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Digital, Data, Disruption in DealsJohn Sviokla, PwCAndrea Fishman, PwCAnand Rao, PwC

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Deals! Deals! Deals!Warming Economy will Boost 2015 M&A – Wall Street Journal, Jan 16, 2015

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Polling Question: With new technologies providing organizations access to significant amounts of data, this has created a new era of disruption and is impacting organizations in all industries. In which way has this impacted your organization the most?

Volume, Variety, Velocity, and Veracity of Data is driving the ‘Big Data’ Revolution

10%

10%

15%

18%

23%

5%

15%

3%

A. Aqui-hire - (buy companies to gain skills)

B. Organizational change - - new roles , remapping of accountability

C. New techniques (e.g., machine learning), new technologies (e.g. Data), and new skills (e.g., Data Scientist)

D. New focus on data security and risk management / mitigation

E. Improved insights from data and analytics into customer

F. Needs / expectations

G. New partnerships or ways to interact with customers

H. I don’t know.

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Deals were larger and also spanned all sectors globally

2014 was a huge year for M&A and private equity - Fortune Magazine

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Deal activity was strong across all areas of capital raising

M&A$3.5 Trillion in M&A

activity globally – 47% increase from 2013

Private Equity $562 billion in global private equity – 43% increase from 2013

Venture Capital$48.3 billion in VC

funding – 61% increase from 2013

Crowdfunding$16.2 billion in

crowdsourced funding – 167% increase from 2013

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Race to dominate Personalized Content Delivery Anywhere,

Anytime on Any Device

Media

AT&T + Direct TV

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Race to dominate Precision Agriculture & increase

productivity significantly

Agribusiness

Monsanto + The Climate Corporation

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Race to dominate Personalized Medicine &

Commoditization of Drugs

Healthcare

GSK + Novartis

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Race to dominate Robo-Advice and guide advisors, investors, and institutions towards a secure future

Financial Services

Northwestern Mutual + Learnvest

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DisruptionDisruption across all industries is driving the deals activity

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Common drivers across all disruptions – Digital, Data & Analytics

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The world is in beta.Technologies, trends, markets and economies are in a constant state of flux.

Acquiring or having access to new technologies,

techniques is essential

Acquiring and motivating your talent becomes your

greatest asset

Competitive advantage is transient

Speed & Scale are critical for a sustainable

business model

Right Now

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79%Of smartphone users are using devices to shop at least once a month

10%Higher revenue growth forecast for companies who prioritize innovation to a greater extent than their peers

50 BillionPredicted number of connected devices by the year 2020

79%Of enterprise IT spend is outside of the CIO’s budget

Disrupt or be disrupted?

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Disruption in Advice

Digitization is transforming how people discover, engage and transact with business

in VC funding for Robo-advisors in 2014

$290M of Adults have Mobile Devices within Arm’s

Reach 24/7

91%Mobile Internet Users by

2020

3.8 BillionInternet Users by 2020

5 Billion

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Disruption in Healthcare

Genomics, wearables, ingestibles, and nanotechnology are making Personalized Medicine

a reality

per year in Personalized Medicine revenues

$286 Billion in smart wearables

global market by 2020

$22.9 Billion Unit sales of wearable

devices by 2020

200Mfor genome sequencing

in 15 years

$100M-$1K

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Data & AnalyticsDigitization is leading to increased volume, velocity and variety of data requiring advanced analytics to draw insights

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Insights driven by - Big Data, Analytics, Technology and Mindset

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Big Data - New sources of data…

…structured, unstructured, audio, image, video, sensors, and social

Volume, Variety, Velocity, and Veracity of Data is driving the ‘Big Data’ Revolution

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Big Data Analytics - New Analytic Techniques……backward & forward looking, statistical & computational, art & science

Descriptive, Diagnostic, Predictive, and Prescriptive Analytics are enhancing the value of Data

Graph Networks

System Dynamics

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Big Data Technologies - New emerging technologies

…distributed stream processing, GPU’s, NoSQL databases

Cloud computing, open-source software, multi-core processors, hybrid architectures are

fuelling big data technologies

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Precision Agriculture

• Sensor, satellite, weather station, and visual data

• Bayesian learning, monte-carlo simulation

• Cloud infrastructure, agile (3 wk) research & analytics

• Crop insurance to yield management

• Elimination of claims process & real-time exposures

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Precision Medicine

• Sensor, electronic health data, genomic, proteomic data

• Cognitive computing, NLP, deep learning, bio-informatics

• Digital DNA sequencers, mobile diagnostics, ingestible devices

• Outcome based care, personalized medicine

• Preventative (well-being) vs Curative (disease)

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Robo-Advice

• Event data, aggregation, sensor, unstructured, video

• Data enrichment, agent-based simulation, behavioral economics

• Cloud infrastructure, digital, social, and mobile devices

• Cost-effective, sophisticated, personalized advice

• Cost-effective, sophisticated, personalized advice

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So what does all this mean?

Digital Experience

Talent Manageme

nt

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Digital ExperienceDigital is transforming customer experience, operations, and back-end processes

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Today’s most successful organizations are known for more than just great products.

They create amazing customer experiences.

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People don’t see the world in silos

For them it’s all one connected experience

Connected Experiences Are Driving Transformations in How Companies Evaluate Deals and Growth Strategies

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New Deals Driven to Heighten

CustomerExperience

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They bought a bunch of companies that “help us

grow our expertise to build best-in-class eCommerce technologies and talent”

Retail

Walmart + Small Society, One Riot, Kosmix, etc..

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Enables in car connectivity for mobile devices and app

developers

Automotive

Ford + Livio

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Personal shopper to hand select clothing/accessories

(web based)

Personalization

Nordstrom + Trunk Club

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Third Era of Digital

Disruption

Merging physical and digital Entering the DigitalBusiness Era

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Made for 1.

78% of consumers express a desire for some kind of content personalization

Here. Now.

People buy online because it’s 24/7, quick and doesn’t require a

trip.

Omni-Everything

By 2025 over 80% of retailers are “seamless”

in go-to-market,fully integrated and 360

omni-channel

Customer Experience is being Transformed by Three Central

Themes

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Tomorrow

Today

Made for 1

Personalized Mobile Stores

Habit Trackers Retailer App integration

Artificial Intelligence Personal Fabricators Printed Food Facial Recognition Shopping

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Tomorrow

Today

Here. Now.

Evolving Retail Formats One-Click Ordering On-Demand Delivery

Drone Delivery On-Demand Personalized Manufacturing

Auto Restock Magic Text Concierge Auto Password Reads

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Tomorrow

Today

Omni-Everything

Image Recognition PwC Total Retail Study Beacon Enabled Auto-Checkin

Wearables Snap to Buy Omni-Currency

vv33% of shoppers research online before buying in store . .44% of shoppers compared prices on their mobiles while in store

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How do you create

that add value beyond the product itself?

Experiences

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This changing journey impacts organizations

Transition from

• Siloed functional teams

• Tactical execution

• Command and control

• Clear escalation, empowerment and communications protocol

• Centers of excellence

Executive management

Middle management and support staff

Front-line staff

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From hierarchical to customer centered

Transition to

• Customer-centric organization

• Agile & collaborative by design

• Empowered and engaged employee base

• Operationally optimized

• Responsive

• Communities of practitioners

Executive management

Middlemanagement

Front-line staff

Support staff

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Why is digital transformation happening in the marketplace?

Customer behavior is changing…

•“B2C-like” experiences expected

•Non linear decision process and online influencers playing large role

•Look for digital self service tools for 24x7 convenience

…and new market entrants are disruptive

•Small nimble competitors coming to market with a “digital-first” mindset

•Competitors do business online with minimal direct sales force costs

•Increasingly flexible payment, billing and fulfillment methods for digital goods

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Technological advances fueling changing customer behavior

of CEO’s say ‘Technological advances’ will be the top driver transforming their business in the next five years.

28

39

58

69

86

Technological advancesDemographic shifts

Shift in global economic powerResource scarcity and climate change

Urbanization

Source: PwC CEO Survey, 2014

Trends that will transform business next five years (%)

Where companies are investing to grow

Wearable computing

3-D printing

Battery and power technologies

Robotics

Sensors

On-demand business and technolog services

Cybersecurity

Mobile customer engagement

Socially enabled business process

Business analytics

0 5 10 15 20 25 30 35 40 45 50

6

11

15

15

20

25

39

39

41

44

%

86% Digital IQ

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What does the Internet of Things really do?

Under the age of 16

The Internet of Things provides the data and services that creates an ecosystem that provides information and intelligence that drives contextual awareness about yourself and/or your surroundings.

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Why does the Internet of

Things matter for Business?IoT is the “extension of the Internet to the physical world. The Internet has transformed digital industries, while the Internet of Things will transform physical industries.”

• “In a manufacturing plant, assets are affixed with wireless sensors. Using remote monitoring technology, plant managers locate anxd track production inventory on the plant floor and within the supply chain in real-time.”

• An automobile’s systems and subsystems produce information about a cars wear-and-tear, performance, and rider driving patterns. The data can be used for monitoring and maintaining the car remotely.

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What the “experts” are saying about the Internet of Things

“50 Billion Devices connected by 2020 – a $19 Trillion dollar industry.”

“If you look back a decade from today at the impact of the Internet of Everything, I predict you will see it will be five to 10 times more impactful than the whole Internet has been today.”

John Chambers, Cisco CEO

“Growth opportunities are in the overlap of Systems of engagement, Systems of record, and systems of insight.”

David Gosen, Nielsen European Managing Director MWC 2014 Keynote

“2013 $1 Billion total investments into IoT companies and $3.5 Billion in M&A activity in 2014.”

Carlos Morales Telefonica, Global Managing Director of M2M MWC 2014

“IoT is moving to higher value by delivering actionable insights in the physical world – cloud based big data services and industry analytics will play a key role”

Bob Fox, IBM Global Business Services - MWC 2014

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Potential Business Model Impacts: Best Practices

Under the age of 16

When we look to IoT innovators and first-movers we see a recurring common theme of best practices observed across sectors

Automotive: Tesla

best practice: push data to the cloud to capitalize on the level analysis, process

optimization and scale enabled by distributed intelligence.

Healthcare: AliveCor

best practice: build additional value for your IoT platform by integrating with

complimentary platforms via open standards.

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Networked Business Model Canvas – Connected Personal Health Monitor

Under the age of 16

Appendix

Key Partners

• Insurance companies

• Hospitals & Clinics

• Doctors

Cost Structure

• R & D for medical devices

• Software platform development

• Cloud-based services hosting infrastructure

Revenue Streams

• Sale of aggregate, non-personally identifiable health data

• Sale of devices

• Sale of varying service levels enabled by the interconnectivity of devices to patients, doctors, hospitals and clinics

Key Activities

• Manage specialist network

• R & D for connected medical devices

• Develop new services

Value Propositions

• Scaled Expertise –healthcare specialists not constrained to a physical location for monitoring or even examining a particular ailment specific to their specialization.

• Ongoing Monitoring – continual monitoring of patients’ vital signs allows for more timely identification of anomalies and faster treatment if identified.

• Hospital Prevention – ongoing monitoring minimizes unneeded and expensive hospital visits.

Customer Relationships

• Online

• Via physicians

Customer Segments

• Insurance companies

• Hospitals & Clinics

• Doctors

Key Resources

• Specialist network

• Cloud platform

• Connected medical devices

Channels

• Primary Care Physicians

• Specialists

• Clinics

• Online

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Get ahead ofcustomer

expectations

Consider new partnerships

Transform your human capital

Where do you go from here?successful organizations

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Talent ManagementAcquiring, nurturing, and retaining talent is the biggest challenge to staying ahead of the competition

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Organizations need to find and keep talent

ProducerPerformer

Organizations need to find — and keep —at least a few exceptional Producers

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Mythic blue oceans..

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Evolution of a Billionaire

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Years of Experience1 - 3 4 - 6 7 - 10 11 - 15 16 - 20 20+

49%66%

previously worked for large company

63%of executives say retainingtop talent is a challenge

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Billionaire Dynamic Duos

Solo Dynamic Duo 60%

self-made billionaires in our sample who succeeded when paired with a

performer partner

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“Producers” think and act in distinctive ways that enable them to create massive new value

Empathetic Imagination

Patient Urgency

Inventive Execution

Rational Risk Takers

Producer/ Performer

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How can organizations attract, cultivate and retain their high potential talent

Recognize a task that

requires a producer

1Hire, motivate,

retain and inspire

producers

2

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Four Ways to Attract & Cultivate Producers

Organic Development

Catalyst Hires

Mergers & Acquisitions

Get Produced

1 2

3 4

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Identifying producers and performers

• What are the most important trends, and what opportunities will that create in your industry?

• Have you ever creatively configured an idea to get it done faster, cheaper, differently?

• Have you ever experienced a real failure, and what did you learn?

• Describe an opportunity in your business that you are passionately interested in pursuing.

• What is your track record of bringing ideas, people and resources together in a new way to create new value?

• If you were given 20% of your time to work on an idea what would it be?

Sample Interview Questions:

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Draft

Thank You

© 2014 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC refers to the US member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

* Data sources via similarweb