Ian Borley
Head of Enterprise - Midlands
KPMG

65% see disruption as an opportunity & 74% want their business to be the disruptor

KPMG's Global CEO Survey

Our 2017 CEO Outlook Report found that nearly two-thirds of business leaders view the disruption on all sides as an opportunity. “Whenever you experience economic or technological change, there are chances for you to invest, make returns and find new routes to market,” explains Ian Borley, Head of Enterprise - Midlands, KPMG. “Change is an opportunity.”

The key, he thinks, is to stay rooted in reality, however revolutionary change seems. “You’ve got to be fleet of foot in terms of what customers want,” he says. “It’s not just about technology. It’s about the fulfilment piece that backs that up. You’ve got to develop infrastructure to back an idea.”

Borley stresses that those businesses wanting to swim rather than sink must take a three-pronged approach to disruption: talent, collaboration and scenario planning. 

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Ian Borley, Head of Enterprise - Midlands, KPMG

Unearth hidden talent

With 77% of CEOs saying talent is a priority investment over the next three years, there is a clear belief that a quality workforce is the key to disruption. But it’s not just about qualifications and skills.

Diversity in age, gender, culture and background will also drive your success. “We see a lot of traditional businesses that have been successful for 150 years,” says Borley. “Yet that longevity doesn’t guarantee survival any more.” You need an openness to new ideas that might be somewhat painful to adopt if your business always relies on the tried-and-tested routes – or the same old faces round the boardroom table.

“We’re helping business build out new thinking on product development, production technologies and digital technologies – often skills that may not have been essential in-house until recently. The aim is to help businesses respond much faster as new tools and techniques shift their markets.”

That’s why the employee aspect is at least as important as understanding the broad sector drivers changing your business. “We often see businesses pass on younger candidates they deemed ‘riskier’, and instead hire individuals with traditional credentials,” Borley adds. “Remember: the way people work is also changing, and mind-set is often the most important qualification.”

United we stand

The risk of disruption has prompted 75% of CEOs to consider new influences and collaborations as a business strategy. Borley says he has seen an increasing amount of collaboration across mid-market businesses, particularly amongst his manufacturing clients.

“One of our automotive suppliers has found ways to work much more closely with their original equipment manufacturer (OEM) client, taking on more responsibility for the finished feature in the vehicle,” says Borley. “The manufacturer is happy to rely upon their expertise in product design; and the supplier appreciates the steady stream of business. Tighter collaboration also reduces risk, which has encouraged the supplier to invest in new designs – further enhancing the feature set on the vehicles, benefiting the OEM. It’s a virtuous circle.”

Collaborations and JVs may help reverse low business investment in the UK by helping share the risks for mid-market businesses. And by marrying two worlds, you can overcome limitations in terms of creativity and even develop best practice disciplines in areas such as management and technology. On that point, collaborating with similar-sized businesses, where the risks and rewards are more likely to be evenly shared, is often more beneficial than with larger enterprises.

Planning to transform

Almost half of respondents to the CEO Outlook Survey expect to see major disruption in their sector over the next three years. Borley emphasises that disruption can come from anywhere – but that doesn’t mean you can’t plan potential responses for when things do change.

Good scenario planning starts with being aware of changing customer behaviours, as well as what’s happening locally, regionally and globally in your markets. So while you might not execute a particular strategy immediately, thinking about how you might respond if you’re affected by these bigger changes – when a new competitor comes to the UK, say, or a nascent technology suddenly breaks through – gives you a running start when things start to happen.

“One of the best examples of a business responding to disruption is Joules Clothing,” Borley says. “They sold equestrian wear at horse shows. Then we had a bout of foot and mouth disease in the UK and they lost their sales channel overnight, as shows were cancelled en masse. They quickly reinvented themselves through mail order, then internet sales, and finally stores.

“Technology isn’t always the catalyst to transform – but knowing how you might shift your business model is never a bad use of time.”

Surviving disruption demands awareness, readiness and responsiveness. And that means making sure your business is a source of new ideas, that you’re ready to be creative on entering partnerships – and that you’re constantly assessing how you would respond to change.

 Key takeaways

  1. Workforce diversity is an engine of creativity and energy.
  2. Collaboration provides strength through creative networks.
  3. It’s vital to keep a close eye on developments and be curious and creative about how you might respond.

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