A sense of belonging: Learning from the family firm

PwC Henrik S-0990Author: Henrik Steinbrecher, Network Middle Market Leader

One of the strongest themes to emerge from our Family Business Survey this year was the priority family firms are giving to professionalisating their operations. Part of this relates to governance and processes, but it’s also about the type of people family businesses need to recruit to deal with the challenges of digital technology, a more disruptive economic environment, and a far more globalised world.

Family firms are not alone in this, of course. Every business, whatever its size or ownership structure, is facing stiff competition in the recruitment market, and needs to retain key staff with critical skills. But this is an area where family businesses often have a distinct competitive advantage. They may have much to learn from multinationals when it comes to issues like financial planning or risk management - but, when it comes to people, the family business can teach its competitors a lesson or two of its own.

The key, in fact, is in the name. The most successful family businesses have a strong culture and sense of identity, which reflects the values of the family that founded it. As a result, employees often feel they’re part of an extended ‘family’, and not just a faceless workforce. And as our Family Business surveys reaffirm, year after year, these firms also tend to have a greater commitment to retaining their staff, even in bad times, as well as a more personal way of working based on trust and respect. Though some may see this as a rather old-fashioned approach, there’s no denying that it makes for a more supportive workplace, where employees feel they’re treated as individuals, and where the board often know them by name. The length of time many employees stay at family firms suggests that this ‘sense of belonging’ is something people really do value, and which is getting harder to find in other types of company.

It’s a mixed picture, though. As the 2014 Family Business Survey revealed, family firms continue to face challenges in recruitment and retention, especially at more senior levels, where the share options on offer from multinationals are hard to compete with. But my team is coming across more and more examples of ambitious family firms who are finding smart new ways to reward and incentivise senior staff, and attract the bright new talent they need. If that sort of thinking becomes more widespread across the sector, family firms could start to offer the best of both worlds: the old-fashioned virtues of a family culture, and the professional prospects of a corporate career.



Henrik leads the Middle Market business for PwC globally, focusing on owner-led, private, family controlled and entrepreneurial companies. He’s particularly focused on family and owner led businesses, advising them on how to address strategic issues relating to the owner's agenda.


What does it take to be truly innovative?

DavidLancefieldAuthor: David Lancefield, Partner, PwC UK

In my view, one of the most interesting findings in PwC’s 17th Annual Global CEO Survey was the strong commitment to innovation among entertainment and media CEOs. Some 56% of respondents from the industry – more than in any other sector – said innovation, particularly in products and services, was the main opportunity to grow their business during the coming year.

What’s more, they saw this form of innovation as playing a vital role in addressing their greatest concern: keeping pace with ongoing shifts in consumer spending and behaviour, and the breakneck speed of technological change.

And I agree – but there are many other ways to innovate that we shouldn’t ignore.

Products and services: just the start
As I see it, innovation – put simply, doing new things in new ways – stretches far beyond products and services. So, while entertainment and media companies are innovating actively in areas like video-on-demand, media measurement and personalisation - and showing plenty of creativity on-screen, on-air and on-line -  there’s plenty more to do to inspire innovation through their organisations.

Strengthening the backbone though innovation
Let’s consider the still largely untapped potential for innovation in the backbone of many companies, including technology infrastructure, procurement, metrics tracking and back office. Innovation here can create the financial headroom and insights for smarter front-office investments – while also opening up the potential for new, more profitable business models.

And this wider and deeper form of innovation does pay dividends. A PwC study of over 350 technology, media and telecoms businesses worldwide found that the most innovative 20% had collectively garnered an extra US$45 billion in revenues over the past three years compared with the least innovative. That’s over US$1 billion per company. 

Incumbents face a ‘disruption dilemma’…
While there’s plenty of value-creating innovation going on - I see it every day among the organisations I work with - it’s often confined to a specific product or area of the business. It’s rare to see breakthrough innovation in terms of new business models, and new organisational cultures and structures. Incumbent or traditional companies, in particular, face a ‘disruption dilemma’. They know that disruption is coming or possible – particularly from new entrants with greater ambition, speed or capability – but they’re not sure how much to disrupt themselves, and potentially risk losing profitable business in search of new revenue streams.

The most effective leaders encourage an open and transparent debate on where to best strike the balance.  They look to build a broad portfolio with the right mix of incremental, breakthrough and radical innovation. This ideal innovation portfolio is self-sustaining: radical innovations achieve very high growth rates from a low base, while incremental innovations generate cash to invest in more radical innovations in the future.

Leaders should encourage a culture of curiosity
To break out of a narrow focus on product innovation and build a self-sustaining innovation portfolio, an organisation needs to fundamentally change its culture. And this is where true innovation leadership comes in. Business leaders need to empower and energise people to innovate, by nurturing a diverse and inclusive workplace culture that fosters collaboration and curiosity. This will,  in turn, encourage the development of a learning capability across the workforce.

At the same time, leaders can shift the organisation’s mindset towards disruptive, value-creating innovation, supported by the right ‘process’ elements – portfolio management, governance, metrics, incentives – to help select the best ideas and take them to market. Development and execution of each idea can be fuelled and accelerated by deeper insights, faster decision-making, and collaboration with selected partner organisations.

Whatever industry you’re in, your company has always innovated in products and services – otherwise it wouldn’t still exist. It may well be a world leader in this type of innovation. But now it’s time to create the conditions to inspire what I call ‘whole innovation’.

Find out more in this video blog and accompanying article.


David shapes the strategic and commercial decisions taken by companies in the context of growth, restructuring and regulation. He focuses on the media and entertainment sector, working with organisations to transform their organisation and services for the digital age. Read more.



Can Africa fulfil its growth potential?

John Hawksworth photo

Author:  John Hawksworth, Chief Economist, PwC UK

After decades of relative economic under performance, sub-Saharan Africa1  has been one of the fast growing global regions over the past decade, as indicated in Figure 1 below. Only the emerging and developing economies in Asia, led by China and India, grew faster over the period between 2003 and 2013.

Fig 1 - Past and projected GDP growth for major country groups

Furthermore, the latest IMF projections from October suggested that sub-Saharan Africa should continue its relatively strong performance, growing by just under 6% per annum over the rest of this decade. This would be only just below its historical average rate and not far behind expected growth in emerging and developing Asia.

Strong projected growth in Africa reflects many of the factors highlighted in our megatrends research, including a relatively young, fast-growing workforce, rapid urbanisation, adoption of mobile communications technology and a rich endowment of natural resources in many African countries.

At the same time, however, we should recognise that:

  • Africa is a large and diverse continent, so performance could vary considerably across (and indeed within) countries; and
  • these growth projections are not guaranteed to be achieved, being subject to many risk factors including commodity price volatility, rising Islamic militancy in some countries, Ebola and other health risks, and a longer term need to improve both physical infrastructure and political, legal and economic institutions to support sustainable growth.

The first point can be illustrated by looking at past and projected growth (according to the IMF) for the ten largest economies in sub-Saharan Africa, which together account for around 80% of the region’s total GDP (see Figure 2).


Fig 2 - Past and projected GDP growth for 10 largest Sub-Saharan African economies

The divergence in past and projected growth between the region’s two largest economies, Nigeria and South Africa (which together account for around half of the region’s total GDP), is particularly stark. Nigeria is, based on recently revised GDP data, now ranked as the 20th largest economy in the world. And, with the IMF projecting relatively healthy growth of around 7% per annum over the rest of this decade, Nigeria could move even further up the global league table. By contrast, projected average growth of 2.4% for South Africa in 2014-19 is no better than the expected average for the world’s advanced economies as shown in Figure 1, implying no further catch-up by Africa’s second largest economy.

For the other major economies in the region, projected growth varies from just over 5% in Cameroon, Ghana and Angola to around 8% in Ethiopia. But, as Figure 2 shows, actual growth over the past decade has varied by much more than this and, in practice, this variability is likely to re-emerge in future due to the differential risks facing sub-Saharan economies.

Most obviously, while the recent sharp fall in oil prices could pose a significant risk for Nigeria and Angola in particular, most other sub-Saharan African economies are actually net oil importers and so might gain from this oil price fall if it’s sustained. By contrast, economies like Kenya, Ghana and Cote D’Ivoire would be more heavily exposed to falls in coffee or cocoa prices.

The Ebola crisis understandably looms large as a risk factor at present, and is clearly a great human tragedy in the three West African countries where it’s mostly been focused  (Guinea, Liberia and Sierra Leone). However, outbreaks in Nigeria seem to have been brought under control, so the hope must be that the wider economic damage can be limited. It does, however, highlight the need to improve health systems across Africa, not least in its fast-growing megacities.

More generally, if Africa is to fulfil its potential, it needs long-term improvement in political, legal and economic institutions in order to provide the right environment for both domestic and international investment to proceed. Long-term investment in energy, transport and communications infrastructure is also critical, but won’t happen without the right institutional environment. There’s been encouraging progress in many African countries on these fronts in recent years, but there’s clearly still a long way to go to get infrastructure and institutions up to the levels seen in Europe, North America or the leading Asian economies.



John Hawksworth is an economist who specialises in macroeconomics and public policy issues. He is Chief Economist in PwC’s UK firm and editor of our Economic Outlook reports. He is also the author of many other reports and articles on macroeconomic and public policy topics and a regular media commentator on these issues. Read John's full biography.


1Throughout this article we focus on sub-Saharan Africa since the North African economies are, for a variety of historical and geographical reasons, more naturally considered alongside the Middle Eastern economies for analytical purposes.


India - a once in a lifetime opportunity

Shashank TripathiAuthor: Shashank Mani Tripathi, Executive Director, PwC India

The state of India is fascinating. We have a nation, defined by its vibrant democracy and capability to grow quickly, but also derided for its lost potential on the economic front. Nevertheless, India is bursting with opportunities. The skills and capabilities, that are so readily available across its young democracy, impressively large youth population and digitally-enabled middle class, have the ability to create opportunities that could carry India, both economically and socially, for future generations. India is home to a once in a lifetime opportunity. But, in pursuit of a new, rapid and sustainable path, who will lead the way?

Our new report, Future of India: The Winning Leap, shows that, to grow at a rate that’s around 2-3% points higher than the current projection, the private sector – both corporate and entrepreneurial - has to take the lead. The government also needs to step forward on two counts – creating national platforms that enable this growth, and improving the ease of doing business in India. Our report highlights the national ambition to build a $10 trillion economy, create new capabilities and solve problems across sectors - and examines the ‘sub-leaps’ that are needed to achieve all this. By transforming the way the economy creates value, India can build shared prosperity for its 1.25 billion people.

However, a number of complex issues stand in the way of this journey, meaning that growth is not guaranteed. Each sector - from education to manufacturing - faces challenges which demand new and innovative solutions that are also sustainable, both environmentally and economically. Companies must invest in building capabilities that can cope with the demands of a significantly larger economy than the $2 trillion mark India is currently approaching. There’s responsibility at every level – from entrepreneurs, the corporate sector, the private sector and government officials. And everyone needs to work together: a setback in one area breeds setbacks and problems in others.

There’s urgency for change and the purpose of our report is to drive action. We must act quickly to achieve a radically higher growth rate - otherwise the Indian economy won’t be able to create the 10-12 million jobs needed to provide quality of life for its growing population. Issues such as environmental degradation have the potential to cause social rift, especially among a young democracy, and must be addressed. That’s why growth must be rapid and why it needs the ingenuity and innovation of the more than capable Indian population behind it.

India stands on the cusp of major change. It’s time to make the most of this once in a lifetime opportunity, by acting now. If we can use our resources to create widespread prosperity, it would be a momentous achievement – and one that’s cherished by all future generations left to enjoy the benefits of living in the largest democracy on the planet. This ‘winning leap’ should be a group effort; ‘a play-to-win approach by young and growing nations seeking a radically different developmental path’. You can be a part of this change; make a start by reading our report.


Shashank is an Executive Director at PwC India where he leads the Strategy practice. He's also the lead Partner for the Growth Markets Centre. Shashank has over 15 years of experience in consulting working with CEOs and CFOs. His focus is on growth strategy, market entry, international expansion and business transformation projects.



The next decade of infrastructure development in Asia Pacific: why public-private partnerships will be key

Mark-rathboneAuthor: Mark Rathbone, Asia Pacific Capital Projects & Infrastructure Leader, PwC Singapore

Take a walk along the streets of Shanghai, Seoul or Singapore, and you’ll see the fruits of a decade of rapid infrastructure development, reflecting the advancing needs and dynamism of economies across Asia Pacific. Over the next ten years, as the region continues to evolve into its role as the global economic powerhouse, infrastructure demands will continue to change too. So what’s required to create the infrastructure that Asia Pacific will need in 2025?

One part of the answer is more capital. Lots more. According to PwC research conducted jointly with Oxford Economics, Asia’s infrastructure market is forecast to grow by 7 - 8% annually over the coming decade, nearing US$5.3 trillion by 2025, or 60% of the world total. Satisfying this hunger for capital will be a challenge in itself.

But I believe something else is also needed: close cooperation, collaboration and alignment of goals between the public and private sectors. In my view, successful and sustainable public-private partnerships will be vital to the robust and savvy deployment of resources – in turn helping to ensure that the 21 member economies of the APEC forum not only survive, but positively thrive, throughout the coming decade.

Why do I say this? Allow me to start my explanation by pinpointing five key trends that are driving priorities and investments in infrastructure development across the Asia Pacific region. While distinct from each other, these five trends are all closely interrelated.

The first – and most evident – of the trends is demand for new transport and utilities infrastructure. As economies grow, so does the need for transport infrastructure to mobilise workforces, transport products and connect economic centres. And as demand expands, improved capacity in power, gas, water and other utility-related resources becomes increasingly critical. Following a decade of expansion, it’s widely recognised that economies across Asia Pacific have a substantial infrastructure gap that they need to close.

Second, the need for schools, healthcare facilities and care for the aged. A combination of rising wealth and greying populations will fuel demand for spending on social infrastructure. Major investments in education and healthcare will be needed if the region’s populations are to contribute sustainably to their growing economies.

Third, Asia Pacific is increasingly wired. The e-commerce boom is driving up expectations for faster and cheaper access to broadband networks for consumers and businesses – while also putting pressure on policy makers to agree how to share data across borders and safeguard transactions, privacy and intellectual property. These types of ‘soft’ infrastructure are vital for expanding business and trade across and beyond the region.

The fourth trend is rapid urbanisation. Attracted by job opportunities, more and more people are moving to cities, stretching existing urban infrastructure to breaking point. To make urban expansion sustainable – and ultimately provide a higher quality of life – it’s imperative to find better ways to manage housing, transport networks, water supply and waste management.

Fifth, private sector platforms for growth are emerging and growing. According to the PwC 2014 APEC CEO Survey, businesses’ capital spending plans over the next three to five years include expanding distribution capabilities in the region, bolstering digital participation, and widening the geographic spread of manufacturing facilities.

If the region is to address the infrastructure implications of all five of these trends, I believe it needs to take an approach that’s increasingly integrated - not just across types of infrastructure, but also across borders. Turning again to our 2014 APEC CEO Survey, some businesses are expanding distribution and service centres to reach new geographies in APEC. Others are stepping up investments in IT infrastructure to expand their digital reach. Each of these examples underlines the importance of planning for infrastructure with regional economic connectivity in mind.

This brings me back to my original point: the vital role of public-private partnerships in spurring and sustaining infrastructure growth. Practical solutions need to be developed to allow for more effective infrastructure investment across the region – and experience shows that mutually beneficial partnerships between the public and private sectors are a great way to enable funds to flow into critical infrastructure. For example, private firms can build and deliver public infrastructure more easily if they have the support of government. And governments can draw on technology and best practices from the private sector to help realise projects and enhance their quality.

For Asia Pacific, the next decade looks bright. And by planning and working together, the region’s governments and businesses can create the world-leading infrastructure that befits the countries’ position in the vanguard of global growth.

Read more in our new report, Infrastructure development in Asia Pacific (APEC): The next 10 years.



Mark is the PwC Capital Projects and Infrastructure leader for Asia Pacific and has extensive experience in structuring projects that straddle the complex interface between public and private partnerships. He’s been integral to the development of numerous project structures, risk allocation and mitigation strategies and the related funding solutions in various sectors in the UK and across Asia Pacific.


The meteoric rise of the middle class: global trend, local opportunity

MarcelFenez0609JPGAuthor: Marcel Fenez, Global Entertainment and Media Leader, PwC

If you look across the many social and demographic changes of the 21st century, the one that stands out for me is the explosive growth of consumers categorised as ‘middle class’.

This demographic group is projected to expand dramatically over the next 15 years, especially in Asia. With rising disposable incomes and aspirations, these consumers are also becoming increasingly connected, mobile, and hungry for new experiences.

The entertainment and media sector has always been one to benefit as consumers have progressed into the middle class categorisation, with ‘products and services’ that are generally affordable and may previously have been aspirational (such as regularly going to the cinema). These consumers also represent great targets for advertisers whose increased spend benefits the sector too.

So I see the emerging middle classes as one of the main engines of revenue growth for entertainment and media businesses over the next decade. You can find out more about this in my new video blog and article. But the opportunities presented by the emerging middle class extend much further than this sector alone – affecting virtually every consumer-facing industry.

What’s really ‘emerging’?
While the potential is clear, confusion surrounds many aspects of the global emerging middle. Where’s it located? Who’s best placed to monetise it?  And what strategies can local and international companies use to harness its spending?

To answer these questions, the first point to stress is that the concept of the emerging middle class is very different from the concept of emerging markets. True, there are fast-growing middle classes in India and China. But you’ll also find them in developed economies: take the US, for example, where the Hispanic community is a key part of the emerging middle class.

One global demographic, diverse local demands
A second – related – point is that the tastes, demands and expectations of the emerging middle vary from market to market.  So, to meet the needs of these consumers, a deep local knowledge and insight in each market is needed. International companies can’t expect to capitalise from the emerging middle class simply by taking existing offerings from one market and transplanting them into others. Instead, success is about defining local relevance and structuring solutions to deliver it.

The importance of partnership – and a flexible approach
With their local knowledge and talent on the ground, it’s therefore the local players in each market who seem best-placed to capitalise on the fast-growing middle class. For global companies looking to succeed, collaborating with these ‘tuned in’ local players - with their deep insight into local tastes, expectations and price tolerances - is key.

The rise of the middle class may be a worldwide trend, but it can’t be harnessed through a global one-size-fits-all approach. The big question for multinationals is whether - and how - they can create local relationships to capture their share of the resulting value.


Marcel is the global leader of PwC’s Entertainment & Media practice with over 20 years experience of working with and advising companies within the industry. Read more.



Fulfilling a new vision for Asia Pacific

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

Since APEC was created 25 years ago, the economic, financial and business landscape across its 21 member nations has been transformed beyond recognition. This unprecedented surge in development and growth has seen the Asia Pacific region emerge as the main engine of the global economy. At the same time, the regional environment in which organisations do business has also changed, creating new challenges alongside the opportunities.

At PwC, our purpose as an organisation is to build trust in society and solve complex problems. And if Asia Pacific’s ongoing evolution and growth are to overcome the challenges along the way, continued engagement and understanding between policymakers and businesses are essential. With these goals in mind, we recently conducted a research study – the PwC 2014 APEC CEO Survey – in which we asked 635 senior executives with operations in the region for their one request of the economic leaders gathering for the APEC CEO Summit.

Their top-line response came across loud and clear: ‘Be bold and break down barriers to growth’. To this overarching request, they also added some specific desires – including, among others, things like concluding the Trans-Pacific Partnership, addressing intellectual property issues, and encouraging regulatory harmonisation.

This wish-list echoes the views I hear on a regular basis from clients and other business stakeholders across Asia Pacific. And I believe our findings gain particular importance from the timing of the research – coming at an inflexion point where advancing technologies are increasingly transcending national boundaries, while also creating new demands and, in some places, whole new industries. These shifts are in turn driving sweeping change for businesses and governments across APEC.

For their part, businesses are ready to rise to the challenge. My conversations with business leaders across the region show consistently that they’re energised by the fundamental changes now under way, and confident in their ability to seize the resulting opportunities. A closer look at the results from our study reinforces this view.

So, what did we find? You’ll be able to read the full report here when it’s released on 8 November, but for now, I’d like to select three highlights. The first is that business investments are increasing, providing us with a tangible indication of rising confidence in the region.

This finding continues the trend shown by our previous studies. As the Asia Pacific region has shouldered an increasing share of the world’s economic activity, we’ve seen confidence in revenue growth rising year on year. And 2014 is no exception, with 46% of executives saying they’re ‘very confident’ in revenue growth over the next 12 months, up from 36% in 2012. Correspondingly, each of APEC’s 21 member economies has more respondents planning to step up investments than looking to pull back. In all, 67% say their investments in APEC economies will increase over the next year.

The second key finding – underlining my comment above about technologies transcending national boundaries – is that Asia Pacific is becoming more connected. Business leaders’ growing confidence in the region’s future is supported by an evolving vision of an Asia Pacific that has greater connectivity – both physical and virtual – in turn fostering more balanced regional growth. However, our respondents also highlight impediments to this vision: barriers to business growth haven't receded over the past four years, and some are even being amplified as businesses anticipate greater connectivity.

More positively, a solution to this challenge is indicated by our third finding. It’s that connectivity and new kinds of partnership that are now driving growth, as technology – including connected devices – blurs traditional industry boundaries. With a mandate to innovate, 59% of executives are now more willing to share market insights and resources with business partners, to speed product development and market access. And 42% say they’re considering a business combination outside their core industry.

What does all this mean for the economic and business leaders gathering for the 2014 APEC CEO Summit? In my view, the overarching challenge is to foster and harness regional connectivity to build platforms for robust growth in the coming years. Achieving this will require three steps. First, adopt a regional perspective for future infrastructure development. Second, realise that the faster barriers can be lowered, the faster economies can grow. And third, invest in the skills needed to compete today – and tomorrow.

In the past quarter of a century, APEC has come a long way. But I believe the progress to date is just the start. It’s now time to build the platforms that will underpin Asia Pacific’s next phase of growth and development – as an increasingly interconnected region.


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



Is the breakfast table more influential than the boardroom table?

Malcolm PrestonAuthor: Malcolm Preston, Global Sustainability Leader

I’m in a really privileged position to work with some great business leaders and it’s interesting to consider their legacy.  ‘Legacy’ seems such an old-fashioned word - somewhat detached and not really relevant for today’s business world.  But you just have to look at the actions of Bill Gates, CEO of Microsoft, or Paul Polman, CEO of Unilever, and the legacy they’re creating is clear.  Both men have a vision and are determined to make a positive difference in their lifetimes.  Their approaches are very different – one uses his earnings from the business as a force for good, the other uses the business itself to drive responsible business behaviour.  But both are clearly driving visible change and will likely be remembered favourably for their contribution.

When I talk to business leaders about legacy, many say they want to be able to look their own children in the eye and have a reasonable response when challenged with, “what did you do with your position and your power?” I often wonder whether the personal nature of family mealtime conversations like these has more power and resonance than any stakeholder pressure.  Take the very current example of the Ebola crisis: if I were leading a company in the healthcare, life sciences R&D or even medical equipment industries, I’d want a very good answer when my kids ask what I’m doing to help those suffering. Being held personally accountable plays a strong part in driving legacy, but it needs to be articulated and embedded into business strategy to shape the business – it can’t stay personal.

In PwC’s 17th Annual Global CEO Survey, 40% of CEOs said that the one thing they wanted to be remembered for, as CEO of their enterprise, was creating ‘social value’ or ‘value for others’.  Over the years, this hasn’t changed – the response was the same in 2007.  On the one hand, it’s reassuring to see it’s remained stable; I would have expected to see this figure plummet during the financial crisis as CEOs focused on business survival. But, to be honest, I was actually pretty disappointed to see just how low it was in the first place.

Business can’t exist without society.  Society provides the employees, the suppliers and the buyers for business to function and be effective.  And society lives not just with the benefits business generates, but the negative outcomes too, like pollution, deforestation, water stress etc.  So it’s extraordinary that 60% of CEOs would appear to view it as a one way relationship, putting profits before people, and personal gain ahead of creating positive value for the society they serve.  Am I being too harsh? Perhaps it’s because CEOs were asked to name just ‘one thing’ that they wanted to be remembered for. But certainly the connection between society and business isn't coming across as strongly as I would have liked to have seen.

I believe business is a significant contributor to many of the problems now faced by humankind and that a responsible approach to business is the way forward. I’m honoured to have been invited to attend the Rockefeller Foundation’s Bellagio Centre to participate in a Shared Value Initiative workshop where we’ll be looking at the future of shared value measurement. If a few leading organisations start reporting against key metrics for social and business value, while proving it adds value to the business, others will likely sit up and say, “If it’s giving you competitive advantage, we should be doing the same.”

I see a real benefit in this - in having an industry standard measurement framework that allows information to be generated for management decisions and company comparison, covering social as well as business impacts. This is my long-term quest—if I go to my grave and it’s happened, I’ll be a happy man! As for whether it’s possible or not, I desperately hope it is.

TIMM framework diagram

At PwC, we’re working towards this with Total Impact Measurement & Management (TIMM), and I look forward to a continued dialogue with the Shared Value Initiative and other stakeholders to advance the global vision.  I hope my legacy will be to have inspired and enabled others to do business in a better way, that’s embedding responsible growth into strategy.  I want to be able to look my kids in the eye and say, “I did my best”.   And my team at work know it, too.

For more information, read my full article entitled, “What motivates your CEO over the long term: Shareholder or social value?”



Malcolm Preston is Global Sustainability Leader for PwC, and leads a team of some 700 sustainability and climate change experts. Malcolm has a view on all aspects of sustainability from climate change to reporting, to supply chains to international development, and specialises in Total Impact Measurement & Management. Read more.


Engaging with the ‘super-fan’: a growing source of incremental revenue

Russ Sapienza photoAuthor: Russell Sapienza, Partner, PwC US

Want to create a viral sensation on YouTube? Try this. Choose a pop star and bring together 20 of his biggest fans to record their own version of his new single. Then video their faces when the star himself walks in to join them on-set. Then upload and see what happens.

This was what the US retailer, Target, did when launching its deluxe edition of Justin Timberlake’s album, ‘The 20/20 Experience’. It’s one of my favourite ever examples of viral marketing. And guess what: it worked. To date, the fans’ shock and joy when Justin appeared has garnered 2.8 million views and counting.

This is just one example of the rise – and rising importance – of the super-fan. It’s a trend investigated in more detail in my recent video blog and accompanying article. But I believe it’s a development whose significance for companies and their CEOs also extends well beyond the entertainment and media sector.

Adding value through adoration
In fact, with the help of digital technologies, super-fans are now adding rising value to brands across many industries. From toys, to consumer electronics, to cosmetics - people with a deep, emotional attachment to brands are going beyond blogging and tweeting to become actively involved in making their favourite brands even better and more valuable. If you look across any brand’s consumers, its super-fans should be among its top priorities.

Not that super-fans are new: fast-moving consumer goods companies have been identifying and engaging with them for decades, including creating personas for different types. And these types vary widely, from ‘fanatical devotees’ who might attend Comic-Con in character costume, to ‘vocal advocates’ who tweet continually about a brand, to ‘quiet advocates’ – or ‘super-subscribers’ – who may only follow their more vocal counterparts, but are every bit as loyal.

Getting inside the ropes – in different ways
In my view, each persona of super-fan should be treated differently. For example, a vocal advocate who tweets positively to 100,000 followers and takes part in product development deserves to be given a premium offering – sometimes termed an ‘inside-the-ropes’ experience – such as a pre-release, exclusive or live version. Meanwhile, the less vocal but equally committed quiet advocate will usually be willing to pay extra for ‘value-add’ premium experiences or products – opening up a growing source of incremental revenues.

What’s key is that a premium experience has to be special – even unique – in the eyes of the fan: witness the ‘V.I.P.’ button displayed discretely on the People Magazine homepage, offering subscribers the opportunity to join the ‘A-List’, including access to an exclusive premium section.

Owning the ‘circles’
As more companies set about capitalising on the rise of the super-fan, I believe its wider implications are becoming increasingly clear. One of the biggest is that it creates a need and opportunity for brands to establish clear ownership of their most passionate consumers, by identifying and building concentric ‘circles of influence’.

What does this mean? Well, the ‘inner circle’ is the people within the business working on developing and delivering new products or experiences. This internal talent pool can then be supplemented and reinforced with an ‘outer circle’ of super-fans advising on product design and boosting the brand on social media, in return for a personalised premium experience. 

This outer circle doesn’t need to be huge: it’s more likely to number 100 than 100,000. But companies that haven’t yet started to identify and engage with their outer circle should begin now, by applying a mix of qualitative research and data analytics to find out who their super-fans are - and how best to engage with and reward them.

Avoiding the pitfalls – through two-way relationships
Inevitably, there are hurdles to overcome. Companies in many industries are disintermediated by wholesalers and distributors, making it difficult to engage fans directly. Strategic responses include direct-to-consumer engagement, potentially including collaboration between producer and distributor.

Also, companies that exploit their super-fans as a source of insight, but then fail to reward them adequately, may end up souring the relationship. So premium incentives that add real value are crucial. Remember, all human relationships are two–way: the super-fan’s commitment to your brand is emotional and beyond reason – so you need to show the same emotion in return.



Russell is a principal in PwC’s US advisory practice with 33 years of experience in the media, entertainment, communications, and financial services industries.  He’s also a senior member of PwC's Strategy& operations practice, focusing in areas such as business strategy, revenue growth, new business design and launch, business process simplification and risk management.  Find out more


Global airline CEOs are at a crossroads


Author: Jonathan Kletzel, Transportation & Logistics leader, PwC US

The aviation sector has long been acknowledged as a critical multiplier of economic growth. So I think it’s good news for everyone that airline CEOs are even more optimistic about short-term prospects for their industry’s growth than CEOs across the board, as found in our recently released 2014 Global Airline CEO Survey.


Airline CEO confidence 2014
Still, airline CEOs are slightly less positive about the prospect of growth for their own companies. That’s probably because they’re acutely aware of threats to the industry and the difficulty of containing costs. While demand is on the upswing, so is competition.

Even more importantly, we’re in an era of unprecedented global change, and global airline CEOs know it. They expect technological advances, shifts in the global economy, and demographic changes to transform their business over the next five years. Over the next 20 years, the industry is expected to triple in size, as the middle class grows in developing countries. Airlines will need to keep up.

In client discussions, and at industry conferences, like the IATA’s Annual General Meeting held in Doha over the summer, I’ve been hearing that talent strategies and technology investments are on many airline CEOs’ minds. These areas are also where the largest number of airline CEOs say their companies are already implementing plans for change, along with production capacity and strategies for customer growth and retention. Some airlines are also looking at improving data analytic capabilities, which could prove useful in market segmentation, revenue and price modelling, and flight and operational planning.

In our view, though, there’s one area where airlines still need to do even more -- innovation. Traditionally, airline CEOs have focused on gaining profitability by keeping down costs and capacity discipline. Change in the industry has been incremental rather than transformational, with only pockets of innovation. These tactics, along with consolidation in the industry, have enabled the airlines to move into the black. But to deal with the dramatic shifts occurring in the world, airline heads will need to up their game.

While many CEOs say their companies have plans to improve their R&D and innovation capabilities, or have already made a start, the airline industry has yet to fully explore a broader range of service and business models. And new technologies still have a lot of potential to increase competitive advantage and drive greater efficiencies. We talk more about how innovation can help improve customer service and engagement as well as help companies manage their supply chains, operations, and maintenance in the Airline Survey and in our recent Tailwinds report.

And the timing for such investment couldn’t be better, with many airline chiefs having earnings to invest.

In my work with clients, I see the most successful airlines balancing short- and long-term initiatives. They’re investing in improving the efficiency of their operations, while also spending some of their profits on innovations. The trickiest bit? Choosing the right projects. And that’s something airline CEOs have in common with their fellow chief executives in nearly every industry.



Jonathan Kletzel, leads the US Transportation & Logistics practice. He has more than 15 years of experience helping clients develop and execute business and technology strategies with a particular focus on modernising customer channels, optimising operations, and improving cross-functional collaboration. Jonathan has been serving clients in the travel and transportation industries for over 10 years. Read more