1. T
oday’s market is full of disruptive forces
across all industries and geographies,
with no signs of easing. But the fastest
growing firms find opportunities at
every turn, taking market challenges and
transforming them into competitive advantages.
These companies believe that disruption must
be embraced—not merely managed—to drive
growth.
By: Alton Adams and Lee Ann Moore
How are they doing it? According to KPMG LLP’s (KPMG)
executive research on disruption, the most successful
companies are responding to change by investing in the
right combination of technology and talent. (see Figure 1).
Accordingly, they are using those new assets to improve their
knowledge, agility, and company culture—a formula that leads
to competitive advantage.
What kinds of technology and talent investments are these
growth companies making? How are they changing their
tactics, and what outcomes do they expect?
The KPMG study shows that the companies experiencing
growth amid disruption are focusing their efforts on some
common areas. Here, we discuss a few of the top attributes
and actions. SLOWEST
GROWING FIRMS
FASTEST
GROWING FIRMS
Investintalent–emergingtechnologyexpertise
Investintalent–industryexpertise
Cloudcomputing(IaaS,PaaS,SaaS)
Upgradinglegacyenterprisesystems
Industry-specifictechnologyadvancements
34%
34%
39%
30%
29%
25% 19%
18%
17%
25%
Figure 1: Comparison of fastest to slowest growing firms - the
fastest growing firms are investing in emerging technology,
industry-specific technology, and specialized talent at a much
higher rate than their slower growing counterparts.
OVERVIEW
PAGE/CONTENTS:
1 / Improving competitive differentiation
2 / Building an effective technology portfolio
3 / Decentralizing the client experience
4 / Aligning executives and creating new roles
Harnessing Disruption for Growth
AKPMGStudy:SucceedinConstantChange
2. A KPMG STUDY: SUCCEED IN CONSTANT CHANGE
Harnessing disruption for growth
PAGE 2
Growth companies have been able to leverage some of these
disruptors to their advantage, differentiating their products
and services through innovative approaches to customer
engagement. For example, amid supply chain disruptions and
regulatory complexity, Tesla has begun offering auto recall
services: if a car is recalled, the company will pick up the car
from the customer’s home, offer a rental car, and return the
repaired car to the customer.
In the banking industry, mid-sized banks face challenging
disruptions such as fee caps and other regulations,
historically low interest rates, and declining customer traffic
at branch locations. In response, a Northwest regional bank
is enticing its customers to engage with their local branch
in very unconventional ways, such as food sampling, yoga,
community art displays, and a phone that rings directly to the
bank’s CEO. As a result of these kinds of engagement tactics,
the bank has grown from six branches in the early 1990s to
over 300 today, and its return on equity exceeds industry
averages.
In the personal insurance industry, carriers are spending
nearly $6 billion a year on brand advertising as they jockey
for differentiation in what used to be a commodity offering.
Looking for less expensive differentiators, Progressive was
an early adopter of telematics technology, which enables
customers to opt-in to monitoring of their driving habits in
exchange for lower premiums. In addition to using telematics
as a pricing and service differentiator, Progressive is generating
new revenue—and offsetting advertising costs—by licensing
the technology to competitors.
68% 65%
35%
34%
31%
21%
25%
8% 5%
5%%3%
C-Level / President
Competitors will be
the same as today
Executive Managment Director
Know the potential competitors
and they are in nascent stages
Not on the radar yet Don’t know
Who will our competitors be in five years?
Different views of competitive landscape
Responses of C-suite vs. other management levels
Responses of executive management vs. sales and marketing
Sales and
marketing
Executive
management
Our main competitors in the next
five years are not on the radar yet.
5% 22%
We know the potential competitors,
and they are in nascent stages.
30% 20%
Our competitors in five years will
be the same as today.
64% 55%
We do not know who the
competitors will be.
1% 3%
A
ccording to the KPMG study, the companies that are
achieving competitive differentiation tend to see some
disruptive factors as opportunities, while their lower-
performing peers see them as challenges. These disruptors
include:
• Accelerated growth of the
digital enterprise
• Instantaneous and
ubiquitous access to data
• Global business complexity
for their industry
• Regulatory and legislative
complexity
• Disruptions to the global
supply chain
• Unexpected deflation,
inflation, and uneven or
slowing growth
1. Improving competitive differentiation.
The KPMG study shows that as growth companies achieve
competitive differentiation amid disruption, they approach
some areas with greater discipline and focus. A financial
services executive cited the use of social media and
“associated techniques to proactively address people we
felt were likely to buy a new house, or refinance a mortgage
due to situations such as children going to college. Before
we applied these predictive analytics, we were able to retain
approximately 30 percent of our mortgages from old to new.
After applying these techniques, that number rose to 58
percent in a very profitable segment.”
3. T
he top response to disruption among KPMG study
respondents was greater use of data and analytics, followed
by investments in talent with industry and emerging
technology expertise. The fastest growing companies, however,
are significantly more likely to invest in new technology. In
some cases they are using existing technology in new ways.
One company uses salesforce.com in an unusual manner. Built
typically as a CRM platform, it has expanded its use around
acquisitions. Interesting, uses it as a “collaboration platform when
we acquire new facilities and need to communicate with them
frequently throughout the postmerger integration process. This
is not the intended purpose of the application, but for us it works
very well and speeds up our ability to make decisions.”
When it comes to talent, importantly, growth companies often
respond to disruption by identifying the need for required talent—
in advance of the demand. In the auto industry, for example,
where cars are starting to act like big moving smartphones that
communicate with wireless networks, some companies have
identified a need for cyber security as it relates to human safety.
Therefore they are adding white-hat (ethical) hackers to their staff
to better arm themselves against future attacks with a team that
thinks like hackers. Doctors are leaving private practices for better
opportunities within the pharmaceuticals industry, adding relevant
experience to pharma businesses. And a healthcare provider is
investing in a company similar to Uber that delivers doctors right
to a patient’s doorsteps.
In terms of technology, growth companies reported that the
highest value will come not from any one technology, but from a
combination that delivers true disruptive innovation. For example,
Amazon is creating competitive advantage by predicting the
future. With “anticipatory shipping,” Amazon is using consumer
data, purchase patterns, and sophisticated analytics to anticipate
what customers will buy and, according to the patent, the
packages could wait at the shippers’ hubs or on trucks until an
order arrives. So when customers do order the product, they will
receive it immediately.
Growth companies have also cracked the code on managing
a diverse and changing workforce, often with the help of
technology. One retail bank, for example, is using advanced
analytics to create a behavioral model for hiring sales officers,
based on the profiles of highly successful salespeople in the
company. A financial services executive cited the use of reverse
mentoring to better manage workforce demographics. “For
retention, most mentoring programs are of course based on more
seasoned people helping people just entering the workforce.
Younger workers…are far savvier on a day-to-day and practical
level when it comes to using technology, relative to people later
in their careers. Imagine how exciting it would be for a 25-year-
old to have the opportunity to ‘mentor’ a VP in their company.
Of course, once the relationship is established, it becomes
reciprocal, and even more beneficial.”
Another executive in the financial services industry cited hiring
practices after the recent recession. “All of the hiring that I
did during the disruption that followed the 2007-2008 financial
meltdown was based around one thing. That was ‘Does this
person have direct experience in working in an environment that
has experienced dynamic change?’ We needed to know that
people we were hiring had the ability to make decisions without
perfect information. This ran contrary to the traditional financial
institution philosophy, but served us very well in the end, even
though we did not have a scientific tool to determine if a person
had that capability or not. It was largely just based on their
experiences.”
A KPMG STUDY: SUCCEED IN CONSTANT CHANGE
Harnessing disruption for growth
PAGE 3
When it comes to talent, importantly, growth companies often
respond to disruption by identifying the need for required
talent—in advance of the demand.
We needed to know that people
we were hiring had the ability to
make decisions without perfect
information. This ran contrary to
the traditional financial institution
philosophy, but served us very well
in the end, even though we did not
have a scientific tool to determine if
a person had that capability or not.
It was largely just based on their
experiences.
2. Building an effective technology portfolio—and the right talent to support it.
4. T
he need for accurate data, meaningful analytics, and
emerging technology is also related to another disruptive
factor: the rise of the individual consumer as a market of
one. This change is most important in business-to-consumer
(B2C) industries, where purchase decisions are made by an
individual, not a committee. Among B2C companies, about 50
percent of the most profitable firms cited the market of one as an
opportunity, compared with 39 percent of the lower performers.
The companies that have adapted to this disruption realize the
need for brand precision, including accuracy in responding to
the needs of specific consumers, engaging them in the right
way, and meeting and fulfilling the brand promise. The property
and casualty insurance industry, for example, is using customer
demographics and other data to create personalized marketing,
featuring coverage and premiums that are tailored to individual
customers. Some pharmaceutical companies, similarly, are
using font settings on mobile devices to gather knowledge
about individual patients’ eyesight. Then they are customizing
the delivery of communications to those patients, enhancing
the customer experience to ensure effective and appropriate
communication.
Varying perspectives differ by generation on this topic, with
baby boomers often not expecting, nor appreciating, the “Big
Brother” approach to information necessary to facilitate these
experiences. Younger generations increasingly expect this
personalization, and in a recent HBR article1
describing the digital
natives, or iGeneration (describing the generation following
Millennials) where it is “all about me” and “everything needs to
be personalized.”
I
n 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. Some healthcare organizations
are creating “chief patient experience officers” to connect
technology and operations, while many high-tech companies have
“chief disruption officers” who defend the firm from external
disruption while creating proactive disruption to edge competitors.
When it comes to creating new roles and accelerating decision-
making around disruption, respondents in the KPMG study ranked
executive alignment on operating strategy as the No. 1 most
important consideration. (See Figure 2). And just as the C-suite
and sales and marketing departments may disagree on emerging
competitors, they may also disagree on other factors that affect
growth decisions:
• Customer satisfaction. Many companies expect to see higher
customer satisfaction and retention due to the response to
disruption.
• Faster product development cycles. According to the KPMG
research, faster growth companies are reporting faster product
development life cycles amid the disruption. Other attributes
are shrinking the size of their teams, simplified committees and
approval structures, and a closer coordination with suppliers and
partners.
A KPMG STUDY: SUCCEED IN CONSTANT CHANGE
Harnessing disruption for growth
PAGE 4
3. Decentralizing the client experience to focus on the “market of one.”
4. Aligning executives and creating new roles to improve decision-making.
Figure 2:
Top changes to decision-making processes
All respondents cited the pace of decision-making as a
challenge in responding to disruption, and they identified
key changes to their process – as presented below.
The companies that feel increased competitive threats
scored their pace of decision-making lowest among their
peers. Meanwhile, growth firms were more likely than
low performers to prioritize certain changes – see bold:
1. Greater use of emerging technology
2. Develop and acquire experts; build in-house
capabilities
3. Greater use of data and analytics
4. Increased engagement with customers and prospects
5. Addition of new technology experts and business
leaders
6. Greater use of small, focused teams to pursue new
ideas
7. Expanding the decision-making authority of senior
management roles
8. Closer coordination with suppliers and business
partners
9. Use of an overall transformation program
10. Simplified committee and approval structures
4 Priorities of the fastest growth companies1 Schneider, J. (2015, May 6). How to Market to the iGeneration.
5. A KPMG STUDY: SUCCEED IN CONSTANT CHANGE
Harnessing disruption for growth
PAGE 5
Change management: continuously adapting the
organization.
As companies attempt to navigate disruption and fluid
environments, fundamental change management skills are
becoming critical across all levels of the organization. Per the
survey, executives now more than ever recognize the need to
effectively manage organizational change in order to achieve their
strategic goals. However, they also realize that managing change
is both an art and a science, requiring a proactive, structured
approach, that is nuanced and reflective of their organization,
their culture, and their goals. The KPMG study shows that 51
percent of executives are investing in and expanding the scope of
change management. These successful leaders have learned that
lasting change requires more than training and communication.
Executives must establish a compelling vision; create buy-in,
ownership, and accountability; anticipate the impact of the change
on their organizations; and define, and reinforce the specific
behaviors needed in the future.
Effectively harnessing disruption for growth requires the
organization to change quickly and successfully. While executives
understand this, it is critical that sales and marketing leaders
also begin to recognize just how essential organizational change
management is to responding to disruption, and effectively
translating it to growth. The low importance ranking of change
management by sales and marketing leaders indicates there is
more work to be done. (See Figure 3).
Companies are trying to develop and institutionalize broad change
management capabilities in a number of ways -- some through
change management offices, others through dedicated tools and
training. Regardless of approach, in a world where organizations
are constantly seeking the next new skill/capability, the ability to
lead change has become a constant imperative.
The importance of change management strategies in
addressing disruption
Sales and
marketing
Executive
management
Elevate the role of change
management leadership in strategic
planning
40% 59%
Invest in change management tools
and training
37% 51%
Create an office to manage change
across the enterprise
33% 52%
Figure 3:
A blueprint for growth?
H
igh-growth companies are showing what it takes to succeed in a highly disruptive market. It comes down to embracing disruptors
as opportunities—and investing thoughtfully in technology and talent. Our research validates that the right combination of
technology and talent seem to create a multiplier effect to business growth. High-growth companies are continually testing and
deploying new business models, accelerating decision-making processes, converting data into valuable knowledge, and focusing on
the customer as the nucleus of the enterprise. In short, these companies are leading their industries in agility, knowledge, and culture:
the keys to competitive advantage in disruptive times.
Key Takeaways
• Disruption is here to stay.
• Digital and mobile are driving and enabling disruption.
• The C-suite has expanded and evolved with the
business to meet the individual needs of customers and
employees.
• Companies that leverage investments in technology and
talent effectively are able to drive greater growth than
their peers.
Questions to ask to leverage disruption to drive growth:
• Have you addressed the entire customer journey?
• Are their gaps in expectations versus experiences?
• Are the paths to driving profitable customer growth clearly identified and in motion?
• Identify the right investments in innovation to support your growth agenda. Are the teams positioned for success?
• Understand the motivation behind customer behavior. How can you use technology to better meet the needs of the
individual?
• Identify key constraints limiting your organization’s growth
– are your employees empowered to drive profitable
customer behavior?
• Look around the C-suite table. Are the needs of the
customer adequately represented? Are the appropriate
defense mechanisms in place?
• Use influence in the C-suite to think about competitive
landscape – new, unknown disruptors that can lead your
company to competitive differentiation. Do you have
the cross-enterprise view of emerging competitors and
capabilities?
