Executives look to be on the front foot in the face of disruption
Innovation, digital and activist pressure is accelerating the frequency of portfolio reviews. This tension between short-term opportunity and long-term growth is apparent in the increasing frequency that executives are reviewing their portfolios. Faced with the twin challenges of activist and other shareholder demands, as well as industry disruption, companies cannot afford to stand still. To keep pace and sustain growth, most companies are fast-tracking the frequency of their portfolio reviews to ensure that they have the right mix of assets to compete. The new reality means no options are off the table.
Those companies that can better identify emerging trends will be able to pivot their portfolios and recycle capital to take advantage of new growth possibilities.
Q: How frequently are you reviewing your portfolio?
Current business models under pressure from all sides with digital technology being the genesis
Business models are being remade across all sectors. There is no standout force driving disruption; they are all closely interrelated. Technology is enabling customers to change behaviors, and creating pressures for sectors to converge to meet these new demands. This, in turn, is opening up opportunities for new digitally enabled companies to overcome historic barriers to entry, use technology to create new business models and open up new options for customers.
The majority of executives look to be proactive in their response to disruptive forces. This is most apparent in how executives plan to respond to the disruption to their business models. While first-mover advantage can have benefits in many sectors, it may be that the unrelenting pace of change and innovation requires a more tempered response. However, one thing is certain — doing nothing is no longer an option for companies in any industry.
Executives are also shifting their investment models to be able to respond quickly and positively as opportunities emerge. The increasing use of alliances and venture capital investments seen across sectors is an indication of this trend.
Q: With regard to disruptive forces, do you prefer to be proactive or reactive?
Talent strategy: Executives look to leverage internal and external expertise to transform digital capabilities
It is no surprise that companies are looking at a wide range of options for the right skills to drive their digital transformation. The reality is that there are not enough people with the right skills in the market. Developing in-house talent is critical in enabling companies to react quickly. This is followed by hiring, and then investing. As every company responds to the transformation to the digital future of their industry, the battle for digital expertise and talent will become more intense.
New technologies and business models require new skill sets, and are also driving job creation.
Companies are looking internally first, with re-skilling the current workforce the top priority.
The most interesting finding with respect to automation is that companies see more job creation and use of contingent workers than job losses. Perhaps, as with the first three, the Fourth Industrial Revolution will drive more job creation.