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The better the question. The better the answer.�The better the world works.
Marcie MerrimanAdvisory | Consumer Products | Strategy
Move Over Millennials: How Generation Z is
Shaping the Future
The edge of a revolution
1%According to Cisco’s CTO,
Padmasree Warrior, only 1 percent of what could be connected in the
world actually is
35Days for a new technology to reach
a critical mass of 50m users
50bnInternet connected “things” by 2020** including sensors, RFID
chips etc.
Mobile
Social
Cloud Computing
Internet of Everything
Big Data
“We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before”
World Economic Forum
Source: http://www.weforum.org/agenda/2016/01/the-fourth-industrial-revolution-what-it-means-and-how-to-respond
A new generation emerges
Gen ZMillennials
Gen Z
Confidential – All Rights Reserved – Ernst & Young LLP
PewDiePie
#1 YouTube 53MSubscriptions
*Source: YouTube **Source: Variety Magazine Survey 2014
#2 Most influential celebrity **
Confidential – All Rights Reserved – Ernst & Young LLP
Gen ZMillennialsMark Zuckerberg
Justin Bieber
Taylor Swift
Lady Gaga
Steve Jobs
Smosh
PewDiePie
The Fine Brothers
KSI
Ryan Higa
Top influential celebrities
Source: Variety Magazine Survey 2014Source Huffington Post 2014
Confidential – All Rights Reserved – Ernst & Young LLP
Confidential – All Rights Reserved – Ernst & Young LLP
Gen Z Millennials
Born into a volatile and
unpredictable world
Confidential – All Rights Reserved – Ernst & Young LLP
• Oldest in kindergarten on 9/11
• Constant state-of-war
• Global recession
• School Violence
Feel that school
violence
will have the biggest
impact on their
generation
Source: Cassandra Report, 2013
43%
Confidential – All Rights Reserved – Ernst & Young LLP
63%
Consider
themselves savers
*Sources: Forbes, Viacom, Cassandra Report, JWT 2015
Savers
Creating a generation of ambitious realist
Think they are more
driven than their
peers
Driven.
80%84%Agree, “It’s really
important to be
really prepared
and have a plan.”
Prepared
89%Spend free time
productive and
creative rather than
just hanging out
Uber-
productive
Confidential – All Rights Reserved – Ernst & Young LLP
Confidential – All Rights Reserved – Ernst & Young LLP
56%achieved
workplace equality 87%
racial discrimination
still exists
77%views different than parents generation
*Sources: Pew Centr Research; Source: JWT, 2015
Confidential – All Rights Reserved – Ernst & Young LLP
Source: MTV Research, 2016
Technology helps Gen
Z understand people
who are different from
themselves
A new generation emerges
Millennials
Gen Z• Persistent
• Entitled
Confidential – All Rights Reserved – Ernst & Young LLP
• Innovative
• Skeptical• Creative
• Optimistic
• Dependent
• Self-reliant
Their world
Confidential – All Rights Reserved – Ernst & Young LLP
Their world
Confidential – All Rights Reserved – Ernst & Young LLP
changed
us
Validated
Sheltered
Helicopter-parents
Millennials
Protected
Confidential – All Rights Reserved – Ernst & Young LLP
Aware
Independent
Consultative
Stealth-bomber-parents
Gen Z
Prepared
Confidential – All Rights Reserved – Ernst & Young LLP
Spending power
of parents say their
children influence
family spending and
household purchases
93%
Source: Cassandra Report, 2015
Confidential – All Rights Reserved – Ernst & Young LLP
In m
illio
ns
Your future co-worker
0
10
20
30
40
50
60
70
1995 2000 2005 2010 2015 2020
Confidential – All Rights Reserved – Ernst & Young LLP
Millennials
54.5MM
Gen X
50MM
Baby Boomers
39.1MM
Gen Z
18.3MM
Silent Generation2.1MM
Confidential – All Rights Reserved – Ernst & Young LLP
Over the past several years, educators, employers,
researchers, retailers and the like have spent significant
time and resources dissecting the Millennial mindset. But
the time has already come to focus to Gen-Z, which
promises to be just as, if not more, influential.
- Goldman Sachs
Source: Goldman Sachs, “What if I told you Gen Z is more important than Millenials?” December 2015
Confidential – All Rights Reserved – Ernst & Young LLP
The future is already here
– it’s just not evenly
distributed.
- William Gibson
The better the question. The better the answer.�The better the world works.
David JensenAdvisory | Strategy | Disruptive Innovation
Innovation RealizedSpark to Scale
Disruptive Innovation Structured Mischief™28
Disruption: When, not if
2006Renting DVDs from a store is the most convenient way to access entertainment
Marriott is the largest hotelier with 328,000 rooms owned in 2005
Can you split the bill 6 ways?
2016All my entertainment is available streaming and on-demand
Splitting the bill is no longer an issue…
The world’s largest hospitality company ownsno property
Disruptive Innovation Structured Mischief™29
When you think of Disruption, what does it actually look like?
Disruptive Innovation Structured Mischief™30
0
10
20
30
40
50
60
70
1 6 11 16 21 26 31 36 41 46 51 56 61 66
Ye
ars
Actual Results ProjectionsAverage Company Lifespan on S&P Index in years (rolling 7-year average)
By 2020 more than 75% of the S&P 500 will be companies that we haven’t heard of yet - Richard Foster, Yale University
Disruption: When, not if
Disruptive Innovation Structured Mischief™31
How businesses are responding
Disruption Is All Around Us
•What new industries willthere be in 20 years?
•Will your industry still exist?•Where are the opportunities across the borders ofyour industry?
•What will your futurejob look like?
•Who will you work for?•Are you going to be working from home?
•Will you have a boss?
•Where will you live?•Will the term ‘rural’no longer exist?
•Will houses be replaced by skyscrapers?
Alphabet logged more than3 million miles per day in simulation and 10k -15k autonomous miles per week on public streets # of Mega cities
(pop. > 10 million):
• 1970: 2 • 2016: 23• 2030: ~41
The fastest growing urban areas will be mid-sized cities in Asia and Africa
1970
Today
2030
By 2020, Intuit predicts that 40% of Americans workers will be independent contractors
Disruptive Innovation Structured Mischief™32
How businesses are responding
• Most are trying to do something about it…
Secret research and development facility, Google X, to drive disruptive innovation
Sample projects include: self-driving car, Google Glass
Strong ideation process that constantly seeks to identify market evolutions
Leverage existing capital investment and manufacturing
Sample projects: Powerwall, electric cars
A secretive research and development lab, SparqPerformance Center to explore new products and service
Sample projects: VaporMax, Zoom Air, Lunarlon
A subsidiary, Ford Smart Mobility, to design, build, and grow in emerging mobility services
Located in Silicon Valley, with an emphasis on “building human progress”
Disruptive Innovation Structured Mischief™33
How businesses are responding
• …and not even the usual suspects
Opened Viacom Lab to deliver products, platforms and businesses that shape the future of fan experience and engagement
Select projects: ‘Fanufacturing,’ Livestreaming, Experiential Fan Opportunities, and Citia
Seek to push the boundaries of sea fleets by offering innovative products such as surf parks, onboard ice-skating rinks, and cascading waterfalls
Ships designed to create a ‘WOW’ factor that will hook in and keep consumers addicted to Royal Caribbean Cruises
Innovation Centers in major global innovation hubs that partner with R&D and product development leaders, investors, transaction advisers, and consultants
J&J Development Corporation, Janssen Labs, IAME, and EIP
Robust innovation network that includes an Munich Re Innovation Lab, a Chief Innovation Driver, and corporate & VC components
Focus on bringing new products and services to market with sole focus on accelerating development and go-to-market
Disruptive Innovation Structured Mischief™34
EY’s view on Disruptive Innovation
• Today, it is riskier to prioritize your investments around sustaining and adjacent rather than disruptive innovation
By focusing on Sustain and Adjacent innovation investments you’re effectively ‘betting the farm’
The golden 70-20-10 innovation investment ratio is ideal for high performing companies
With Structured Mischief, you can increase the return and decrease the risk even without rebalancing the portfolio
Structured Mischief increases your ability to identify and act upon Disruption Inflection Opportunities (DOIs)
Where to Play
How
to W
in
Disruptive
Adjacent
Sustaining
Serve existing customers and markets
Serve adjacent markets and/or customers
Enter new markets and/or target new customers
Optimize existing products,
resources, and processes
Add incremental products,
resources, and processes
Develop new products,
resources, and processes
“It’s often easier tomake something 10xbetter than it is tomake it 10% better”Dr. Astro Teller, Captain of Moonshots at (Google) X
Disruptive Innovation Structured Mischief™35
010,00020,00030,00040,00050,00060,00070,00080,000
19992000200120022003200420052006200720082009201020112012201320142015
Series1
Su
bsc
rib
ers
(in
th
ou
san
ds)
YEAR
How businesses are responding
• Netflix: Story of a company that successfully disrupted itself on three separate occasions
NFLX Subscriber History (1999-2015)
Netflix goes public as the largest provider of online movie rentals
Founded Blockbuster decline to purchase Netflix for an estimated $100 million.
Management declares a new vision, independent of their DVD subscription, by commercializing the online streaming business for customers
Netflix introduced the first flat-fee DVD rental subscription available online
Netflix launches a series of original content to enable a new future as a top media producer, not only as a media distributor
1999 2000 2002 2007 20111997
Disruption Inflection Points
Flat-Fee DVD Rental
StreamingService
Netflix Original Content
317% SUBSCRIBER INCREASE
Disruptive Inflection Point-driven approach
identifying and creating Disruptive Inflection Points (DIPs) is EY’s answer to driving radical growth in an environment of accelerating disruptive innovation.
MARKETTIMING
CAPABILITIES
PARTNERSHIPS & INVESTMENTS
TECHNOLOGY
RISK TAKING
CULTURE
LEADERSHIP
PURPOSE
DISRUPTION INFLECTION POINTS
DIP
Control
Monitor
INDUSTRY
disruptive innovation: Structured Mischief
A green light tofly the pirate flag
Structured Mischief ™
The management process, mentality, and structure that enable the identification and action on DIOs by having the Right Attitude and Right Preparations, and monitoring the Right Conditions
Benefits:
Drives moonshot thinking and more impactful innovation
Minimizes misses and maximizes the upside of innovation
Is a methodicalway to hedgeagainst disruption
innovation spectrum
our innovation focus is working with clients across the spectrum, with a priority on disruption.
because that’s what the market is asking for.
Incremental Change
AdjacentInnovators
SustainingInnovators
DisruptiveInnovators
RadicalGrowth
Risk Appetite
Core Beliefs
ProductExamples
Low Medium High
Protecting downside Retaining growth
Maximizing upside Exponential growth
Minimizing downsideGrowing incrementally
• iPhone• App Store
• Windows 7• Surface
• Flat-screen TVs• Smartphones
Disruptive Innovation Structured Mischief™39
Example: Innovation Structure & Operating Model
• EY lead a global agricultural organization create their disruptive innovation strategy and activation program
Corporate & Innovation Strategy
Art of the Possible Voice of the
Customer
Outside-In research and innovation workshops create baseline market innovation hypotheses
1) Research and Potential Futures Analysis
2) Future State Operating Model
The operating model hypothesis defines how to operationalize high priority services with people, process, UX tools and IT systems
Operating Model
Corporate Operating Model
3) Innovation Structure & Operating Model
The innovation unit’s organizational structure and operating model was designed specifically to enable cross region learns and crate a culture of accelerated innovation
Innovation Operating Model
Innovation Operating Model
Disruptive Innovation Structured Mischief™40
What is Disruptive Innovation?
Disruptive Innovation is the art and science of creating RADICAL GROWTH by CHANGING THE WAY THE WORLD WORKS
What is Innovation?
Innovation is the art of MAKING HARD THINGS EASY and CREATING NEW VIABLE BUSINESS OFFERINGS
The better the question. The better the answer.�The better the world works.
Maria Rey-MarstonAdvisory |Digital Operations | Analytics
How to serve the
#ConsumeroftheFuture? @MariaReySCM
EY | Advisory
The day everything changed: June 29, 2007
…and we became phy/gital beings
► Physical-Digital interplays
► Seamless experiences in-
store and at-home
► Convenience
► Connectivity
► Recurrence
► Endless channel
experimentation
► Real every-day-low-pricing
► “Automation” of tasks
The phy/gital consumer
The phy/gital consumer
► Physical-Digital interplays
► Seamless experiences in-
store and at-home
► Convenience
► Connectivity
► Recurrence
► Endless channel
experimentation
► Real every-day-low-pricing
► “Automation” of tasks
The phy/gital consumer
► Physical-Digital interplays
► Seamless experiences in-
store and at-home
► Convenience
► Connectivity
► Recurrence
► Endless channel
experimentation
► Real every-day-low-pricing
► “Automation” of tasks
How to serve the
#ConsumeroftheFuture?
Page 51 | Serving the #ConsumeroftheFuture
• How do you find things in the P/D era?
• Search engine optimization (SEO)
• Conversational commerce
FIND
It all starts with
finding what
shoppers look for.
CONSUMEBUYCHOOSE
How do you choose in
the physical-digital
world?
How do you buy in
the physical-digital
world?
How do you consume
in the physical-digital
world?
• How do you choose things in the PD era?
• Recommender algorithms
• Cognitive commerce
• How do you buy things in the PD era?
• Channel hopping
• Brands as platforms for shopper connection
• How do you consume things in the digital era?
• LATTE
• Experiences
• Servitization
The phy/gital consumer and its path-to-consumption
Page 52 | Serving the #ConsumeroftheFuture
Serving the #ConsumeroftheFuture
16routes-to-market to
serve the
#ConsumeroftheFuture
4steps in the path-to-
consumption
2alternatives for every step along the path
and fulfill #ConsumeroftheFuture’s demand in sustainable and profitable ways
Four actions to flex your routes-to-market
Set your innovation priorities
Page 54 | Serving the #ConsumeroftheFuture
01.
LEVERAGE
02.
ENABLE
03.
ENGAGE
04.
SCALE
Four actions to flex your routes-to-market
16
Demand-Driven
Phy/Gital
RTMs
16
Demand-Driven
Phy/Gital
RTMs
01.
LEVERAGE
02.
ENABLE
03.
ENGAGE
04.
SCALE
RTMs leverage technologies in the
digital dome to drive profitable growth and
to connect the enabling network of
assets.
01.
LEVERAGE
02.
ENABLE
03.
ENGAGE
04.
SCALE
16
Demand-Driven
Phy/Gital
RTMs
01.
LEVERAGE
02.
ENABLE
03.
ENGAGE
04.
SCALE
RTM enables key actions of the path-to-
consumption and converts shoppers into buyers reducing friction with phy/gital audiences
16
Demand-Driven
Phy/Gital
RTMs
01.
LEVERAGE
02.
ENABLE
03.
ENGAGE
04.
SCALE
Successful RTMs shape phy/gital
demand by engaging audiences, internal
and external, in memorable experiences
16
Demand-Driven
Phy/Gital
RTMs
01.
LEVERAGE
02.
ENABLE
03.
ENGAGE
04.
SCALE
All solutions deployed to fulfill phy/digital demand must be scalable within a segment, and/or
market, and/or geo
16
Demand-Driven
Phy/Gital
RTMs
How to serve the
#ConsumeroftheFuture? @MariaReySCM
EY | Advisory
Page 63 | Serving the #ConsumeroftheFuture
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