03/01/2017

Software greasing the wheels for Technology, Media and Telecom transformation

Author: Brad Silver, Global TICE Leader Brad silver

Technology, Media, and Telecommunications: just thinking of these industries brings to mind legendary innovators, scrappy startups, emerging technology, and creativity in the pursuit of the solutions of the future.

But we’re not alone anymore…

Software is fueling the development of technology and services-based business models for all industries, and hastening the breakdown of industry walls. Convergence within the Technology, Media, and Telecommunications (TMT) industry is being met with the rapid escalation of technology acquisitions by non-TMT companies. Investments by non-tech companies

As our own Barry Jaruzelski said recently in the Wall Street Journal, software is “becoming the oxygen” for all established companies – regardless of whether their roots are in brick and mortar retail, century-old consumer product brands, manufacturing, or mobile apps.   

So, how can TMT companies succeed amid convergence, increasing competition, and the threat of commoditization? We have identified four guiding principles that can provide a blueprint for successful transformation from a products company to a “software and services” company.

  • Optimise your current position: Think about where your company currently lives in the value chain, and assess whether to expand, transforming your connection with the customer and path to market, or connect, structuring the company to be open and connected with “megahubs” – ecosystem platform drivers.
  • Mobilise and monetise models: IT and business operating models must unite to create a single digital operating model. This also requires adapting service models for business through monetisation of core data, value-added services, cost savings through scale, as well as moving fixed assets to consumption-based models.
  • Focus on customer outcomes: Rather than thinking narrowly about products, or even service offerings – focus instead on how to link core capabilities with the outcomes that customers are looking for.
  • Build a technology “lingua franca” (and an understanding of risk): Establishing a common language around digitisation, and a shared culture of innovation, will help facilitate the seamless collaboration necessary for moving at the speed of technology. Importantly, as companies embrace emerging technologies, they should account for the associated risks and costs. While future success won’t be possible without becoming open, connected, and networked, it is crucial that CEOs assess the cyber and data-privacy threats that can emerge from such a structure, and that the right service partners and protections are in place.

While we can’t see the future, we can prepare for it. Our latest article on this topic, “Software greases the wheels” provides additional insights on how to take decisive action now to prepare for the continued evolution of our industry – and the breakdown of industry walls.

Brad leads PwC’s Global Technology, InfoComm, and Entertainment & Media practice, a role in which he oversees PwC’s Technology, Media & Telecommunications (TMT) clients across the PwC network. In this capacity, PwC provides services to over 90% of Fortune Global 500 TMT companies.

 

02/27/2017

Consumers lead the way on digital trust in Central and Eastern Europe – will companies follow?

Author: Olga Grygier-Siddons, Chief Executive, PwC Central & Eastern Europe Olga-Siddons

Businesses in Central and Eastern Europe have been given an enormous credit of digital trust by local consumers. The challenge now is to safeguard it.

A recent PwC survey found that about 70% of internet users in Poland are willing to share data with online platforms, as long as their information is sufficiently protected. That illustrates neatly how the story of online trust in our region has largely been one of untapped potential: Our consumers have been faster than our companies to embrace the new reality where everyone is online, all the time. People are expressing online trust and looking for new ways of interacting with businesses, but it’s not clear whether businesses are truly listening yet.

Improving technology in the region – already often better than in Western Europe, as infrastructure “leapfrogs” ahead – means more and more transactions are taking place online. A world in which people are constantly connected to the Internet means a world of expanded consumer choice, so companies need to stand out from the competition by offering relationships and experiences, not just products.

In Poland, for example, 77% of people connect to the Internet using more than one device, in more than one location, every day; 44% of consumers want to receive personalised offers from businesses, delivered to their mobile devices. And in all of the categories of online services we analysed, more than 30% of respondents said convenience is more important than price. Still, they recognise the trade-off: in order to get personalised offers, they need to offer up data about themselves. They want to make sure that the benefit is worth the cost; that the data will be handled appropriately, and that personalisation won’t lead to excessive interference in their personal lives.

Olga Grygier-SiddonsTrust and transparency are the key to meeting those concerns – and that requires businesses to change their mind-set. One cautionary tale comes from a supermarket chain in the region, which faced a consumer backlash after journalists reported on how much data it was collecting on members of its loyalty programme. Instead of hiding the amount of data they’re collecting and why they’re collecting it, companies need to be up-front with their customers, showing proactively how sharing data will help build a better relationship and provide better service.

Unfortunately, thus far CEOs in the region have shown a lower level of concern than their global peers about threats to cyber-security: in PwC’s annual CEO Survey, only 46% said they were “somewhat concerned” or “extremely concerned” about this threat, the lowest percentage on a list of 10 threats, and well below the global average of 61%. But the EU’s new General Data Protection Regulation is bound to concentrate minds, as it revolutionises the way companies handle consumer data.

For CEE companies in EU member states, the new rules undoubtedly mean new compliance costs, but the savvy ones can find ways to use the change as an opportunity to solidify consumer trust.

When the GDPR takes effect on 25 May 2018, it will be a tipping point in consumer awareness of how companies use their data; among its requirements are procedures for customers to examine, correct and delete data held by companies, and it imposes penalties of up to 4% of turnover for failure to comply. As the date approaches, consumers will be flooded with new versions of the terms of service for websites they have interacted with – including many that they’ve forgotten about.

Smart companies can stand out from their competitors by doing more than just the minimum: explaining the changes in plain language and pointing out the benefits consumers receive from the relationship. Ultimately, the best way for businesses to get consumers to trust them is to show that they have enough confidence in themselves to be open and transparent about their digital relationships with consumers.

Like their counterparts around the world, businesses in Central and Eastern Europe lost years of hard-earned trust overnight when the global financial crisis hit in 2008. The online world has given them an opportunity to earn it back, but it will require commitment to new ways of relating to their customers. This matters, because due to their troubled history, societies in this region have suffered for too long from a lack of trust in all areas (not just online).

If companies can grasp the role and significance of digital trust, they may find ways to leverage it to increase face-to-face trust, with benefits that flow far beyond the world of commerce.

Olga Grygier-Siddons is the Chief Executive Officer of PricewaterhouseCoopers Central and Eastern Europe (CEE) which comprises 29 Member Firms of the Global PwC Network. Olga is a member of the PwC Global Strategy Council which comprises the Territory Senior Partners from the largest 21 territories in the PwC Network.

02/22/2017

Confident or concerned? Inside the mind of today’s industry CEO

Author: Robert Swaak, Vice Chairman, Clients and Markets  Robert Swaak

In my experience, there’s one important question that continually preys on the minds of CEOs, regardless of their organisation or sector: Are things about to get better or worse?

It is always hard to predict the future since a single event in a single industry or country can be enough to trigger wider upheaval. Just consider the environment we’re operating in today. Nevertheless, I believe that our 20th CEO survey, launched on the slopes of Davos a few weeks ago, offers some telling insights. Today 59% of CEOs think that governments will become more protectionist, up from 46% in 2009. Furthermore, less than a third (29%) anticipate that global economic growth will improve in the short term.

Understandably, the confidence levels of CEOs tend to vary by sector. So while the past few years have been tough for miners due to the slowdown in China, 50% of mining CEOs feel optimistic about the economy in the short term. That’s because uncertainty has boosted investor demand for gold while the election of President Donald Trump should lead to increased expenditure on large-scale infrastructure projects in the US.

A third (37%) of automotive CEOs are also positive, encouraged by high North American sales in recent years, important technological advances such as electric and driverless cars, and the future potential to sell more vehicles in Europe, Asia, the Middle East and Africa.

On the other hand, around a quarter of CEOs working in consumer goods, transport and logistics and insurance take a more pessimistic view of the world economy. Trade restrictions will make life harder for the two former groups, while insurers continue to wrestle with intense price competition, low investment yields and a heavy regulatory burden.                             

PwC Economic forecast Web banners

CEOs must have grown used to uncertainty since they have become more optimistic about their own organisation’s growth prospects over time. In 1997, the year of our first survey, just a third of participants felt very confident about their company’s three-year revenue outlook. This year, by contrast, 51% of CEOs are very positive about the next three years while 38% feel the same about their company’s prospects of 12-month revenue growth.

It strikes me that CEOs’ optimism is linked to their investment in innovation and digital capabilities and their willingness to seek out the right partners for these projects. Globally, nearly half (48%) of CEOs are turning to strategic alliances or joint ventures to drive growth and profitability. Meanwhile, more than a quarter (28%) of CEOs are looking at collaborating with entrepreneurs or start-ups instead of, or as well as, forming an alliance. A keenness to work with disruptors is particularly evident in sectors that are at the forefront of the digital transformation, such as technology, media and telecommunications and financial services.

Over the long term, the twin forces of technology and globalisation will continue to change the world, putting CEOs under pressure to ensure that the benefits of progress are more equitably distributed. Furthermore, in an age of people power, suspicion of apparently ‘faceless’ multinationals is likely to become even more widespread.

So as CEOs adapt to an environment that is radically different from the one their predecessors knew, they must confront new challenges. How can their organisation harness the power of purpose to compete in a diverging world?  What’s the best way to manage both man and machine? How can organisations gain from connectivity without losing trust? What’s the CEO’s role in making globalisation work for all?

These are the kinds of questions we’ll be answering in a series of industry deep-dives from our 20th CEO Survey starting with the financial services, energy and government and public services sectors. Stay tuned for more industry views over the coming weeks.

Robert Swaak is Vice Chairman, Clients and Markets. In this role he oversees PwC's global markets through regions and industries. Read more

02/17/2017

The end of trust? Balancing privacy with profits in the digital world

Author: Julie Fitzgerald, Global Priority Services & Critical Markets leader (based in Switzerland)

Julie-fitzgerald

Over the past 20 years, technology has penetrated our business and personal lives at a speed and on a scale that few would have predicted. Yet while technology creates enormous opportunities, it also exposes us to significant risks. We can now source goods and services from across the world with a couple of mouse clicks, but that convenience comes at a price. Many of us, myself included, worry that we’re unintentionally compromising our privacy and the security of our personal data by shopping online.  

As our markets leader in Switzerland, I had the good fortune to be in Davos last month where we launched our 20th CEO survey to the global media. I can’t remember a time when trust has been more prominent than it is today. Although it wasn’t a focus area in the earlier years of our CEO research, it’s been steadily climbing up the agenda. And most, the financial crisis and the political focus on the tax affairs of multinationals have eroded both customers’ and other stakeholders’ trust in businesses. Our survey shows how heavily this erosion is weighing on CEOs. More than half (58%) were worried that a lack of trust in business would harm their business, a significant jump from 37% in 2013.

In some respects, technology has made us more trusting than before. This is best demonstrated by the sharing economy, where digital platforms connect strangers who are willing to share cars and homes. Overall, however, technology is acting as a drain on trust, especially where people believe they are dealing with ‘faceless corporations’ instead of someone like themselves. A never-ending stream of cyber attacks, system disruptions and phishing scams creates the impression – accurately, in many respects – that the internet is not a safe place. We increasingly have to differentiate ‘real news’ from ‘fake news’ and we fear that governments and companies are abusing our personal information. No wonder more than two-thirds (69%) of CEOs are firmly convinced that it’s getting harder for businesses to gain – and retain – people’s trust.

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Customer data is a great asset to companies, which use it to influence purchasing behaviour. It will be an even greater asset still once the Internet of Things has expanded to include host of devices ranging from smart watches and heart monitors to refrigerators and cars. Understandably then, customer data is probably the most pressing trust issue for CEOs, with 91% saying that breaches of data privacy and ethics will have a negative impact on stakeholder trust in the next five years. Our research suggests they are right to hold this view since 84% of people we spoke to at the same time as we surveyed the CEOs confirmed that breaches do indeed undermine their trust in companies.

Of course, companies will want to use data generated by the Internet of Things to serve their customers better, but they must also avoid intruding on their customers’ privacy or allowing their customers’ data to fall into the wrong hands (and indeed new EU regulations in the form of the General Data Protection Regulation will come into force next year to help further protect individual’s personal data).

Another major challenge to businesses is cyber espionage, the modern-day equivalent of industrial espionage. This is the practice of using computers to gain access to confidential information held by another organisation. Furthermore, more than half (53%) of CEOs are afraid that trust will be undermined by global cyber warfare – where government-backed hackers target another nation’s crucial energy or security infrastructure, commercial assets or mass transport system.

CEOs recognise that trust is an opportunity as well as a risk. Significantly, 64% of those surveyed believe that how their firm manages data will be a differentiating factor in future. The businesses that flourish will balance getting and using data with the social consequences of those actions. They will actively engage with stakeholders and invest heavily in their IT security, risk and governance strategies. Ultimately, in an environment where the line of acceptability regarding data usage will be constantly moving, the ability to earn trust will be one of the greatest determinants of business success. Read more about what’s on the mind of the CEO in our 20th CEO Survey.

Julie Fitzgerald is the leader of priority services and critical markets. In this role she will develop and implement plans for network-aligned businesses in priority services and critical markets. Prior to taking up this role, Julie has served as the Growth and Markets leader and as a member of the Management Board of the Swiss firm since 2013, a role that she will continue to have. In this role, she is responsible for clients and markets and driving growth areas such as digital, cyber and analytics. Read more

02/13/2017

Closing the gap between rich and poor

Authors: Rollie Quinn, Government and Public Services Global Leader and Nick C Jones, Global Director of PwC's Public Sector Research Centre

Globalisation and technology have brought many gains over the last twenty years. People, goods and services, capital and information all flow more easily and quickly across the world. Being ‘connected’, whether in business, government or as an individual, has come to be seen as a universal requirement in the 21st century. But has everyone benefitted?

This is a question that goes to the heart of the debate on inclusive growth which has become increasingly important following the last year where electorates have challenged the existing order.

The view from CEOs in PwC’s 20th Annual Global CEO Survey, launched in Davos, is that while we have seen significant benefits from increased trade and mobility as well as skilled work forces, globalisation per se has done little to address inequality. Indeed, almost half (44%) of the CEOs surveyed felt that globalisation had not helped at all to close the gap between rich and poor, similar to the proportion of a parallel poll of the public (39%).

Closing the gap between rich and poor

With over a half (53%) of CEOs believing that global economic growth will remain static over the next 12 months, and ‘uncertain economic growth’ being the top threat to growth prospects (replacing over-regulation from last year), it is clear that this year will involve further head scratching on what to do from those in government, at national and local levels.

This is particularly the case given that CEOs see geopolitical uncertainty in their top five threats while many CEOs (58%) agree that the trend toward closed national policies creates challenges for business and makes it more difficult to compete in a more global market place.

So what’s to be done? There are no silver bullets but it is clear that policy action can help if directed to support the top drivers for growth, identified by CEOs surveyed as innovation, technology and human capital. Over three quarters (77%) of CEOs surveyed are concerned about a lack of availability of key skills: an area where governments can have a direct impact.

In addition, business needs effective, efficient and sustainable infrastructure – the backbone on which economic success and prosperity can grow. This includes providing the assets which deliver public services and improve the wellbeing for a nation (such as timely transport, quality education and affordable housing).

But government action on its own is not enough: business has an important role too. For instance, business and political leaders alike recognise the critical role infrastructure investment can play to bring a wide range of benefits for business and society.

CEOs interviewed commented that collaboration between business and government is needed to drive the kind of systemic change which will enable the proceeds of globalisation and new technology to be distributed in a way that closes the gap between rich and poor.

The interviews with CEOs reveal, however, the polarised views on whether such collaboration can actually be achieved to deliver more inclusive growth. Some say ‘we have to be more open and honest and more proactive in talking to government’ and ‘be more active at promoting the positive economic impact of globalisation’. Others are less hopeful and call for governments to be more radical and ‘provide the leadership through policy change where change is required to benefit society as a whole.’

Perhaps the solution is for both business and governments to go ‘glocal’: ‘think global, act local’ and work to ensure that the proceeds of growth are seen by the many, not the few.

 

Rollie Photo

Rollie Quinn is PwC’s Government and Public Services (G&PS) Global Leader.  PwC’s Global G&PS is a $2B business, which includes over 12,000 professionals delivering in over 150 countries. G&PS clients include: international governments and global organizations, central governments including state owned entities; and State and Local governments.

Connect with Rollie on LinkedIn

 

 

 

NickNick C Jones is the Global Director of PwC’s Public Sector Research Centre and has authored, and contributed to, reports on a wide range of public services issues. He sits on PwC’s Global Government and UK Government and Public Sector Leadership teams and is also a member of the Editorial Team for PwC’s Annual Global CEO Survey, commenting on the relationship between business and government.

Contact Nick Jones

Connect with Nick on LinkedIn

Follow Nick on Twitter

 

01/30/2017

Man and machine: What will the future hold?

Author: Carol Stubbings, Global Leader of PwC's People and Organisation practice

It takes bravery nowadays to predict the future. Indeed, if the events of 2016 have taught us anything, it's that unlikely AAEAAQAAAAAAAATCAAAAJDE3ZmIxZWQ0LTE0MTgtNGU3My04MDQzLTY3NGVhMGFkMzU4Mwoutcomes can easily become a reality.

This year marks the 20th year of our CEO Survey‎ and it's been fascinating to look back over the surveys to see how the thinking of CEOs has developed, reflecting the environment around them. To their credit, CEOs saw a lot of the turmoil coming; back in 2009, 76% predicted a rise in political and religious tension and even then 46% believed that governments would become more protectionist.

‎But successful predictions are relatively rare - and that's a salient lesson for people strategy.

In 2015, our CEO survey showed that a third of business leaders were increasing their reliance on contractors and freelancers – signalling the emergence of the ‘gig economy’. Two years later, companies that trailblazed working models based around this new breed of workers are fighting a regulatory backlash and concerns about brand damage. Was that predictable?

It’s a challenge to get people strategy right in such a complicated world. And it’s about to get even more difficult. There’s no doubt that we’re living through a time of profound change, one where technological development is forcing us to question what our place will be in the world – and what role humans will play in the workplace of the future. CEOs are concerned about the impact of a more digitalised world on their relationship with stakeholders; 69% felt this would have a negative impact on stakeholder trust in the next five years.

As automation and the use of Artificial Intelligence (AI) increases, more jobs (and more white collar jobs) will be lost - or at best radically reshaped. One in eight CEOs are already set to reduce headcount due to automation. Yet, our survey shows that the majority of CEOs are still planning to increase headcount – 52% say they’ll hire more people in the coming 12 months. Top of CEOs' talent wish list are those skills that can’t be replicated by machines; innovation and creativity, adaptability, emotional intelligence and leadership.

6a01bb088fa79f970d01b8d2582b09970c-320wiIt’s hard to know for sure what the future workplace model will be, and how humans and machines will work together. The advent of artificial intelligence means we’ve got to the stage where machines can think – the one thing that set humans apart from every other creature on this planet. So where does that leave us? Dov Seidman, CEO of LRN, which advises companies on leadership and building an ethical culture, told the New York Times recently that it’s the human heart that sets us apart – software cannot produce passion, character and collaborative spirit. This is echoed in our recent interview with Jorge Mario Velásquez Jaramillo, CEO of Grupo Argos SA in Columbia, who said: “Human talent is irreplaceable. You can automate processes. You can have technology as a very significant enabler of business relationships, but human warmth [is] very difficult to replace with machines.”

It’s going to be a huge challenge to get people strategy right in a world where humans and machines work alongside each other. There are many ways this could evolve, and some scenarios seem far more likely than others. But in the month we’ve seen President Trump inaugurated and the UK Government’s approach to ‘Brexit’ becoming clear, taking more time to plan for unlikely outcomes seems like a very smart move.

Carol is the global leader of PwC's People and Organisation practice, which brings together 10,000 specialists with industry, technology, analytics, business, talent, strategy and HR expertise. Alongside her work with multinational companies, Carol talks and writes about Talent, Innovation and Diversity; with a focus on the Future of Work and Younger Workers and the role companies and their leadership can play in shaping their own paths in an uncertain environment. Read more.

 

01/23/2017

Growing wealth disparity: the failure of imagination?

Author: Blair Sheppard, Global Leader, Strategy and Leadership Development. Blair-sheppard

We are confronting a fundamental issue in the world today: how to handle the growing disparity in wealth and erosion of the middle class throughout the world. This was highlighted in Oxfam’s recent report and is recognised by the CEOs surveyed for our recently released 20th CEO Survey; 44% of them said that globalisation has done nothing to close the gap between rich and poor.

Two factors are at the root of this challenge: technology and lack of investment in the future. But to really respond to the challenge requires us to think differently about potential responses. Currently we are applying 20th Century logic to a 21st Century problem. And this sets us up for failure.

The first and most important creator of growing wealth disparity is technology. Machine intelligence and robotics are already systematically replacing attractive and high paying work, making a few people even wealthier, while hitting two groups especially hard: the middle aged who are difficult to re-train and the young, who find many entry-level roles now automated and have not been prepared for other, yet to be identified, roles. This affects both wealthy countries with a higher average age (e.g. Germany at 48.5 years) and some of the poorest and youngest countries (e.g Nigeria at 18.5), who can no longer compete in their traditional, labour intensive ways. 

Robotics_B                                 Source: PwC's CEO Pulse on robotics

The second factor likely to exacerbate the problem is one I am somewhat embarrassed to admit as a former Dean of a business school: the declining rate of investment around the world. Uncertainty in political and economic markets, the decline in trust in institutions and the formal modelling of financial cost-benefit analysis has made us more risk averse – and less likely to invest in work-creating ideas at a time of accelerated job extinction.

But most problematic is our reluctance to question and adapt our established ways of thinking to a new paradigm.  Yes, taxes are an important solution to the problem, but not if they simply enhance the wealth of those already most benefiting. Yes, investing in job creating industries is a good idea, but not if the solution is unsustainable. Yes, focusing on local job creation is an answer, but not if we do so by reducing healthy trade. Yes, wealth redistribution is part of the solution, but not if it comes without the means to build a productive life and career.

What might a different approach look like? The answer requires imagination, or perhaps more appropriately re-imagination. Re-imagining life and a career as a series of related but quite different roles. Re-thinking the meaning of work and leisure. Re-defining national growth so it includes concern for job growth and resilience as well as GDP. Re-focusing our governments’ attention on the city, where the challenges are more tractable. Re-imagining the role and obligations of the wealthy. 

And finally re-imagining what it means to be human. For, while a little scary, this act of re-imagination has the potential to unlock new levels of freedom, creativity and opportunity for all of humanity.

Blair leads the team that focuses on strategy and leadership for the PwC network. He is also Professor Emeritus and Dean Emeritus of Duke University’s Fuqua School of Business. Read more.

01/17/2017

Four concerns that keep CEOs awake at night

Author: Bob Moritz , Chairman, PwC International Ltd. Bob Moritz photo

Since we conducted our first CEO survey twenty years ago, the world has reshaped itself faster than we can reshape ourselves: from a massive increase in trade and financial flows and global online traffic to improved living standards.

Inequality among countries has decreased, and one billion people have emerged from extreme poverty. Artificial intelligence, blockchain, 3-D printing, the Internet of Things, and drones are just some of the emerging technologies that are already transforming our world. A higher level of interconnectivity has raised engagement with stakeholders and forced society to think about how information is accessed and consumed. Increased transparency demands a new way of communicating, a higher level of accountability, an elevated approach to leadership, and indeed, a deeper focus on trust, purpose, and the inherent human connection that has brought us closer together.

In this uncharted territory—predicted by few and now reality for all—how can CEOs transform today’s challenges into tomorrow’s opportunities? Our just-released 20th annual CEO Survey delves into global business leaders’ strategies for success in uncertain and shifting circumstances:

1. Being ready to flex in a world of flux

Brexit and the U.S. presidential election are two recent examples of how difficult it’s become to predict the future. Unsurprisingly, CEOs ranked uncertain economic growth and geopolitical uncertainty among their top concerns.

With globalization shifting to a multi-dimensional tug-of-war among power centers, economic growth, and geopolitical threats, most CEOs are now dealing with multiple value systems, frameworks, and trading blocs. Forces like rising income inequality and accelerating digital connectivity are causing rifts and new alliances. After decades when global trade growth greatly outpaced the growth of global GDP, 58% of CEOs told us it’s becoming more difficult to balance global competition and protectionist tendencies.

So how do CEOs create sustainable businesses when it’s only getting tougher to see what is coming around the bend? CEOs are focusing on strengthening their corporate purpose and collaborating with government to tackle systemic change. CEOs are also looking at a different mix of markets for expansion opportunities around the world.

2. Building (not busting) trust

As we become more interconnected and interdependent, concern about a business trust gap has grown: 58% of CEOs worry that lack of trust in business could harm their company’s growth, up significantly from 37% in 2013. This breakdown in public confidence creates risks for individual companies, but also political, economic, and social systems around the globe.

As with just about everything, technology plays a role here too. A significant number of the CEOs we surveyed are convinced that gaining and retaining trust is harder in the digital era. Notably, they also emphasize the growing importance of establishing a strong corporate purpose and reflecting that purpose in their organizational values, culture, and behavior--recognizing that the definition of trust has changed—specifically, expanded. Today, for example, to counter the risks stemming from the inevitable data breaches and cybersecurity issues, a company based on integrity and transparency will be strongly positioned to speak directly to its customers and stakeholders--both present and future--outlining all that was done and will be done to preserve data privacy.

The days where the CEO of a company was rarely accessible to the end customer or was able to get sanitized feedback are gone, as are the days where the consumer had little sight into how a product was produced and a supply chain crafted. Today, executive teams need to fully grasp the ethical and moral implications of their decisions, and communicate their actions with integrity. Trust has become an equalizing force, moving power from top-down to peer-to-peer.

This means that while trust is an increasingly challenging issue, organizations that succeed in earning and retaining trust have much to gain. When businesses effectively articulate their purpose, act transparently, and stand by their values, trust and success can go hand in hand. Sustained execution is key.

One fact is indisputable: the role of business in society has never been more important. Hand-wringing over uncertainty will not lead to success. But leaders who step up to collaborate across sectors, borders, and markets and the public at large will forge ahead.

3. Tackling the talent challenge day

The competition for talent is as fierce as ever, as the global population ages, the nature of work changes, and companies look for the skills they need to grow – now and in the future. 77% of the CEOs we surveyed voiced concern that skills shortages could hinder their organization’s growth, and 52% plan to hire more employees over the next year.

Despite greater automation in the workforce, CEOs realize they can’t rely on digital skills alone. To innovate, they need good problem-solvers and people with creative skills and high emotional intelligence. These are also the hardest skills to find. As LRN’s Dov Seidman explains it, companies and leaders that recognize and put the human connection at the center of their strategy will be the enduring winners. Indeed, “machines can be programmed to do the next thing right. But only humans can do the next right thing.” In a recent New York Times article, Thomas Friedman also writes “The technological revolution of the 21st century is as consequential as the scientific revolution, argued Seidman, and it is “forcing us to answer a most profound question — one we’ve never had to ask before: ‘What does it mean to be human in the age of intelligent machines?’”

To find these employees, CEOs are increasingly tapping into a more diverse hiring pool—and looking across borders. They are also focused on the structure and future of work, including the “gig economy,” with 28% of CEOs relying more heavily on temporary workers. A laser focus on delivering results, a drive to find the right skills, and ability to execute are what distinguish the CEOs that have higher confidence in their companies that we see in this survey.

4. Reimagining the leadership model

All of the above require CEOs to rethink the role of business in society, and engage with multiple players including those in government to create viable solutions. For example, many CEOs told us they struggle to define the extent of their company’s social obligations and to prioritize long- over short-term performance due to greater emphasis on shareholder value. And the events of the past year have shown us that companies that ignore people power risk stymying their growth.

Giving and receiving feedback, collaborating widely, and leveraging more decentralized decision-making will all be core attributes for successful leaders as C-suites expand and boardrooms diversify. Executives who embrace this changing paradigm may well blaze a trail that reintroduces the human factor and a sense of inclusiveness, fueling growth along the way, creating opportunity, and developing a meaningful relationship with the public.

Interestingly, CEOs are relatively optimistic amid the upheaval. Compared to last year, a higher percentage of CEOs said they are very confident about their organization’s 12-month revenue outlook (38% up from 35% last year). This positivity indicates that many CEOs have grown accustomed to navigating stormy, uncertain seas and are increasingly focused on opportunities created by unpredictable circumstances.

Leaders that live their values and scale them will create organizations with the resilience to navigate this complex, rapid-fire, disruptive world.

This story originally appeared on the WEF ‘Best of Davos 2017’

From 2009, Bob led PwC US as its chairman and senior partner. During his tenure, the US firm focused on increasing quality service and enhancing its brand and reputation by developing and retaining key talent and expanding its capabilities across all areas of the business. Bob speaks widely on, and is a champion for, diversity and inclusion in the workforce as well as being an advocate for workplace flexibility. Read more

01/06/2017

Had enough yet? More disruption on the way in 2017

Author: Dana Mcilwain, CAO & Global Operations Leader, PwC International Ltd. Dana_McIIwain

As we move on from 2016, I’ve been reflecting on events from across the globe over the last 12 months that highlight dynamic societal discourses on topics ranging from economic policies to tax reform to immigration and national security. The words that spring to mind are unpredictability, change, upheaval and disruption. Anyone in the business of making predictions for 2017 may be looking at changing their career path!

We’re marking 20 years of PwC’s global CEO survey with the launch today of an interactive timeline looking back at the defining events and technology breakthroughs of the past two decades. Looking at the frequency and scale of tech developments (and this timeline shows just the tip of the iceberg), it’s no surprise to me that corporate leaders all over the world continue to tell us that they’re grappling with forces of disruption affecting all parts of their business.

I spend a lot of time talking with our clients about how megatrends like demographic and social change, shifts in global economic power, rapid urbanisation and – often, most acutely of all – technological breakthroughs are disrupting and changing the very rules of the industry they operate in. What’s increasingly becoming apparent is that industries aren’t just being disrupted, they’re being completely upended and reshaped at their very core. The walls between suppliers, producers and consumers and even between whole industries are moving, transforming and even, in some cases, coming right down. And technological change is driving the transformation of the business landscape.

In fact, four in five CEOs surveyed in our recent executive Pulse panel think the production technologies their companies use will change in the next five years – this rises to 90% of CEOs in Asia Pac companies. And three quarters cite investing in or acquiring new technologies as the most important strategy for managing disruptions faced.

CEO20 timeline

In this year’s CEO survey (due for release in Davos on January 16) we asked CEOs to what extent technology has changed competition in their industry over the last 20 years and the last 5 years – and how they think it will change competition over the coming 5 years. Although the final results aren’t in yet, my guess is that CEOs will tell us that tech in the next 5 years and beyond will be even more disruptive to their industry than even in the last five. So it’s not only that the pace of change continues unabated, but that it may actually be accelerating.

Strategic planning has moved on from being an annual event to become an iterative dialogue across the C-Suite. CEOs must continuously look at how the forces of technological breakthroughs are affecting their sector, how far those forces will disrupt their industry in the next five to ten years, what the future might look like for their business, and most importantly, what they might need to transform today to continue to thrive tomorrow.

So, disruption continues to be a way of life. The future is unpredictable. But history shows us that the companies that can prepare themselves for more than one future have the best chance of navigating the uncertainties ahead.

Dana Mcilwain is the Chief Administrative Officer and Operations Leader for the PwC Network. Dana’s primary responsibility is to ensure the PwC Network is Fit for Growth by teaming to drive strategic planning and investments; strategic cost management; strategic combinations and integrations; and technology enablement. Read more.

12/22/2016

Six Principles for Creating a Brexit Business Strategy

Author: David Lancefield, Partner, PwC UK David-Lancefield

Following Brexit, the British government and the E.U. will spend the next several years negotiating a divorce that balances their economic, political, and social interests. The terms of exit and the trade deals that will follow will be unprecedented in their complexity, and there are no clear rules to follow. Nor is there a certain timetable. The negotiations were supposed to be concluded in two years, but the High Court’s recent decision mandating that Parliament must be involved, and the ongoing Supreme Court hearing, calls that into question.

As a leader of private enterprise, you can build an effective post-Brexit strategy around these basic principles in the meantime:

1. Develop a course of action that will be robust under many scenarios. Scenario planning will help you chart a course. First, think about the possible big-picture effects. Then take an existing element of your business and think through all the possible ways it could be affected by those larger changes. Consolidate your alternative futures into a few scenarios that demonstrate how this situation could evolve. They should all be mutually exclusive and have a counterintuitive aspect, something you can learn from. Consider the unintended consequences of actions that are relevant to your business. Then look into the impact each alternative future could have on your company, highlighting risks or opportunities involved.

Finally, instead of devising a separate response for each scenario, consider these questions: What strategy could we adopt that would be robust under any scenario? What investments could we make now to ensure that whatever scenario comes to pass, we will be glad we made that choice? And what can we do now to influence the development of the preferred scenario?

2. Rethink your global footprint.The aftershocks of the Brexit vote provide an opening to launch soul-searching exercises to examine the map of countries where you manufacture and sell your portfolio of goods and services. These exercises can also help you reconsider cost allocation, to adjust expenses to match your new global needs. Focus on strategic objectives: making the most of your capabilities, ensuring access to markets where your capabilities can help you stand out, managing regulators, finding suitable labor pools, and providing opportunities for innovation.

3. Encourage a diversity of perspectives within your company. Employees will hold a wide range of views about the risks of your post-Brexit strategy and the direction your company should take. This diversity of perspective is a strength of your enterprise. Give a large group of trusted managers and employees the task of developing a course of action in Europe and the U.K. Then encourage them to question one another’s biases and assumptions.

Draw in people with a range of experiences, professional backgrounds, interests, and expertise. Include advisors with deep sets of intelligence in areas as diverse as economic development, political engagement, devolution, immigration policy, industry trends, and customer data. Ask open questions to make sure that responses are not exclusively what people believe management wants to hear.

4. As a leader, be transparent and choose your words carefully.In difficult periods, executives must be cautious about what they say and the stances they take. Express sincere compassion and be on guard against statements that may ruffle feathers throughout the organization. Allow people to communicate their views freely. If people express fear or concern, offer tangible aid whenever possible. Avoid language that can be perceived as callous or threatening; even low-key statements such as “We’re thinking differently about next year’s budget” could be heard in a menacing way. Be self-aware when interacting with customers, suppliers, and shareholders.

5. Develop your company’s “foreign policy.”Multinational companies will have to become adept at navigating the changing regulations, consumer preferences, and cultural mores in regional and local markets. If you move into foreign territories that have their own evolving post-Brexit characteristics, you will need to integrate your company with the local society and government, capabilities you may need to build. Use your expertise in your current business locations to collect on-the-ground intelligence that can inform strategies designed to minimize risk. Instituting a well-resourced corporate foreign policy can buoy your localization strategy.

Your thoughtful engagement of issues related to Brexit, trade barriers, and globalization is critical. The Japanese government, and some U.S. officials have encouraged businesses to speak out publicly about Brexit, even if it takes them out of their comfort zone. This type of unprecedented encouragement may lead some companies to take positions on Brexit or other geopolitical issues before they have developed true diplomatic skills. More prowess with a foreign policy will lead to a more powerful impact.

6. Prepare for further expressions of public antipathy to the establishment. Recognize the public’s ongoing resentment of income inequality — and of generous executive pay and high dividends. Your employees will be worried about pension deficits and the potential impact of economic uncertainty on their job and wage prospects. We may also see the rise of conscious capitalism, more attuned to the needs of the people business serves and employs. Pay attention to attitudes about immigration. Borders will be tighter, and moving people across them will be harder, in terms of both managing the regulations and navigating public opinion. If migration of labor is part of your business model, you’ll have to consider these issues now.

By taking these steps, you can keep your business healthy while also addressing post-Brexit political and social issues. This process can catalyze innovation and growth even amidst turbulence. You will gain new insight into your distinctive identity, your capabilities, and your people. You’ll align your company with the devolution of power that appears to be occurring in many countries. Indeed, one of the surprising long-term results of Brexit may be a higher level of connectivity among citizens, government, business, the environment, and society at large.

For more insights, check out Business Beyond Brexit in strategy+business.

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