PwC US Highlights Nine Disruptive Forces CEOs Need to Consider

By Peter Bernstein October 10, 2013

For those of you who follow my postings, you are hopefully at this point not just aware but in agreement with my characterization of the times in which we live as “The Age of Acceleration”—where the only constants are change and the speed at which it is increasing. In short, disruption is now a way of life.

The reason this is pertinent is because management and consulting firm PwC US is out with a new report that you may wish to spend some time with, The new digital ecosystem reality: Nine trends rewriting the rules of business.  I must admit that what got me to read the report in its entirely was a pullout quote that goes as follows:

“If change was as easy as a directive, then the companies that made 1999’s Fortune 500 list would not need to say goodbye to 238 of their peers a mere 10 years later, a change of almost 50 percent from the 1999 Fortune 500 to the 2009 Fortune 500.”

In a word, WOW!

It should be noted before going into more details about the nine trends in the report that PwC strongly states that they are not mutually exclusive. In fact, they say the trends are too inter-related to be tackled with an independent strategy. PwC therefore is recommending two complementary strategies, one targeting the short-term trends and the other targeting long-term challenges.


Image via Shutterstock

“Technology CEOs face the dual challenge of having to understand the disruptions for their own business, but they also need to guide their customers or risk becoming irrelevant,” said Tom Archer, PwC’s US Technology Industry Leader. “With the pace of change occurring faster than ever, technology executives must be prepared to pivot their strategies to address the implications of cloud, social and mobile on their business, fend off new market entrants and adapt to changing customer behavior and spending.”

This is the first in a series of perspective papers. It analyzes the key technological, economic and political trends and the imperative for technology CEOs to, according to PwC, “Adapt their internal DNA as they move to new revenue and cost models brought on by the disruption.”

The nine trends watch list

So what are the trends? Read the synopsis PwC provides and consider.

1.       Disruptive innovation

Radical shifts in technologies translate to radical shifts in business models. In order to prepare, technology CEOs should consider a variety of steps, including: developing an appropriate innovation strategy that ties in with the corporate vision and company capabilities; determining the best ways of fostering and sustaining organic innovation; identifying opportunities for growth; determining strategic investment bets and identifying appropriate partners for highly integrated digital ecosystems.

2.       Managing cost and complexity

According to PwC, in terms of IT complexity, more than half of all companies are turning to the cloud to reduce expenses. They must also adjust their operating model to increase agility through focus on innovation both in technology and processes in order to lay the foundation for a more-efficient cost structure. Additionally, companies are using technology to get better information faster and cheaper through using social analytics within the connected experience they have with customers and creating a connected experience with suppliers and partners through digital ecosystems.

3.       Convergence

The convergence of consumer and corporate capabilities has forced most companies across industries to become technology companies. Many companies will need to increase the pace of their customer communications in order to meet these increased expectations.

4.       Consumerization of IT

Employees have become accustomed to the ease of accessing information online, whether through mobile devices, tablets or personal computers. Companies will need to develop enterprise applications that are easier to learn to improve productivity and those that are easier to use on smartphones and other mobile devices.

5.       Changing dynamics between developing and developed countries

Technology companies will likely be looking to emerging markets for new business opportunities. Therefore, technology CEOs should think about rationalizing their global operations and simplifying and standardizing business processes and products so that development can be applied across any region, and also tailored for a particular region.

6.        Social media

According to PwC surveys, 90 percent of technology companies are focusing on strengthening relationships with customers and clients by increasing engagement and 84 percent are enhancing their focus on social media in search of new customers. Companies can use social media to interact on a regular basis, to deliver information and advice, and thus potentially increase the value of the experience.

7.       Data explosion

Technology companies must be able to accommodate input from social media with input from sales results in order to harness the broad flow of information. This requires developing a variety of systems, for example: data warehouses, analytic tools, storage systems and business intelligence.

8.        IP and data protection

Being able to compete in the global world of technology requires maintaining a balance for technology companies. Companies need to ensure that their systems are accessible to their friends (i.e. employees and business partners) and unavailable to their competitors.

9.       Changing political and regulatory landscape

Technology CEOs have already been subjected to extensive regulatory conditions, therefore they must be prepared to track manufacturing and product information, and to be audited on a regular basis.

To address these nine trends, PwC recommends that technology companies focus on extending their own digital transformation across their business units, including manufacturing, supply chain and finance.  Digitization supports automation, which decreases response time and increases the accessibility of information which in turn enables companies to be more agile and able to respond to change faster. 

“In today’s reality, virtually every company is transforming to become a technology company as technology is creating the value differentiation in every industry with the digitization of product and service delivery. Businesses across industries now require technology providers to bring them new capabilities or platforms necessary to serve their customers,” added Archer.

The interesting thing about the list is its familiarity. In fact, this is a list that CIOs are more than familiar with since they live it day-to-day. What is different is the target for the message, i.e., CEOs. What the paper illustrates is that no CEO in any business today can or should be (to use my own term) “digitally deaf.” Clearly, the impact of not just innovation but the speed at which it is changing historic relationships—between enterprises and their customers, supply chains, business partners, and particularly with their customers—is breathtaking. The impact on businesses’ ability to create and sustain competitive value and advantage has been profound and a lack of digital dexterity has obvious and potentially catastrophic consequences. 

We hear all the time that the trends should be your friend. The big trend here is that CEOs need to be digitally adept, and understand what PwC has correctly pointed out in terms of all business being technology companies and that two types of strategy development and execution are going to be the keys to success going forward. This is no longer an IT problem, or merely about the now cliché phrase of “getting IT better aligned with business objectives.” Digital disruption is an enterprise-wide challenge and CEOs need to be more than mindful of the speed at which things are happening, they need to be proactive instead of reactive, and accountable along with delegating responsibilities. 

How disruptive is disruption? The short answer is, “Very.” In fact, it may take just five years for the Fortune list to turnover 50 percent instead of 10. It would be unfortunate to be one of the companies whose name no longer appears because of a lack of attention and accommodation of major technology trends, the shifts they cause. Disruption actually can and should be a good thing.

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