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Thriving in uncertainty Margin improvement in the age of digital disruption Given unprecedented times of uncertainty, Deloitte’s developed a new perspective on margin improvement to help companies thrive. Today’s environment is making it harder for companies to thrive Tried and true approaches to dealing with uncertainty are often failing to move the needle Thriving in uncertainty requires one thing more than ever: agility Agile companies… Corporate profit growth has stagnated since 2012 agility | noun | agil·i·ty Marked by a ready ability to move with quick, easy grace; having a quick, resourceful, and adaptable character corporate profits profit margin Increasing, and seemingly endless, volatility makes it nearly impossible to confidently deploy even five-year growth initiatives July 2008 US financial crisis August 2011 US debt downgraded June 2016 Brexit Nov. 2016 Presidential election See their environment clearly Parsing mountains of data and highlighting what matters Employ multiple strategies at once Understanding when and how to shift among multiple market approaches Exhibit organizational alignment Balancing priorities, goals, and incentives to build a culture of anticipation Understand trade-offs among value levers Developing the right approach in a world where typical margin improvement archetypes no longer apply Embrace the critical technologies required to thrive Making sense of digital disruption in a time of unprecedented and accelerating change Typical margin improvement programs are not as effective as they used to be AND YET Change in corporate profits and margin since 2012 1 Digital disruption helps allow the rapid ascension of new competition and the convergence of industries Typical Fortune 500 company 2 4 6 8 12 14 16 18 10 20 Company A (1998) Company B (2004) Company C (2003) (Founding Year) Company D (2009) Company E (2009) Company F (2011) Company G (2012) Time to a billion dollar valuation 3 US Economic Policy Uncertainty Index 2 1. Federal Reserve Bank of St. Louis Economic Data 2. Economic Policy Uncertainty, News Coverage about Policy-related Economic Uncertainty, accessed May 2017, http://www.policyuncertainty.com/us_monthly.html 3. Brown, J. (2015, December 5). Weekend Edition: Over the Next 10 Years, Fortunes Will Be Made. Retrieved May 26, 2017, from https://bonnerandpartners.com/over-the-next-10-years-fortunes-will-be-made/ 4. Deloitte Cost Surveys: US; LATAM; Europe; APAC of companies fail to meet their cost reduction goals 4 64% of companies pursuing cost reduction in excess of 20% 84% 300 250 200 150 100 50

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Page 1: Thriving in uncertainty - Deloitte US · PDF fileThriving in uncertainty Margin improvement in the age of digital disruption Given unprecedented times of ... US Economic Policy Uncertainty

Thriving in uncertaintyMargin improvement in the age of digital disruptionGiven unprecedented times of uncertainty, Deloitte’s developed a new perspective on margin improvement to help companies thrive.

Today’s environment is making it harder for companies to thrive

Tried and true approaches to dealing with uncertainty are often failing to move the needle

Thriving in uncertainty requires one thing more than ever: agility

Agile companies…

Corporate profit growth has stagnated since 2012

agility | noun | agil·i·tyMarked by a ready ability to move with quick, easy grace; having a quick, resourceful, and adaptable character

corporate profits profit margin

Increasing, and seemingly endless, volatility makes it nearly impossible to confidently deploy even five-year growth initiatives

July 2008 US financial

crisis

August 2011US debt

downgraded

June 2016 Brexit

Nov. 2016 Presidential

election

See their environment clearlyParsing mountains of data and highlighting what matters

Employ multiple strategies at onceUnderstanding when and how to shift among multiple market approaches

Exhibit organizational alignmentBalancing priorities, goals, and incentives to build a culture of anticipation

Understand trade-offs among value leversDeveloping the right approach in a world where typical margin improvement archetypes no longer apply

Embrace the critical technologies required to thriveMaking sense of digital disruption in a time of unprecedented and accelerating change

Typical margin improvement programs are not as effective as they used to be

AND YET

Change in corporate profits and margin since 20121

Digital disruption helps allow the rapid ascension of new competition and the convergence of industries

TypicalFortune

500company

2468

1214

1618

10

20

CompanyA

(1998)

CompanyB

(2004)

CompanyC

(2003)

(Founding Year)

CompanyD

(2009)

CompanyE

(2009)

CompanyF

(2011)

CompanyG

(2012)

Time to a billion dollar valuation3

US Economic Policy Uncertainty Index2

1. Federal Reserve Bank of St. Louis Economic Data2. Economic Policy Uncertainty, News Coverage about Policy-related Economic Uncertainty, accessed May 2017, http://www.policyuncertainty.com/us_monthly.html3. Brown, J. (2015, December 5). Weekend Edition: Over the Next 10 Years, Fortunes Will Be Made. Retrieved May 26, 2017, from https://bonnerandpartners.com/over-the-next-10-years-fortunes-will-be-made/4. Deloitte Cost Surveys: US; LATAM; Europe; APAC

of companies fail to meet their cost reduction goals4

64%of companies pursuing cost reduction in excess of 20%

84%

300

250

200

150

100

50

Page 2: Thriving in uncertainty - Deloitte US · PDF fileThriving in uncertainty Margin improvement in the age of digital disruption Given unprecedented times of ... US Economic Policy Uncertainty

Deloitte can help you rise to the challenge

We help clients transform their business and operations to achieve structural and sustainable actions that allow for savings capture, margin improvement, and the strategic allocation of resources towards growth initiatives.

The Thriving in Uncertainty (TIU) approach is robust and rapid, making it different from traditional margin improvement programs. Our proprietary TIU Insights Platform and Margin Improvement Labs leverage next generation automation and cognitive technologies, as well as interactive visualizations, to quickly establish a path forward by identifying specific, actionable projects with bold achievement targets.

Our services generally fall into four broad transformation strategies to help organizations address their specific strategic challenges:

ContactsRanjit SinghPrincipalDeloitte Consulting LLP+1 703 251 [email protected]

Faisal ShaikhPrincipalDeloitte Consulting LLP+1 214 840 [email protected]

Omar Aguilar Principal Deloitte Consulting LLP +1 215 246 2382 [email protected]

Jerry O’Dwyer Principal Deloitte Consulting LLP +1 216 830 6657 [email protected]

This communication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms or their related entities (collectively, the "Deloitte Network"), is, by means of this communication, rendering professional advice or services. Before making any decisions or taking any action that may affect your finances, or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this communication.

About DeloitteDeloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for a detailed description of DTTL and its member firms. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

Copyright © 2017 Deloitte Development LLC. All rights reserved.

Need help getting started? Let’s chart a path at a Margin Improvement Executive Lab:• Facilitated conversation on the results of a diagnostic with the latest visualization technology • Discovery of tangible margin improvement opportunities• A portfolio of prioritized initiatives for execution and improving shareholder value

Already know where to go? Let’s get to work! Deloitte can collaborate with you to execute on your margin improvement agenda and hit the ground running with an unparalleled breadth of proprietary tools, and depth of industry experience and know-how to execute against all value drivers.

www.deloitte.com/us/tiu

Client situation

Distressed

Positioned for growth

Growing steadily

Thrive in uncertainty

Focus areas

Focus on immediate actions to reduce costs, maximize liquidity, bring stability, and capture savings to avoid further deterioration of the business.

Focus on actions that help improve cost and competitive position, avert cuts that might inhibit future growth, and rebalance costs to fund investments in business strategy enablers.

Enable or develop a scalable cost or business platform to fuel growth and investment in core capabilities while supporting a differentiated business strategy.

Transform business operations through application of disruptive cost approaches such as automation and cognitive solutions to enable agile strategies in the business and set the stage to thrive in a fast-changing market environment.

Deloitte solution

Deloitte’s solutions will focus primarily on liquidity by applying working capital and balance sheet strategies immediately while balancing short-term tactical cost actions.

Deloitte’s broader cost approaches can help identify a portfolio of tactical and strategic actions and solutions that are self-funding to improve the overall cost structure, margin, and competitive position of the company.

Deloitte’s structural and target operating model solutions can help integrate business model, governance, and service delivery model strategies to develop a scalable business platform that enables sustainable growth.

Deloitte’s digital cost transformation services, leveraging automation and cognitive technologies and strategies, helps provide agile solutions that enable companies to better adapt to disruptive market changes.