Responding to the forces of disruptionFollow @PwC
Author: Norbert Schwieters, Global Consumer and Industrial Products & Services Leader
How are the customers I sell to changing? How's my business model changing? Who are my new competitors? How do I plan in a world of change? What capabilities do I need to stay relevant?
It’s clear that no industry, no company and even no government, is immune from the effects of a rapidly changing world. Whether it’s demographic change, global power shifts, rapid urbanisation, climate change and resource scarcity, or technological breakthroughs – what it means for companies is disruption, disruption, and more disruption.
When we surveyed 1,322 CEOs across 77 countries for our 18th Annual Global CEO Survey, we got a pretty interesting insight into the challenges that companies are facing all over the world and in every sector.
Nearly 60% of them see more threats for their company than three years ago; that reflects an upward trend over the last four years. And they’re getting more worried about almost all the threats we asked about.
Fully 78% are concerned about over-regulation. Other threats that are looming large for CEOs are the ones related with technologies: cyber threats - up 13 points to 61% - and the speed of technological change - up 11 points to 58%. In fact, of the threats we asked about, the only issue CEOs are slightly less concerned about is bribery and corruption. And when it comes to disruption, CEOs see regulation, competition and customer behaviours as the top industry disruptors.
One of the CEOs we spoke to face-to-face said, “The challenge we and many others are facing is that it’s very hard to know when exactly the disruption will become so big that you actually don’t even survive without being part of that disruption.”
This week, we published the CEO Survey results for each sector. What they show is that some industries are experiencing more upheaval than others and that sectors are reacting in different ways to disruption (more on this in a second blog I’ll be publishing in a few weeks’ time) - but none is immune.
In the energy sector, for example, where I do a lot work, it’s clear that the disruption taking place is just the start of a major transformation. It’s not a question of whether the business models pursued in the sector will change, but rather what new forms they'll take and how rapidly companies will have to alter course.
One example of that is Germany’s biggest utility company. It was recently in the news when it announced that it was going to split its renewables, distribution grids and services operations from power generation, energy trading and oil and gas production to respond to disruption in the European energy sector. It cited, "dramatically altered global energy markets, technical innovation, and more diverse customer expectations". The latter two disruptive forces are not confined to the energy sector – they were mentioned by the CEOs we surveyed as affecting most, if not all, sectors.
So ask yourself:
- What do your customers really value, and how do your organisation’s differentiating capabilities deliver that value?
- How are you learning from other industries to solve customer problems in your own industry?
- Are you considering how your organisation’s key strengths can be leveraged to solve customer problems in other industries?
- What business are you really in?
Norbert Schwieters leads PwC's Global Consumer and Industrial Products & Services group. He's also the Global Energy, Utilities & Mining Leader and heads up the Energy industry team in Germany.