KPMG’S RESEARCH:

Succeed in Constant Change

Harnessing Disruptionfor Growth

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firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

In April, KPMG presented findings based on the first release of the Harnessing Disruption for Growth Global C-Suite Study.

Against a backdrop of constant change, executives can build the business case for new growth opportunities to create value. In recent discussions, we highlighted:

• How organizations with the right skills and tools can turn any disruptive challenge into a competitive opportunity

• How agility is critical to achieving growth

• Executives have a unique ability and responsibility to identify opportunities and influence the C-Suite

KPMG’s Succeed in Constant ChangeHarnessing Disruption for Growth

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firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

KPMG surveyed 650 C-suite execs at leading global organizations

*Numbers might not add up to 100% due to rounding and multiple selections; n=650

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firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Across industries, widespread disruptive forces set the stage for new business decision models, approaches, and tactics

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firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

High-growth companies believe disruption is not merely managed,but must be fully embraced to achieve growth

The most successful companies are responding to change by investing in the right combination of technology and talent, using those new assets to improve knowledge, agility, and company culture.

Yet, only 17% feel prepared

Dis

ruption

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firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Our data indicates 5 disruptors that represent the greatestchallenges for companies

The most successful companies are able to turn market

challenges into competitive opportunities.

Companies are able to

harness these

disruptors by investing

in a combination of the

right technology and

talent to drive growth

and operating

effectiveness

Observations from organizations that are driving growth in the midst of disruption

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firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Successful organizations turn big challenges into big opportunities

• Demonstrate Competitive Differentiation

• Transform Data into Significant Value

• Leverage Emerging Technology

• Accelerate Product Development Cycles

• Create a “Market of One”

• Create New Roles to Accelerate Growth

• Excel in Attracting and Retaining Talent

Opportunities to Drive Growth

Tax

Risk

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firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Demonstrate competitive differentiation

The data tells us:

Organizations that achieve

Competitive Differentiation rank the

following as opportunities, more than

their peers:

• Accelerated growth of the digital

enterprise

• Instantaneous and ubiquitous

access to data

• Global business complexity for

their industry

• Disruptions to the global supply

chain

• Usage-based insurance with Snapshot®

creates customer differentiation:

• “Little device turns safe driving into savings”

• Clear positioning:

• “Progressive makes it easy to understand,

buy, and use auto insurance”

• New revenue streams:

• Licensing IP to companies interested in

implementing UBI programs

Case Study: Progressive Insurance

Source of information on Progressive Insurance: http://www.progressive.com/newsroom/article/2013/june/usaa-ubi/

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firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The data tells us:

When asked how companies plan to respond to the disruption?

Greater use of data and

analytics is the No.2 response

No.3 = greater use of emerging technology

No.4 = addition of new technology experts

• Enterprise-wide Big Data platform

• Powers strategic partnerships and relevant

customer experiences through Amex Offers

• Amex Big Data Labs

• Designed to “democratize” big data with self-

service tools, APIs, and libraries of algorithms

• Multiple social and mobile applications

• Leveraging data and improving customer

experience

• Leveraging item-level “holy grail” transaction data outside Amex network

• Partnership with global retailers and restaurant

chains to offer additional services to customers

Case Study: American Express

Transform data into significant value

Tech disruptors - especially those related to analytics, mobility, and the

digital enterprise - are viewed as the most impactful of

all 25 disruptors assessed

Source of information on American Express: http://www.enterprisetech.com/2014/10/17/hadoop-new-backbone-american-express/

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firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The data tells us:

Fast-growing companies:

• Agree on emerging technologies and the need to secure talent in advance of demand

• Leverage cloud, automation, and big data more than average

• Have greater than average focus on industry specific technology, ranking it as the most important technology

• Focus on technology-related disruptive factors as enablers of positive change

El Camino HospitalCase Study: Wegman’s Grocery

Leverage emerging technology

• Wegman’s app leverages data and

technology

Integrates past purchases, replenishment

cycles, and recommends new items and recipes

aiming to optimize the customer experience

Loyalty card loaded on app

• Apple Pay accepted at Wegman’s

• Service robots Deliver meals, lab specimens, trash, linens, and

prescriptions

• Creating necessary controls Managing issues around “drug diversion” and

ensuring correct dosage to patients

Case Study: El Camino Hospital

Source of information on Wegman’s: www.wegmans.com/mobile

Source of information on El Camino Hospital: http://www.wsj.com/articles/SB10001424052702304459804577281350525870934

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firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The finance function sees less impact with cloud and other models

When asked how great an impact the disruptive factors had on the following elements of the company’s core operations in areas such as finance and accounting, HR, IT, manufacturing, supply chain, etc., the finance executives see less impact than their peers.

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firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The data tells us:

Fast-growing companies:

• Demonstrate greater use of emerging technology and D&A

• Develop experts in-house

• Use small, focused teams to pursue new ideas

• Have closer coordination with suppliers and partners

• Have simplified committee and approval structures

Case Study: Toyota Motors

Accelerate product development cycles

• Specific org. structure

• Built to speed information, decisions, and materials

through each operating cycle

• Specific mindset

• Integrated system for delivering value to customers,

resulting in fast-paced production cycles

• Customer-defined value

• Product development delivers a design that meets

customer needs with efficient manufacture

• Small-focused expert teams

• Go-to-the-source engineering creates flexible product

development capacities: “A stone’s throw away from

the physical product.”

Source of information on Toyota Motors: https://hbr.org/2013/03/big-bang-disruption/

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firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The data tells us:

50% of the most profitable B2C

firms cited the market of one as an

opportunity, compared with 39%of the lower performers.

Case Study: Amazon

Create a “market of one”

• Anticipating customers’ needs, even before customers do:

• “Anticipatory shipping” leverages customer data to

create an entirely new delivery model that predicts

what customers are going to buy – before they buy it

• Predicting individual customer demand on a variety of

factors, including past purchases, wish lists

• If it is determined that the customer does not want the

product, Amazon may use it as a “promotional gift” to

promote customer goodwill

Source of information on Amazon: http://blogs.wsj.com/digits/2014/01/17/amazon-wants-to-ship-your-package-before-you-buy-it/

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firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

What we heard:

In response to disruption, companies

have created a vast number of new

roles for new times, many at the C-

level, to improve their decision

making and accelerate growth.

• Accelerating growth by reorganizing around the

customer

• “Changing culture to better serve the one reason

we all exist - our customers”

• Looking at all aspects of the organization through

the lens of the customer–products, payments,

operations, sales, marketing

• Aligning all market-facing roles under this title

Chief Customer Officer: The link between the customer and organization

• “Culture change from the mailroom to the

boardroom.”

• AIG CCEO maps the organizational systems and

service delivery processes connecting customers

and employees and influencing changes that

empower and reward the desired behaviors.

Chief Customer Experience Officer : AIG

Create new roles to accelerate growth

— Executive Director, Joint Ventures

Health Care Delivery Network

A year ago we didn’t even have the role of Chief

Patient Experience Officer. The role is very vague

but basically connects technology and operations

and is increasingly influential.

— Regional Chief Technology Officer

Technology Giant

The C-suite is getting crowded. Many high-tech

companies now have a Chief Disruption Officer, and

that person’s job is to defend the company from

external disruption while also creating value.

Source of information on Chief Customer Officer insights: http://www.thecmosite.com/author.asp?section_id=2865&doc_id=261577

Source of information on AIG: http://www.marketwired.com/press-release/aigs-donna-n-peeples-joins-the-chief-customer-officer-council-nyse-aig-1927959.htm

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firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Excel at attracting and retaining talent

“Mentoring works best when the mentor has a stake in the outcome of the mentee in terms of his or her own variable comp.”

WHAT’S WORKING FOR THESE COMPANIES?

• Empowering business units to drive talent management and strategies

• Building talent internally versus outsource

• Recognizing the opportunity in the changing demographics of the workforce

• Tailoring talent management to the unique needs of the workforce

El Camino Hospital

• Talent is driven by “Human Capital

Committee”

• Charged with putting “right talent in the right role

at the right time”

• Believes “talent is not just a strategic resource, but

a matter of critical accountability for line

management”

• Proactively identifies high-potential talent and

values “stretch assignments”

• Tailors targeted recruitment and retention

strategies to unique segments

• Uses digital “hubs” to network with leaders and

strengthen employee engagement on key priorities

Case Study: Blackrock – asset firm

Source of information on Blackrock: https://hbr.org/2014/01/building-a-game-changing-talent-strategy

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firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The challenges and opportunities of disruption

CUSTOMER FIRST FRAMEWORK

Disruption is here to stay.

Companies that leverage technology and talent effectively are able to drive greater growth than their peers.

The C-Suite has expanded and evolved with the business to meet the individual needs of customers and employees.

Digital and Mobile are driving and enabling disruption.

Four things you should know about disruption.

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firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Driving the growth agenda

Identify key constraints limiting your organization’s growth.

Identify the right investments in innovation to support your customer growth agenda.

Use influence in the C-Suite to ensure growth and innovation is on executive agenda and an investment priority.

Because of their strategic and pragmatic lens, the C-Suite has toidentify opportunities and influence the growth agenda.

To do so, the following should be top-of-mind:

Use influence in the C-Suite to think about competitive landscape – new, unknown disruptors that can lead your company to competitive differentiation.

19© 2015 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member

firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

To access the research

briefs, please visit:

• Harnessing Disruption for

Growth

• Operating Effectively in

the Face of Ever-Present

Change

19

Alton Adams is the Consumer Insights Lead Partner

for the Customer and Operations Group within

KPMG’s Advisory Consulting Practice. He has more

than 20 years of management and consulting

experience specializing in the use of data, analytics,

and technology to help companies accelerate

organic growth.

aladams@kpmg.com; +1 404 222 3000

Stan Lepeak leads research efforts globally for KPMG’s

Management Consulting service line, focused on

trends, issues, and futures in global business services,

enterprise services transformation and optimization,

and their enablers and drivers such as cloud, big data,

social media, and consumerization of IT.

slepeak@kpmg.com; +1 203 458 0677

To learn more, please contact:

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