Relevance Through Reinvention

Disclaimer: Views expressed are mine and mine alone and do not necessarily represent those of my firm or my colleagues.

Of the 4400 CEOs that we surveyed for PwC's latest Global CEO survey, nearly 40% are concerned that their companies might not survive the upcoming decade if they don’t transform. 40%!

And their concern is not unfounded, is it? Nearly 50% of the 500 biggest companies from 25 years ago are no longer around in their original form.

I could rattle off stat after stat but to paraphrase Vin Scully, “statistics should be used for support not illumination”.

So, what’s the TL;DR?

We believe that to remain relevant and thrive over the coming decades, you and your companies would need to reinvent yourself. We, PwC , a 174-year-old company are doing so ourselves, and we strongly believe you should too!

Don’t worry! Not here to sound a wake-up call and not have a proposed solution. The solution isn't easy but nothing worth doing, nothing worth being proud of, is. So, to grow, to remain relevant, to thrive, you should do 5 things:

1. Reimagine your business model
2. Create value by embracing ecosystems
3. Empower your employees (with cutting-edge tools & processes)
4. Champion a culture comfortable with change & obsessed with outcomes
5. As leaders, be on the case!

 Let's dive in!

1. Reimagine your business model:

How many of you are doing today, what you had planned for yourself during your college years? How many are doing today what you were doing five years ago. Why should companies be any different?

The world is changing – I don’t need to tell you that. In the multi-polar multi-generational multi-technology world of tomorrow, your customers and partners have very different expectations from you. There needs to be a playbook for the world, and one for America, and for India, and for China. New competitors need to be accounted for; tech companies started becoming banks and banks are launching tech businesses. New rules and regulations are being crafted every week.

All of this requires that you rethink what you do, how you add value and how you make money i.e., your entire business model. This means:

• Look beyond your existing offerings and both create new ones & present existing offerings in new ways,
• Get comfortable with using new technologies and fast,
• Watch and prepare for new (and old) competitors,
• Make your operations fit this new business model, and
• Craft superior customer, partner and employee experiences

And to do one or all of these, you will need to retool & rejigger your strategy, your processes, your tech, your tools, your talent and your partners. No, this is not easy. There are many challenges - our survey highlights

An example of the benefit if you do: PwC customer surveys show that customers will pay a 16% premium on products they have a wonderful experience with. 16% more - we’d all like that wouldn’t we?

2. Create value by embracing ecosystems:

Modern economic and societal challenges often exceed the ability of a single entity to solve. Again, let’s look at your own lives. Look at what you achieve with your teams. So again, why should companies be any different. The remedy lies in using collaborative ecosystems united by a shared purpose.

A large Japanese industrial equipment company invented cutting edge technology: intelligent equipment that used GPS, digital technologies (#IOT), machine learning (#ML) to increase performance 2x.

But guess what happened? At the construction sites, the equipment encountered processes from the 20th century and labor shortages and plans ill-equipped to take advantage of this transformative technology. None of the expected gains were being realized.

They could’ve tried to go at it alone – set up training programs and incentive programs but few companies can transform an entire industry by themselves these days

So what did they do? Embraced the power of the ecosystem. They created an open digital platform and allowed construction companies and suppliers to collaborate on their platform. Ecosystem participants could now design plans that took advantage of the smart equipment and their capabilities from the beginning.

The result: 50% reduction in construction job time vs. traditional methods. They’ve now gone global with this ecosystem orchestrator play.

One of the world’s biggest semiconductor manufacturers is expanding in Europe. $10+ billion investment. They’re not doing it alone. They’ve formed a business partnership with 3 other companies to harness the power of the ecosystem: amplify demand-gen, accelerate innovation, increase government support and spread the risk. 4 companies, 3 countries, 2 continents and 1 shared purpose!

Bottomline: you can enhance your impact, expand the value-pool(s), increase innovation and temper risk by embracing the power of ecosystems.

3. Empower your employees with cutting edge tools & processes:

Employee empowerment is a lynchpin of business model reinvention. Gone are the days of companies succeeding by just focusing on great CX. You want to reinvent your company - employee experience (EX) is just as important.

The great news is technology now allows us to deliver a wonderfully engaging employee experience like never before. Equipping your employees with state-of-the-art productivity and collaboration tools is not just about efficiency; it's about improving morale, unlocking citizen-led innovation and accelerating time-to-market. A long-running study with one of our clients found that the return on investment (ROI) into employee experience is 397% over three years and payback starts within six months.

There is a reason that we at PwC Strategy& are investing hundreds of millions of dollars in reinventing our employee experience – upskilling them in new skills such as AI, digital transformation and cybersecurity.

A word of caution here though: it is not just about tech. Please wrap that with appropriate process updates, change management and employee training. Per PwC’s 2023 global pulse survey, 90% of c-suite execs believe they prioritize employee needs during tools rollout but only 53% of employees agree with that statement. Please don’t be that leader.

Realize that tools by themselves are – you know – tools.

4. Champion a culture comfortable with change and obsessed with outcomes.

Drucker said, “Culture eats strategy for breakfast”. And take it from a strategist, there is a lot of truth in that statement. Just reflect, how many of you feel that your organizations encourage risk taking, are comfortable with change or have an active innovation process in place?

PwC’s 2023 CEO (4400 CEOs) and Employee Hopes and Fears (54,000 employees across 46 countries) present a concerning picture. 44% of global CEOs and a staggering 67% of employees said that leaders don’t often encourage debate and dissent. 53% of the CEOs- a majority - and 65% of the employees said their leaders don’t often tolerate small-scale failures. 

The good news is companies can actively work on unlocking innovation-led growth and reinvention.

By reimagining the processes for End-to-End (E2E) impact, democratising data, carefully designing x-org collaboration, aligning incentives for calculated risk taking AND walking the talk from the top, leaders can build that culture comfortable with change & obsessed with outcomes. Innovation will follow.

We’ve helped (and are helping) many companies do just that. It takes time, and it takes commitment but it is very very doable!

5. And finally, to reinvent your company, the critical fifth factor is the leadership. Make sure, as leaders, you show up early and show up often!

Change is hard. It is hard when you want to change. It is really, really, hard when you’ve grown comfortable in the status-quo. This is where great leaders make a difference!

They inspire. They build-up. They collaborate. They support but also make the hard calls. They drive that outcomes obsession that I was talking about. They reward risk taking but then also pull the plug on investments that are not building differentiation. They actively focus on building trust with all their stakeholders - customers, partners, employees, shareholders and communities.

Over the past year and a half, we've researched over 2000 companies and surveyed over 2000 leaders to tease out correlation between 40 areas of management practices and company investments, and company performance. We can quantifiably say that leadership is a key differentiating factor in a company’s success. To become that leader, ask yourself the following questions:

• Am I a transformational leader or a boss (bosses instill fear and build barriers, while leaders facilitate collaboration, camaraderie, and conviction)?
• Do I demand—and expand—ROI (for customers, ecosystem partners, employees, shareholders and communities)?
• Am I focused on M&A and other deal opportunities (in addition to organic efforts)?
• Do I prioritize customer relationships (vs. transactions)?
• Am I looking and listening (outside my own org and my own company)?

To summarize, to remain relevant, to grow, to thrive in the upcoming decades, you and your company need to reinvent yourselved. Doing these five things can help you do that:

1. Reimagine your business model (what you do, how you add value, how you make money)
2. Create value by embracing ecosystems (don’t go it alone!)
3. Empower your employees with cutting-edge tools & processes (but wrap with appropriate process change and change management),
4. Champion a culture comfortable with change and obsessed with outcomes (it can be done), and
5. As leaders, be on the case (show up early, show up often!)

As I said, it is not easy to do these. However, they are needed. If you and your leaders need motivation to embark on this necessary (maybe even imperative) journey of reinventing yourself, remember this number: 13x. That is the performance premium companies that do the above five things, and do them well (in the top quintile), are able to capture vs. their competitors.

13x! That is the power of Relevance through Reinvention.

Many thanks to my colleagues for their contribution to the deep research and thinking that went into pulling this article together. Truly takes a village! Could not have done it without Lindsey Newbern Cenk Karaduman, MBA Jennifer Shafizadeh Monica Nayar Romit Dey Saurabh Mohanty Alana Payne Abhilasha Sharma Sindhu Bharadwaj, CA Sushmita Singal Dean Wang Venky Jayaraman Matthew Duffey Tyson Cornell Andrew Meaux Matthew Baltovski Tom Casey Sundar Subramanian Daniel Hays Derek Smith Joseph Palladino Michelle Morrison, MBA, PMP Michael Whitman Louis Bouquet Tom Puthiyamadam and our research teams.