Special Report. For the underlying data and E&M revenue forecasts, visit pwc.com/outlook.

Deborah Bothun is the Global Entertainment and Media Leader at PwC and leads the US Entertainment, Media and Communications practice, focused on helping clients address the business imperatives that are important to their success. For over 20 years, Ms. Bothun has worked with Fortune 500 entertainment and media companies in adapting to the changing content, distribution and advertising marketplace. 

 

06/01/2016

As CEOs strive to meet wider stakeholder expectations, does tax have a role to play?

Author: J Rick Stamm, Vice Chairman, Global Tax Rs 01

From the results of the CEO survey, it is clear that for many CEOs the purpose of their business is not simply to generate as much profit as possible for their investors but also to benefit their employees, the communities where they operate and society more generally. Increasingly, businesses are expected to develop products and services that enrich people’s lives and to do so in a way that is sustainable and takes into account the impact that they have on the societies in which they operate. Indeed, almost a quarter of CEOs report that they have updated their organisation's purpose in the last three years to take account of the broader impact that they have on society.

As Patrick Lenain of the OECD notes in his blog post of 5 February below, for many businesses their tax payments are one of the most significant ways that they contribute to society. However, the full extent of that tax contribution is not well articulated and is consequently not well understood. If businesses explained the full extent of taxes that they pay, and how they approach tax issues, would this help them to demonstrate how they generate value for a broader range of stakeholders, not just their investors?

Web_155567-2016_CEOsurvey_globaltax_v5_Website copy

In my view, an era of increased transparency is already upon us and it is being driven not only by stakeholder expectations or more stringent reporting requirements but by technology. Businesses the world over are being utterly transformed by powerful new technologies, which are in turn shaping their relationship with their stakeholders. When asked about the global trends most likely to transform wider stakeholder expectations of businesses in the next five years, 77% of CEOs globally cited technological advances.

The world of tax is in no way immune to the transformative power of technology. Taxing authorities are harnessing technology not just to collect routine tax data through e-filing but in more significant ways, and corporate tax departments are investing in technology to improve compliance and efficiency. Technology – and social media particularly – is forcing both businesses and taxing authorities to engage and respond to questions around tax in a clear and accessible way, and to a much wider base of stakeholders than before.

As CEOs look to meet the expectations of their stakeholders, a clear explanation of their contribution to society through the taxes that they pay will be critical. Providing proper context for all of their social, environmental, tax and economic impacts, business can help stakeholders understand the total impact of their tax strategy and contribution as an element of their total contribution to society.

Rick Stamm is the Vice Chairman, Global Tax. He was appointed to this role in October 2011. In his role, he is responsible for building the capabilities of Tax practices across the PwC network of firms, as well as for interacting on Tax and business issues with many of the firm's larger clients. Read more

 

 

05/25/2016

Can your data champion convince your CEO?

Author: Dan DiFilippo, Global & US Data and Analytics Leader Dan_DiFilippo

As CEOs work to anticipate customer needs amid a torrent of data, they value analytics more than ever. According to PwC’s 19th CEO Survey, when CEOs were asked which connecting technologies deliver the greatest value on stakeholder engagement, they chose analytics more often than other connecting technologies including relationship management (CRM) systems, social listening, and online collaboration tools.

This growing reliance on analytics puts the chief data owner – whether it is the Chief Data Officer, the Chief Analytics Officer, or another person, in a powerful position. It’s also a difficult one. CEOs are willing to listen. But, the chief data owner needs to do more than talk. They need to show and tell data stories in a coherent and compelling way.

Sensors, artificial intelligence (AI) and predictive analytics now empower chief data owners to extract insights that can alter business outcomes in extraordinary ways. But translating insight into action often requires buy-in from the CEO.  And while CEOs value analytics, they still rely on their gut. Convincing them to take action on insights that may be counter-intuitive is tough.

The new breed of data champion CEO's top technologies for customer engagement- Dan DiFilippo

Successful businesses are nurturing a new breed of data champion who is a master translator of data. This requires skills that go well beyond technology alone. Business acumen, superior communication skills, knowledge of tools and technologies, and the ability to gain the trust of the business are critical. In the analytics realm, we need a shift similar to the CIO’s transformation from an IT-centric function into an orchestrator of business services. CIOs needed to turn their attention away from plumbing and wires toward empowering the business with technology to drive competitive advantage. Today’s data champions need to focus less on columns and rows, and more on bringing complex insights to life for busy CEOs.

Many of our clients are gaining a foothold in nurturing new data champions.  Here are three characteristics that define the role:   

  • Focus on the problem, not the data: Today’s CEOs are under pressure to solve complex problems and exploit opportunities before their competitors do. They care little about data for data’s sake. Today’s data champions need to keep the business objective in mind or risk going down a data rabbit-hole. From the outset, data champions should ask “What do we want to achieve?” and “What data do we have to help us get there?”

 One of our commercial airline clients wanted to reduce non weather-related downtime. To achieve this, they looked at data from sensors embedded into engines to help predict equipment failure. But the data from the sensors didn’t enable the predictive capability that they expected. In light of their business objective, the airline augmented the sensor data with data from manual logs maintained by mechanics and pilots. The combination of unstructured data from the aircraft combined with the unstructured data from the logs enabled the airline to gain a better view into performance and reduce down-time.    

  • Take an outside-in view: Gone are the days when CEOs can rely solely on information within the walls of the enterprise. Data owners also need to look outside the business for new data sources and insights. We see digital innovation emerging from unconventional places like incubators, university labs, and open source projects. Don’t be afraid to forge new relationships with non-traditional players. This way, the CEO gets the big picture as well as a steady stream of innovative insights.
  • Ditch the spreadsheet: Data owners who walk into the CEO’s office with a 40-page spreadsheet probably won’t be back for a second meeting. New visualization tools, predictive analytics, and AI can bring data to life in ways unimaginable only a couple of years ago. Data champions need to understand new tools and be prepared to illustrate key insights in a compelling way. Be ready to stand by your data and insights, particularly if they go against the CEO’s gut. Too often, major insights are discounted before they are understood. I am still disappointed that 52 percent of CEOs say they have discounted data that they didn’t understand, according to PwC’s Global Data and Analytics Survey: Big Decisions™®. Even when delivered effectively, CEOs may still fall back on their gut, but they’ll do so from an informed position.

As data is now at the center of everything we do, CEOs will continue to place greater emphasis on analytics. I am struck by the fact that the other connecting technologies in our CEO Survey, like social media, CRM, and online collaboration tools are either data-driven or have data at their core. To take full advantage of all that data and analytics can offer requires a mindset shift and a new breed of data champion. I’d like to hear what steps you are taking to ensure your data champions are prepared for the journey ahead.  

 Dan DiFilippo is PwC's Global Data and Analytics Leader and the Senior Relationship Partner for a Fortune 40 client. Dan has responsibility for delivering PwC's data and analytics talent and capabilities, applications, products, and services for our clients across all of PwC businesses. Read more

 

05/20/2016

If all Chinese were to switch to electric vehicles...

Author: Jan Willem Velthuijsen, Chief Economist, PwC Netherlands  Jan Willem

Suppose that the Chinese government decides today to install solar panels throughout the Gobi desert and to allow only electric transport in the cities from now on. In addition to addressing the smog problem, they would also be dealing with the demand for energy. This decision would make a difference of two million barrels of oil production a day and would therefore have an even greater impact on the global economy.

It all sounds a bit like the man in the street thinking out loud, but oil companies might do well to consider the consequences of a shift in economic power toward Asia, the only continent where car use is increasing.

These are challenging times in any event for the oil and gas industry. Falling oil prices and excess supply are resulting in plummeting profits for major companies, which are now opting mainly for short-term solutions. They have announced mass redundancies and have already postponed projects worth more than USD 300 billion. Those facts appear in the PwC publication ‘New energy futures’ about the future of the energy sector. 

That publication makes clear that the energy transition is gathering pace and that companies must not focus exclusively on low oil prices. Megatrends are transforming the oil and gas industry at unprecedented speed. This makes finding the way ahead increasingly difficult. Everyone in the industry knows what will happen on the energy market in the next five years. And everyone knows that thanks to new technologies, alternative energy sources such as solar and wind power will be used far more in fifteen years’ time. The period at issue is the ten years in between, which is precisely the period for which major companies must now draw up their investment plans.

But just try doing that given the current turbulence on the markets and the price fluctuations. And let’s not forget a government that is increasingly interfering with the energy supply and consumers who want to make their own choices. At PwC, we have mapped out that uncertainty along two paths, which has yielded the four scenarios presented schematically below.

CEO_Insights-02_Jan Willem

If I have to make a prediction, I would say that energy users will increasingly determine demand and that demand will mainly be green. Under pressure from society, both individuals and retail companies will wish to reduce their environmental impact. They will increasingly abandon the use of fossil fuels, so the demand for such will therefore be reduced.

The result will be that more expensive oil resources will no longer be needed. Countries that can continue to supply cheap oil – Iran, Iraq and Saudi Arabia – will be the winners and will keep going in the short term. Countries like Canada and Brazil, where oil extraction is far more expensive, will face a tougher future.

That transition will be very gradual rather than sudden. According to current expectations, renewable energy sources and nuclear energy will expand fastest up to 2040 (representing 6.7 and 2.3 percent of the compound annual growth, respectively), but the demand for fossil fuels will still be 75% of the total (as opposed to 80% now). Up until then, gas will increasingly be a transitional fuel.

Depending on the role played by governments, this transformation may be more rapid. If the agreements made by government leaders in December at the climate summit in Paris are actually implemented, the growth of renewable energy sources will accelerate. In that case, I expect more rapid advances in disruptive technologies, particularly as regards traffic and transport.

And if a government decides to allow only electric vehicles in major cities in the future, the demand for oil may fall very quickly.

Jan Willem Velthuijsen is managing partner of PwC Strategy & Economics in Amsterdam since 1999 – specialised in macroeconomics, finance, strategy & risk, market and demand analysis, competition & regulation economics, econometrics, modelling and complex valuations. In 2013 he became Chief Economist of PwC Europe. In that function he is responsible for PwC’s thought leadership and research. Beside his work at PwC je is professor of Economics at the Rijksuniversiteit Groningen and director of the international Executive Masters Finance & Control for the Energy Industry, running modules in Groningen, Doha, Houston, Moscow and Rio de Janeiro.

05/16/2016

Global Investor Survey 2016: CEOs and investors share goals but must communicate better

Author Richard Sexton, Vice Chairman, Global Assurance RS pic

Each year, PwC’s CEO Survey gives a unique glimpse into the minds of business leaders: their priorities, fears, opinions, and plans. But what about the investors who provide these CEOs with the capital to run their companies? Do they share similar views on the threats and opportunities on the horizon? And do their views on how companies create value align or clash with those of CEOs? In a companion to this year’s CEO Survey, we decided the best way to find out was to ask them.

What did we find?

The result, our 2016 Global Investor Survey, includes the responses of over 400 investment professionals from around the world. We asked them the same questions that we posed to CEOs in our 19th Annual CEO Survey, and they answered in the context of the companies they invest in or follow. I was struck by the differences of opinion our survey revealed.

Investors, for example, are paying more attention to issues that require businesses to operate in a more socially responsible way – CEOs may be surprised to see how much attention some investment professionals are paying to issues related to the environment and society, and certainly beyond financial profit. They want businesses to do the walking as well as the talking – and are checking up on this. The CEO Survey suggests that business leaders think the market will punish them if they incur additional short-term costs adopting new practices that take into account social responsibility issues. But the importance accorded to these issues by investors suggests that the market is more receptive than CEOs might think.

Barriers

Doing well by doing good?

Another of the biggest differences in opinion was the clarity with which company leaders and investors saw the purpose of business overall. CEOs were split in their views on whether companies exist to generate a financial profit, from which value flows to a range of stakeholders, or whether by meeting the needs of a range of stakeholders they would in turn create a profit. Investors on the other hand were clear. In their minds, the value created by a company (for example, income equality, a skilled workforce and more positive environmental impacts) flows from profit first. Since, in theory, investment professionals and CEOs have the same goals, this may be another area where clarity of communication (about the company’s activities and plans, as well as between the two parties) may be key.

Enhancing engagement

These differences and others (such as CEOs being far more confident about short-term company growth) suggest that, perhaps, CEOs aren’t communicating well enough about how they will continue to succeed in a difficult and changing environment.

The findings from this year’s survey will help in this regard - enhancing companies’ engagement with the investment community and helping them to understand what’s behind their investment goals. But communication is a two-way street: investors in turn must be willing to do their part to create a more open and productive dialogue with the companies they follow.

I want to thank all the business leaders and investment professionals who gave their time to complete our surveys and share their opinions with us – without your generosity our research would be far less robust.

Richard Sexton is Vice Chairman; Global Assurance, an appointment he took up on 1 July 2013. In this role, he focuses on further building the PwC network’s global assurance practice with particular emphasis of quality and regulatory matters, trust in the profession, and broader financial markets. Read Richard's full biography.