CEOs in Davos — Are they talking your language?

Author: Colm Kelly, Global Tax and Legal Services leader  Kelly

Davos’s theme of growth in a fractured world is actually about skills, jobs, wages, responsibilities, and opportunities. It’s a conversation business, policy makers and society need to have says Colm Kelly.

This year’s business leaders are arriving at the World Economic Forum in Davos, Switzerland with the highest level of optimism about global growth since 2012. But, even with all this optimism, there are some real anxieties about what is happening in wider society.

PwC’s CEO Survey shows that CEOs are the anxious optimists. It comes on the back of a lot of reflection last year (including our own with the T20 on how today’s economic and political upheavals reflect an ongoing misalignment between business and economies (on the one hand) and acceptable societal outcomes (on the other)).

Across the world, business leaders report increasing anxiety about broader societal threats — such as geopolitical uncertainty, terrorism and climate change. These threats outpace the more familiar threats to business growth prospects such as exchange rate volatility and changing consumer behaviour. Two out of three business leaders are concerned about populism as a threat to growth (35% extremely concerned; 42% somewhat concerned).

The threats that trouble CEOs are increasingly existential. And the issues of fairness, transparency and are at its core.

This greater level of understanding and awareness of the threats to growth that are beyond the control of business alone is an important aspect of the changing role of business in society. It’s also marks a shift in the public’s expectation of CEO’s influence and action on how growth will be achieved in the short, medium and long term.

CEOs believe the focus on delivering results in shorter periods of time (60%) is still the main challenge. However, following this, there is a significant shift with the majority reporting higher levels of pressure to hold individual leaders to account (59%), including for misconduct. Over a third report more pressure from employees and customers to take political and social stances (38%) in public.

In the Banking and Capital Market, Healthcare and Technology sectors, the profile of leadership accountability was higher than average. So too were expectations in the US (70%), Brazil (67%), and the UK (63%). High-profile debates on diversity, immigration, social inclusion and pay equity have raised employees’ expectations of leadership to engage in political and social issues, particularly in the US (51%), China (41%) and the UK (38%).

This is part of a shift in how the CEO is having to see their responsibilities as leaders, their organisations’ as employers, and their business’ purpose in society.

When we talk to our family and friends in our homes, park, cafe or the office, we don’t tend to talk in the language of a business’ purpose and the systemic changes that are needed to make sure the economy serves society. We do talk about tax and wages. We talk about job security, opportunities, and the state of our areas, schools, the future of education and healthcare.

The feeling that business leaders don’t talk about or address these issues has long contributed to the underlying mistrust between business and society. What this year’s CEO survey is telling us is that these issues are now in the boardroom.

Take the impact of technology for example. While recent research by PwC showed that workers were optimistic about technology improving their job prospects, CEOs reveal that helping employees retrain, and increasing transparency on how automation and AI could impact jobs is becoming a more important issue for them.

Two thirds of CEOs believe they have a responsibility to retrain employees whose roles are replaced by technology, chiefly amongst the Engineering & Construction, Technology and Communications sectors. 61% of CEOs build trust with their workforce by creating transparency, at least to some extent, on how automation and AI impact their employees.

Business leaders’ opinion is divided again this year on whether future economic growth will benefit the many or the few. Globally 48% believe widespread economic growth will benefit more people, 46% say it will benefit fewer. When asked if globalisation has helped ‘close the gap between the rich and the poor’, nearly 40% of CEOs respond “not at all’.

And yet in the short term we see much more collaboration reported between leaders in business and education, and policy makers. 73% are collaborating with educators and policy makers to improve the employability of future workers. Even within their own businesses, 86% are now implementing continuous learning and development programmes to support attracting and developing digital talent.

Following a long period of globalisation, increased fragmentation is driving business leaders’ views of how we measure prosperity around the world. CEOs across every region and country recognise that the world is moving away from measuring prosperity primarily through financial measures, for example GDP, and towards measuring prosperity through multifaceted metrics, including quality-of-life indices.

This is particularly true in Latin America. North America lags behind the global consensus with nearly 40% of CEOs siding with traditional financial measures. Still, 57% agree that the world is moving in the direction of multifaceted metrics. Defining those metrics and capturing the data to accurately measure them will be a priority agenda item in the coming years.

People’s expectations — whether of their employer, or of business more broadly — are rightly high.

We’ve spoken before about the shift in the role of business in society. What once sounded academic is now becoming very real.

This year, business leaders in Davos need no reminders of the importance of enabling societal progress. It’s become a part of their day job. The results will be better for us all.

Tackle tech skills and greater trust may follow

Kevin Ellis, Chairman and Senior Partner, PwC UK Kevin-ellis

Disruption from emerging technology is now a fact of life. Business leaders are considering how the fourth industrial revolution will impact their operations and employees. They are acutely aware of the change technologies such as AI, blockchain and robotics could bring. Our 21st annual global CEO Survey, published this week at the World Economic Forum in Davos, underlines this. More than two thirds of the UK CEOs polled agree emerging technology and automation will disrupt their business over the next five years. 

The next stage of the challenge is capitalising on the digital revolution by having the right people with the right skills to apply and embrace cloud technologies, data analytics, robotics and more. Technological changes will have a significant impact on the jobs market. How UK businesses respond will determine their own and the UK’s future success. 

Ensuring they can attract and develop the right talent is a top priority for UK CEOs and the availability of key skills is one of their prime concerns. Six in 10 (62%) don’t believe they currently have sufficient digital skills amongst their workforce and a significant 38% believe it is difficult to attract the right kind of digital talent.

Creating the next generation of skilled workers and attracting and retaining tech talent will be essential in a post-Brexit world. The more UK CEOs take the lead and innovate, the greater the likelihood that the UK will maintain its competitive position on the international stage.

There are positive signs they are taking practical steps to address this issue. Three quarters (77%) say they are improving compensation and benefit packages to attract or develop people with digital skills. But the digital skills shortage means companies are unlikely to meet their needs through recruitment and retention alone. So it’s encouraging that nearly two thirds (63%) of leaders are using or plan to use apprenticeships and internships to grow their workforce, while developing the skills they need for today and tomorrow. Our own new technology degree apprenticeship will give 100 people per year the chance to develop the right skills and experience to kick off a tech career, as well as providing us with a pipeline of talent for the future.

But it’s not just about the workforce of tomorrow. Business leaders also need to focus on the workforce of today. PwC’s economic analysis forecasts that up to 30% of UK jobs could be impacted by automation by 2030. That’s a significant proportion of workers at risk of being left behind, but business leaders appear to be increasingly alive to this.

More than half of UK CEOs recognise they have a responsibility to retrain employees whose tasks and jobs may be impacted by automation. Upskilling existing employees is as vital as creating the next generation of tech talent, particularly given we estimate a higher proportion of lower skilled jobs are at risk of automation, For example, in sectors such as transportation, storage and manufacturing. This is an area where business can take a lead. Business and Government can work together to help current and future employees develop skills that keep pace with technological change.

Nearly nine out of 10 UK CEOs also recognise the need to strengthen harder to automate soft skills, such as teamwork and communication, alongside digital skills. 

According to the latest Edelman Trust Barometer published this week, only 43% of the general population trust business. 60% of respondents believe that CEOs should lead change, rather than wait for regulators to impose it. Equipping people with the skills to stay relevant and employable is a vital and tangible way businesses can make a valuable contribution to society and start to bridge the trust gap. Improving social mobility will mean keeping people in work, as well as opening up the workplace to people from diverse backgrounds. Businesses have an opportunity, and responsibility, to really benefit people’s lives. 


A strong business outlook means it’s time to invest in people and in digital: Findings from PwC’s 2018 CEO Survey

Authors Tim Ryan, Senior Partner and Chairman, PwC US Tim-ryan

The global economy is strong. Business leaders have told us as much for PwC’s 2018 CEO Survey. Much of the worry from previous years about slow business growth and economic volatility have eased. Of course, there are new concerns, but CEOs are confident that 2018 holds tremendous opportunities for business.

For American companies, this year is not just a chance for greater profit but a year to strengthen and invest for the future.

Today, we released our 21st Annual CEO Survey at the World Economic Forum in Davos, Switzerland. We interviewed 1,293 CEOs from 85 countries (104 from the US) about what they are optimistic about and what keeps them up at night.

This year, US CEOs are much more certain about the global economy. In fact, for the first time since the 2008 financial crisis, a majority (52%) of US CEOs say they are very confident about their business growth. Compare this to five years ago when economic uncertainty was their biggest concern or even just last year when only 39% were very confident about growth.

Indeed, CEOs in the United States and around the world believe the global recovery has fully taken hold. Macroeconomic indicators are strong across most G-20 economies — particularly in the US, where unemployment is at an all-time low in 17 years and where the stock market is at an all-time high. So it’s no surprise that the United States is the number one, “must-win” market for business according to the CEOs we surveyed — ahead of China, Germany, India, and the United Kingdom.

Even though global economic volatility is no longer keeping CEOs up at night, they can’t get complacent. If anything, they should take this opportunity, when growth prospects are good, to shore up other parts of their business that may be lagging behind. For example, US CEOs now rank cyber threats (63%), over-regulation (55%), terrorism (50%), and geopolitical uncertainty (50%) as their top concerns for 2018. And while CEOs can’t control over-regulation, terrorism, or geopolitical uncertainty, they certainly can put in place the safety protocols to protect against online hacks and cyberattacks.

And while most CEOs today have an ever-present fear of a potential cyber attack, they are also worried about being left behind by the rapid pace of advancements in artificial intelligence (AI), autonomous transportation, and other areas where jumps in technology can give the competitive edge to new and more agile competitors.

Global vs. Organisational Growthv2

From AI to machine learning to data analytics, there’s a lot at stake when it comes to how technology is disrupting industries and the workforce. But in an environment where global growth prospects are strong, CEOs that take this opportunity and have the foresight to embrace digital transformation will be greatly rewarded.

It’s important to keep in mind, however, that digital transformation can be particularly unsettling for employees who often think immediately about the impact on their jobs. So while the PwC survey tells us that a third of US CEOs are extremely concerned that today’s workforce doesn’t have the right set of skills, it also finds that only about half of US CEOs believe it’s their responsibility to retrain employees whose tasks and jobs are automated by technology. This is in stark contrast to what CEOs from other advanced manufacturing economies think. According to our survey, 71% of CEOs in Japan, 84% of CEOs in China, and 85% of CEOs in Germany believe that they have a responsibility to retrain workers.

I believe that this is one of the most important actions for a CEO to take — to ensure their employees have the necessary digital skills for the jobs of today and tomorrow. By investing in our employees and fostering trust, CEOs can build a more skilled and inspired workforce that will ultimately be more innovative, agile, and responsive to business needs. And by helping the workforce adjust to the digital transformation with upskilling, we meet our responsibility to build better companies and support our people.

We are currently in an unprecedented time of opportunity and awareness. It is our job as leaders to build companies that are fundamentally strong businesses that support our employees, and embrace the challenges of our global economy. Business is very good today — let’s ensure we embrace the opportunity to build an even better tomorrow.


Winning talent (and transforming society) in a world where engagement is key

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

Business leaders in Central and Eastern Europe have proven they have the skills and determination to thrive in the face of mounting threats to growth, such as terrorism, climate change and rising populism. But closer to home, they face a new challenge: adapting their organisations to a new world where values such as trust, engagement and purpose are just as important as dollars and cents. To meet that challenge, here are four things they should focus on in 2018:

Invest in new ways of retaining and motivating digital talent. Our region has a tremendous asset in the form of its people, and their formidable technical and digital skills. And yet 51% of CEOs in Central and Eastern Europe report that they’re extremely concerned about the availability of key skills for their organisation, according to our Global CEO Survey, released in Davos this week. In fact, it’s the top perceived threat to business success in the region. What’s more, 62% of regional CEOs (compared with 50% globally) say it’s very or somewhat difficult to recruit for digital talent.

One big reason is that rivals from around the world have also noticed our talent pool, and are now competing to hire our brightest stars. So companies in our region need to learn to compete with global players – and that means competing on different terms than they’re used to. The key is not just to offer higher salaries, but more importantly to offer higher engagement: helping employees connect with a sense of organisational purpose, and offering opportunities for fulfilment that go beyond just a bigger pay cheque.

Help strengthen and improve the role of technology in society. In many areas, such as banking and telecoms, CEE has leapfrogged ahead of our Western neighbours in terms of the quality and availability of technology. The challenge now is to ensure that those benefits reach all members of our societies and work to improve the lives of all of our fellow citizens, for example through e-government initiatives. Fortunately, we have in our midst the clear world champion at e-government, Estonia. That can give us an advantage in the learning process – if we are willing to open up and learn the lessons we need.

One important way that technology can flow outward to benefit society as a whole is in the area of trust. While countries in this part of the world often struggle with low confidence in interpersonal interactions, we have relatively high trust online. Companies need to explore ways of turning digital trust into the face-to-face kind. The promising news here is that business leaders in our region are becoming aware of the importance of this issue: our survey found that 74% of CEOs in CEE (the same as globally) measure the trust between their organisation and its customers.

Work to build an education system for the future. While we rightly trumpet our region’s impressive digital skills and the impressive cohorts of technical and engineering graduates that our universities produce, we need to be honest in pointing out that our education systems often fail to teach important skills such as teamwork, critical thinking, communication and leadership. This is also borne out in the survey results: 97% of CEOs in our region (compared with 91% globally) believe it’s important to improve soft skills in addition to digital technologies.

While it’s good that executives are realising the need for better soft skills once people have been hired, our societies need to find ways of equipping our youth with those skills earlier: at the moment when they walk out the doors of the education system and enter the job market. That means companies should be proactive in reaching out to universities – and all levels of education – to ensure that young people are learning the skills they need to be able to thrive today. While entrenched bureaucracies in some countries make this difficult, they also make it all the more important for business to seek out enthusiastic partners in education, who can lead by example.

Be a part of the conversation as societies rethink measures of prosperity. Finally, businesses need to find their voice and speak up in the growing debate over how our societies measure success and how we ensure a fair distribution of the benefits of the prosperity we have achieved over the last quarter-century. By changing the way they engage with employees, customers, the education system and government as a whole, CEOs in this region have a vital role to play in this transformation.

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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.

3 reasons why CEOs are optimistic about 2018

Author: Bob Moritz, Global Chairman, PwC US Bob moritz

You don’t have to look far for signs that we live in tumultuous times. Geopolitical uncertainty, cyberattacks, and jobs threatened by artificial intelligence are just a few of the topics that dominated headlines in 2017. But despite these harbingers of gloom, a record-breaking percentage of CEOs told us they are optimistic about the economic environment worldwide, at least in the short term. That’s one of the findings of PwC’s latest Global CEO Survey, launched at the World Economic Forum Annual Meeting in Davos this week. I want to focus on three highlights here:

1. Soaring short-term CEO optimism

This year’s survey showed a record jump in the all-time highest level of CEO confidence regarding global economic growth prospects for the coming year. For the first time since we asked the question in 2012, a majority (57%) of the CEOs surveyed told us they believe global economic growth will “improve”. Strikingly, this unprecedented optimism is about twice as high as last year and it is truly global — from North America to both Western and Central/Eastern Europe, as well as Africa, Latin America, the Middle East and Asia Pacific.

This confidence waned, however, when we asked CEOs about their own company’s growth in the next three years. While last year, 51% of respondents told us they were “very confident” about their organization’s longer-term growth prospects, only 45% shared that view this year.

CEOs may justifiably feel that the future is simply less predictable than it once was. With technological disruption and geopolitical unpredictability verging on commonplace, longer-term confidence may be increasingly elusive.

UC9B00222. A focus on the geopolitical positives

In the short-term, CEO optimism appears unimpeded by shake-ups such as Brexit, the Trump administration’s withdrawal from trade agreements and climate accords, and increased anxiety over North Korea. Undeterred, CEOs continue to invest in and grow their businesses.

Simply put, 2017 looks set to be the best year for the global economy since 2010. As we kick off a new year, global commodities prices have recovered from their trough and the world’s major economies are growing. Even Britain’s economy seems to be persevering despite Brexit. This upward trend is set to continue in 2018, with PwC predicting that the global economy will grow by almost 4% in purchasing power parity (PPP) terms this year.

In the US, the Trump Administration’s pro-business policies — with the notable exceptions of trade and immigration — look to be fuelling a stock market boom, corporate confidence and low unemployment. With deep corporate tax cuts, deregulation and infrastructure spending on tap for 2018, it’s no surprise that North American CEOs are our most confident survey respondents: more than half (53%) of CEOs from the region are “very confident” about their company’s growth in the next 12 months.

Only time will tell how well-founded CEOs’ short-term confidence is but the economic indicators are on their side, with booming stock markets and strong predicted GDP growth in most major markets. Also, while risks seem to grow and multiply, CEOs are, on the one hand, becoming more used to high levels of multiple risks; while on the other hand finding ways of managing them. There are plenty of potential potholes in the road ahead for business but CEOs have become better at predicting where they are and navigating around them.

3. Taking technology in their stride

Technology is affecting businesses in varied and complex ways. As we continue to hurtle through the digital age, business strategies for technology are in flux, and the numbers show that. On the one hand, technological advances — like cyberthreats and the sheer speed of change — are high on the list of concerns that keep CEOs up at night. Last year, 24% of the CEOs we spoke to told us they were “extremely concerned” about cyberthreats, but that number has jumped to 40% this year. In contrast, business leaders see enabling universal connectivity as the chief benefit of globalization.

There is no question that the impact of AI will be enormous, potentially transforming business and society at large. PwC’s recent global AI report predicts AI will contribute an additional $15.7 trillion to global GDP by 2030. But those benefits are unlikely to be shared evenly: the US and China are slated to account for 70% of the boom. There will also be winners and losers in the jobs market when machines can replace cheaper labour. Certain jobs will become redundant and new ones will be created. However, while CEOs are focused on the potential benefits of AI, they are for the time being relaxed about the impact on employment with fewer than one in five CEOs expecting to reduce headcount in the next 12 months.

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General Secretary Xi sets out his blueprint for China

Author: Richard Oldfield, Global Markets Leader  Richard-oldfield

Whichever way you look at it, last week’s 19th National Congress of the Communist Party in China was a triumph for General Secretary Xi. From the beginnings of his days in office it was pretty clear that Xi was a different type of leader for China. A leader with a clear vision who was prepared to move quickly to marshal the resources and consolidate the powers necessary to put his vision into action. The 19th Party Congress has reinforced this, cementing Xi’s grip on power. And with no successor in the wings, he looks likely to be leading China for the next 10 to 15 years. 

While we clearly got the message that we will be dealing with General Secretary Xi for the foreseeable future, what were the messages for business and investors?

In the General Secretary’s words, the Chinese economy–having gone through “deep and fundamental changes”–now stands at a crossroads. On the one hand, between 2013 and 2016 it achieved an average GDP growth rate of 7.2%–but on the other, it faces many challenges and risks. Among them, rising levels of debt, high cost of production, low returns on investment, persistent industrial overcapacity and high levels of pollution. None is easy to fix. But by setting out priorities to pursue supply-side structural reform and a commitment to work harder for better quality, higher efficiency and more robust drivers of economic growth through new industrialisation, better use of technology, urbanisation, and agricultural modernisation, then we can at least now see a clearer direction for future economic growth.

Preventing systemic financial risks has been the focus of attention of the Chinese leadership and many investors around the world. At the National Financial Work Conference in July 2017, General Secretary Xi stressed that China should treat the deleveraging of state-owned enterprises (SOE)–the major beneficiaries of the banks’ easy credit and main source of bad debt–as “the priority of priorities,” adequately deal with the “zombie enterprises”, and hold officials accountable for a lifetime for building up debt at their respective regions.

To address the problems, the 19th Party Congress report calls for “deepening Institutional reform in the financial sector, increasing the proportion of direct financing, and promoting the healthy development of a multilevel capital market”. There are also plans to step up supervision of the financial markets. All encouraging moves.

State-owned enterprise reform has become the centrepiece of China’s economic policy. China has given priority to enhancing SOE competitiveness and efficiency through market-oriented reforms and reducing excessive production capacity. There are signs that SOE reform has gathered pace, starting in August with a partial privatisation deal at China Unicom and with over 68% of central SOEs now involved in mixed ownership reform.

The 19th Party Congress stated that the Party will support state capital in “becoming stronger, doing better, and growing bigger”, and turn Chinese enterprises into “world-class, globally competitive firms”. It also said that the Party will work to consolidate and develop the public sector while encouraging, supporting, and guiding the development of the non-public sector. This is encouraging, however it remains to be seen how SOE expansions will not crowd-out private investment, how to improve SOEs’ returns on investment, and through what mechanisms entrepreneurship and innovation in SOEs are encouraged.

China’s private sector contributes 60% of total GDP, 50% of tax revenues and 80% of employment opportunities. Yet the sector’s growth peaked in 2011 and plunged in 2016 to a low level. The 19th Party Congress report calls for “supporting the growth of private businesses”, and doing away with regulations and practices that impede the development of a unified market and fair competition. While all these measures are in the right direction, time will tell how effective they are.

After rapid growth for over two decades, foreign direct investment (FDI) into China has stalled recently, standing at US$126 billion in 2016. In the first nine months this year, FDI fell by 3.16% year-on-year, according the Ministry of Commerce. There are many reasons for the decline, such as labour-intensive manufacturing companies moving to other low-cost neighbouring countries, but a key reason is the accumulated “promise fatigue”, where many government commitments to further open up to the world and level the playing field are not followed through.

The 19th Party Congress report reaffirms that China will not close its door to the world and will only “become more and more open”. It commits to adopt policies to promote high-standard liberalisation and facilitation of trade and investment, significantly “ease market access”, and “protect the legitimate rights and interests” of foreign investors. “All businesses registered in China will be treated equally”, the report declares. Now that these issues have been given such high political prominence, hopefully the situation will significantly improve in the coming years.

The report also calls for “developing new ways of making outbound investments”, promoting international cooperation on production capacity, and forming globally-oriented networks of trade, investment, financing, production and services. It clearly states that the Belt and Road Initiative will be pursued “as a priority” and investment in these regions is likely to grow further.

So while there were perhaps no real surprises coming out of the 19th Congress, there were for business some encouraging noises and initiatives–the gathering pace of SOE reform, improved market access and fairer treatment for foreign companies, commitment to the Belt and Road Initiative and an increased focus on environmental protection and improving people’s livelihood. Only time will tell which of these initiatives will bear fruit first and when…but time is something that General Secretary Xi does appear to have on his side.

Richard Oldfield leads all market-facing activities, initiatives, and strategy. Prior to his current role, Richard was a member of the UK Executive Board for five years during which he was Head of Clients and Markets and latterly Head of Strategy and Communications.  Richard also led the UK firm’s Banking and Capital Markets Assurance practice and sat on the Assurance Leadership team. Read more


Why the eyes of global business leaders will be on Beijing this week

Author: Richard Oldfield, Global Markets Leader  Richard-oldfield

As the leaders of the Communist party in China gather this week in Beijing for the 19th National Party Congress, business leaders around the world will be focused on President Xi and his colleagues, watching and waiting for any indication of the future direction for the Chinese economy and the climate for investment.

In a world of rapid change, political shocks and fluctuating economies, many have come to view China as a steady ship and a reliable engine for economic growth. While the Congress is not known for setting out detailed policy announcements, there is an expectation that President Xi will, when he addresses the meeting, set out his agenda for the next five years and cement some of the key policies and reforms that he has put in place since becoming leader of China in 2012. Policies that have fostered an environment that has allowed businesses to grow and thrive As China forms its political leadership for the next five years, the key questions on the minds of business leaders around the world will be:

  • Will China remain committed to opening its markets and economic reform?
  • What are the possible future policies on investment both by foreign companies in China and outbound investment by Chinese companies?
  • What direction will future Chinese monetary policy take?
  • And what policies will be put in place to boost infrastructure, urbanisation and sustainable development - in particular the Belt and Road initiative.

How many of these questions will be answered by the end of the session remains to be seen. But as we prepare to listen to President Xi’s thoughts on the future direction of China, I would encourage you to take a look at our thoughts on:

The other big question for business is what future role China will play in world affairs and in particular on trade, given the more domestic focus of the Trump administration. While we may not learn much detail this month, based on previous speeches by President Xi the expectation is that China will remain very positive on the benefits of global trade.

While this month the world will be looking at Beijing, next month the world’s gaze will turn to Vietnam where heads of state from the Pacific region, including both President Xi and President Trump will gather to attend the annual meeting of Asia-Pacific Economic Cooperation (APEC) leaders and give us their views on regional and world trade. It’s going to be an interesting couple of weeks.

For PwC’s views on the upcoming APEC meeting please take a look here.

Richard Oldfield leads all market-facing activities, initiatives, and strategy. Prior to his current role, Richard was a member of the UK Executive Board for five years during which he was Head of Clients and Markets and latterly Head of Strategy and Communications.  Richard also led the UK firm’s Banking and Capital Markets Assurance practice and sat on the Assurance Leadership team. Read more


Tomorrow’s world: a revolution begins

Author: Richard Sexton, Global  Assurance Leader, PwC

A fluid, inclusive information system is taking shape Richard-sexton

Before any revolution, a tipping-point arrives: an inflexion point where a set of apparently separate developments come together and align to make radical change inevitable. In my view, we’re now at such a point in the world of corporate reporting and assurance.

Why do I say this? To explain, let me begin by looking at the current landscape of company information – and then at where today’s developments are taking it.

As we all know, we’re living and working in an increasingly complex and fast-moving world of decisions, risks and opportunities. It’s also a world in which management teams have more and better data and information than ever before with which to manage their businesses and respond to stakeholders’ interests. They’re accessing data from an expanding array of internal and external sources, and synthesising it to develop fresh insight for decision-making.

A growing proportion of the data that management teams are using is now generated outside their company and beyond its control. And this same information is also available to people outside the company including customers, investors, suppliers, owners and society as a whole.  They are also drawing on this information to make their own decisions and put management teams under intensifying scrutiny, about issues ranging from strategy to ethics, and from environmental impacts to what factors really drive their decision-making.

Management teams are responding to this scrutiny by using a broader range of data in managing their businesses. The reporting of this information combined with the growing availability of company-related data generated by sources from outside of the company, is putting today’s system of reporting and assurance under increasing strain, pulling it in directions undreamt of when it was developed over 100 years ago.

In my view, all these shifts are now combining to create one irresistible force for change. Because what companies and their stakeholders need today is a new solution to the information challenge: one that provides management teams with information to manage their businesses more effectively and responsibly, while also enabling stakeholders to access the right types of credible information to make decisions with confidence.

What’s more, such a solution is starting to take shape. What we at PwC can see emerging from today’s state of flux is an interdependent network of systems – an “ecosystem” of information and trust – that will be broader, more fluid and more inclusive than any before.

The ecosystem will be powered by technology and fuelled by data. It will be capable of adapting to future advances in technology, managing and sharing multiple sources and types of data and information, and fostering more balanced decision-making that benefits the system as a whole. And – as the image shows – it will include an optimised form of today’s system of financial reporting and assurance.

The evolution of the ecosystem

Blog image

The transition to the ecosystem is already underway, with many of the required components in place and various participants taking steps to accelerate its development. To find out more about what it’ll mean for your business, download our new point of view paper. I’m sure you’ll find it a riveting read.

Whatever role your business may ultimately play in the ecosystem, its emergence sounds a call to action that you cannot afford to ignore. We think all companies and stakeholders should prepare now by taking steps to plan and secure their future position in it.

  • What relationships are important for you to establish or grow?  Do you need to establish more permanent bonds?
  • Who else is generating data on you and how reliable is it? Can you work to improve the quality of the data and help people put it in context?
  • How can you help people to use all the data available on you and your company’s impact more effectively in decision-making?

And there’s no time to lose: early adopters will gain a competitive edge – while laggards will face a battle to catch up. The choice is yours.

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



Untangle the perils from the promises of Agile Project Delivery

Authors: Chris Oxborough, Partner and Dr Andrew Schuster, Director, PwC UK’s Technology Risk practice

Organisations are having to cope with the need to adapt or radically change operating models to meet the demands of a rapidly changing market place. More than ever before, they need to be increasingly flexible to succeed in today’s evolving landscape of digital change.  As a result, many project managers are turning to Agile Project Delivery (APD) methods as a way to deliver the technology-enabled changes that are needed to help their organisations thrive.

What is unique about Agile Project Delivery?
Agile Project Delivery strives to deliver products through disciplined, proven practices and allows for adjustments based on continuous stakeholder and customer feedback, thereby increasing speed to market. It is a value-driven approach that can give organisations the capacity to deliver high-priority, high-quality work and create lasting meaningful relationships with stakeholders. APD differs from traditional project delivery in four fundamental ways (see table). Four values WEB
Embedded into every facet of APD, these four values set the tone for a successful result through a change in cultural mindset, incremental working prototypes, stakeholder collaboration and readiness to respond to change. They shift the emphasis away from delivering the project by following a detailed pre-established plan to working with people to deliver meaningful outputs more gradually.  This approach tends to lower risk as it provides the opportunity to respond early in the delivery lifecycle. Traditional project delivery has high visibility at the beginning and end of a project. Agile, on the other hand, aims to reduce and mitigate risks through its ongoing visibility and continuous improvement approach.

Is Agile right for you? Its perils can outweigh the promises
Although APD can introduce possibilities for improving successful delivery, it can also introduce perils for your organisation. For example:

  • there must be consistently high levels of senior decision maker involvement throughout delivery, which can take time away from other priorities
  • team resources must be highly engaged and available, which may divert resources and funding from other work
  • the APD environment must operate within a mature and stable governance context, otherwise it loses its flexibility and cannot operate as intended.

If your organisation is not able to create an environment where Agile can operate well, you may want to consider alternative project management methodologies. If, however, the promises are compelling and the perils are managed, APD may be right for you. 

Assuring Agile Project Delivery
Achieving the full value from Agile Project Delivery requires continuous planning and a commitment to proactive and embedded assurance as part of an Agile transformation.

Organisations that successfully employ ADP methods ensure they have the right governance and controls in place. You must make your organisation ready before you embark on APD. To do this, leading organisations develop a framework to take into account a number of factors that consider the principles of good project management and Agile methodology practices. This includes:

  • Assurance to management, sponsors, IT, risk teams, and internal audit on Agile governance, controls, culture and change management
  • Safeguards to the delivery team and internal audit so that they can be effective and enable Agile
  • Guidelines for building a corporate Agile Centre of Excellence that reinforces the governance and culture around the methodology
  • Confidence that the fundamentals of Agile are embedded into ways of working such as risk management and training.

Our Agile Delivery Confidence Framework can help organisations make assessments against these essential elements of project management, governance, cost, and measurement of value delivery. Find out more in Agile Project Delivery Confidence: Mitigate project risks and deliver value to your business. The paper explores how you can create value for your organisation by building the right capabilities, unleashing your potential and gaining confidence to deliver the best product to market, while minimising delivery risks.

  Chris OxboroughChris Oxborough is a partner in PwC UK’s Technology Risk practice. In this capacity, he brings together a broad set of technology risk capabilities including data and analytics, cyber, strategy and transformation, technology operations and integration and emerging technology capabilities.

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AndrewDr Andrew Schuster is a Director in PwC UK’s Technology Risk practice, a role in which he focuses on providing strategy and transformation assurance to a range of clients. He also drives the development of global and national propositions and capabilities.

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Data – are you maximising one of your most valuable assets?

Author: Jennifer Ho, Global Data & Analytics Risk Assurance Leader, PwC Jennifer Ho_9908

Decision-makers today are faced with an ever-evolving inventory of risks and there is an increasing need for better data information so organisations can take action.  But, what data is needed to do a better job at identifying emerging risks and how can business leaders tackle this head on?

The results of our 20th Annual Global CEO survey tell us that CEOs are ploughing investment into innovation – and are focusing on boosting talent in the digital and technology space to capitalise on new opportunities. The next generation of cognitive computing and programming applications will fundamentally transform the ability of users to correlate and connect data in ways never before imagined.  With big data, cloud computing, governance, compliance and Artificial Intelligence, risk managers will be able to gain advantages from capturing, extracting and transforming data to perform risk assessments, stress tests and risk scenario analyses.

The need for good data has never been greater

Companies in all sectors are seeking consistent, credible and trustworthy data to make faster and well-informed decisions.  The demands of big data and data analytics are creating a world where data needs to be shared in new ways.   As a result, data is one of the most valuable assets a company possesses.  Yet many companies fail to unlock the full value of their data because they manage it in a fragmented fashion.  Often, organisations lack a standardised and coordinated approach to data governance, management and analytics.

Future risk technologies will use this evolution in computing to enhance the automation of traditionally controlled activities, such as the financial statement audit. This will form the basis for effective information, communication, monitoring and related processes - critical for an organisation to effectively manage risk management.

Advanced technological platforms that can address complex situations are currently characterised by ambiguity and uncertainty. Cognitive capabilities including data mining, language processing and machine learning are supplementing traditional analytics and being applied against massive data sets to help find indicators of known and unknown risks.


What’s in it for executives? 

Many companies are getting into the action on big data with existing resources and making the investments in technological platforms, business intelligence, data mining and others.  But the essential first step is to think about the critical business issues first.  For example, is it to improve product profitability, customer segmentation/analysis, supply chain optimisation, financial performance management, workforce performance and alignment, or for regulatory compliance?  Whilst big data means different things to different people in a company, the focus of big data should be all about making faster, smarter and more confident business decisions.   

There is an infinite amount of data out there, but organisations often suffer from time and resource deficits to perform comprehensive data analytics. Therefore, once the executive team agrees on the critical business issues, then – and only then – should they consider and analyse the data sources that will be most appropriate to help them solve these key issues.  This focused approach to data analytics should help to get better actionable insights.

Jennifer is the Global Data & Analytics Risk Assurance Leader based in Hong Kong. She also leads PwC China's Data and Analytics team. She has extensive experience in providing data analytics to clients to enhance their management and compliance reporting; improve business processes and internal controls; and gain operational efficiencies. She graduated from University of Waterloo in Canada with a first class honours degree in Master of Accounting and is a member of the CICA and HKICPA. She is also a CISA and CRISC and has attended Executive Leadership program at INSEAD Business School.