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Global Trends

This presentation made at #UnicreditStartLab StartUp Academy, illustrates some global trends and how those changes impact the way we do business

Global Trends

  1. 1. Copyright © 2015 Accenture All Rights Reserved. 1 Danilo Mazzara Milan, 9 November Key Trends workshop
  2. 2. Copyright © 2015 Accenture All Rights Reserved. 2 Danilo Mazzara Danilo Mazzara @DaniloMazzara  Lavora in Accenture Strategy  Si occupa di Consulenza Direzionale in ambito Banking, Life Science ed Healthcare  Ha significative esperienze nell’ambito di innovazione e start up  Collabora con UnicreditStartlab nell'ambito della quale si occupa di training e mentorship a selezionate start up
  3. 3. Copyright © 2015 Accenture All Rights Reserved. 3 Agenda Key Global Trends Impact for Business Strategy Wrap up
  4. 4. Copyright © 2015 Accenture All Rights Reserved. 4 Technology  Internet of things  Social Network  3D printing Demographic  She factor  Aging population  Cloud  Big Data  Mobility  Middle class  Millennials Demographic and Technology trends are changing consumer behaviours Main trends Consumer behaviours  Gamification  Trading up & down  Sustainability  Sharing Economy SELECTION
  5. 5. Copyright © 2015 Accenture All Rights Reserved. 5 There is no doubts that the economy power is structurally shifting from mature to emerging economy Demographic: Middle Class Economic power shifting Source: Economic Outlook and Interim Economic Outlook OCSE, Sept. 2015 World: 3,3% 2,6% 1,9% 6,5% 7,3%  Competition at global level for several industry sectors  Export as key driver for sustainable growth in the future (euro vs dollar advantage)  The rising of the Middle Class as the biggest opportunity for all
  6. 6. Copyright © 2015 Accenture All Rights Reserved. 6 Across Asia, rising incomes are creating an enormous new class of consumers, much of that growth is coming from China Demographic: Middle Class in China Type Description Working Population (mln) Annual Income (k$) RURAL WORKERS  Half of China’s workers still live in rural areas. With lower incomes and fewer available jobs, their spending is concentrated on essentials such as food and housing. 387 2,0 MOVERS & SHAKERS  China’s wealthiest citizens already make up a large part of global demand for high-end goods. Their spending patterns will continue to influence trends as the country grows 1,4 500 URBAN MIDDLE  This is China’s narrow middle class. Nearly half of them are on the public payroll, so policies to increase income will have a strong effect here. 11,7  This group—blue-collar workers and migrant workers who have moved to cities to find better- paying jobs—is expected to see the biggest rise in income. This will allow them to broaden their spending beyond consumer staples 146 236 5,8URBAN MASS 770.4 Source: The Rise of Chinese new consumer class, Goldman Sachs
  7. 7. Copyright © 2015 Accenture All Rights Reserved. 7 In the future the consumption patterns will gradually shift discretionary products Demographic: Middle Class in China Source: The Rise of Chinese new consumer class, Goldman Sachs Expenditures across key spending categories  Comparing China’s consumption patterns with those of the more mature markets shows how as incomes rise, spending will shift from necessities to discretionary items  E-commerce e Tourist inflow the opportunities can be taken with lower investment
  8. 8. Copyright © 2015 Accenture All Rights Reserved. 8 Millennial generation (people born from 1980 and 2000) is the largest in the history and as they reach their prime working and spending years, their impact on the economy is going to be huge Demographic: Millennials 77 61 92 36-50 (Gen X) 51-70 (Boomers) 15-35 (Millenials) People per Age Group in USA (mln)  Millennials have come of age during a time of technological change, globalization and economic disruption. That’s given them a different set of behaviours and experiences than their parents  They have been slower to marry and move out on their own, and have shown different attitudes to ownership that have helped spawn what’s being called a “sharing economy  They’re also the first generation of digital natives, and their affinity for technology helps shape how they shop. They are used to instant access to price comparisons, product information and peer reviews Source: Source: Elaborations Goldman Sachs
  9. 9. Copyright © 2015 Accenture All Rights Reserved. 9 Millenials reject the "must-haves" product of the previous generation and are developing an "healty life style" Demographic: Millennials 25% 15% 25% 30% 15% 20% 20% 30% 15% 100% 100 CAR 5% TV 100 I might purchase one if I really need, but indifferent Extremely important I don’t intend to purchase one in the near future Important, but not a priority I don’t feel strongly about it Millennials preferences on selected traditional product 20131998 83% 69% 46% 14% 14% Boomers 12% Gen X 12% 22% Millenials 24%29% 43% ExercisingNot falling sick Eating Right What is your definition for Healthy (% respondent) Do you disapprove of people (who are 18 older) doing the following ? (Smoking one or more packs of cigarettes per day) Source: Source: Elaborations Goldman Sachs
  10. 10. Copyright © 2015 Accenture All Rights Reserved. 10 Millennials is the digital native generation, they are social and connected and need to be engage trough new media Demographic: Millennials 2% 7% 16% 44% 32% 15% 19% Text messaging 38% 11% 25%Social media 38% 8% Istant messaging Blogging Millenials Boomers Gen X After searching on line, how do you communicate with others about a service/product/brand ?  Digital engagement  Ominchannell  From "monologue" to "dialogue"  Personalized product and experience Source: Source: Elaborations Goldman Sachs
  11. 11. Copyright © 2015 Accenture All Rights Reserved. 11 Examples of innovation Demographic: Millennials Heineken Burberry Coca Cola Footlocker ILLUSTRATIVE
  12. 12. Copyright © 2015 Accenture All Rights Reserved. 12 Women are becoming even more important in business Demographic: She Factor She factor in consumer shopping (household expense driven by women) Source: Catalyst. Pyramid: Women in S&P 500 Companies. New York: Catalyst, October 13, 2015. 24 12 20152011 33% 67% Driven by women  $20 trillion in annual consumer spending with an expected grow by 50% in the next 5 years  75% of women identify themselves as the primary household shopper  50% of products typically marketed to men are purchased by women  80% of healthcare decisions are made by women.  68% of new car purchase decisions are made by women She factor in Business (Women Presence) Women CEO in fortune 500 Women presence in S&P 500 per level Source: Elaborations Based on Fona International Research
  13. 13. Copyright © 2015 Accenture All Rights Reserved. 13 Address the gender gap is a top priority both for Institutions and Corporate Demographic: She Factor Address the gender gap (Report Selection from Istitutions) Address the gender gap (Report Selection) Example from Corporate in Italy (Report Selection)
  14. 14. Copyright © 2015 Accenture All Rights Reserved. 14 Having a personalized experience and getting the right work life balance are the top priority for women Demographic: SheFactor Healthcare Well Being Automotive Sharing economy ILLUSTRATIVE
  15. 15. Copyright © 2015 Accenture All Rights Reserved. 15 Over the last 50 years we have gained 12 years more and by 2050 4,3% of total population will have more than 80 years Demographic: Ageing population Life expectancy at birth total years (OECD Countries) 67,9 80,0 17,8% Today1960 World 1,5 11,4 1,4 3,7 4,8 2,1 6,8 1,6 6,4 7,2 7,4 4,3 14,5 16,7 2011 2050 Population over 80 years on total population (World and selected Countries in %) Source: Elaboration on OECD data, 2014
  16. 16. Copyright © 2015 Accenture All Rights Reserved. 16 Global dysfunction erectile market (%) Worldwide Aesthetic Market (in billions of dollars) Source: Allergan Annual Report, 2013 Source: Elaboration based on Evaluate Pharma and Med Tech World cataracts procedures (mln) Alzheimer's disease or other dementias (mln on people global) Source: Elaboration on World Health Organization, 2014 Source: The Global Impact of Dementia, Alzheimer Disease International 2013 5,0 3,2 2,3 2009 +10% 20172012 135,0 76,0 44,0 +3% 205020302010 32,0 20,0 +5% 20202010 5 10 40 45100 Viagra LevitraTotal OthersCialis Live longer also means incurring in new aging related diseases and in addition to that, people expect a better quality of life in their "silver stage" Demographic: Ageing population impact on the Healthcare  Cataracts is responsible of 50% of global blindness K K  4 BLN $ market since the first launch in 1998
  17. 17. Copyright © 2015 Accenture All Rights Reserved. 17 Aged people have consumption aptitude extremely polarized between "Come up to the end of the month" and "Enjoy life" Demographic: Ageing population – Aged people segmentation Housewife/Reader Mick JaggerVicious Family sustainer Cruise addicted Average monthly amount of pension income Consumeraptitude Up to €1.000 €1.000 - €2.000 More €2.000 Card player LowHigh Number of people belonging to the income class # people (mln) 7,3 5,1 1,6 ITALY Average € 1.131 Source: Accenture analysis on INPS data - Rapporto Annuale, 2011 and ISTAT - I cittadini e il tempo libero  Long life duration will increase the demand for wealth (health, wellness and leisure)  The system of Public / Private and Third Sector will join the national welfare  Aged people mainly spend time in traditional home activities such as watching TV (95% of pensioned) or read newspaper (52%)  However, many aged people spend their income in activities as tourism: • More than 30% of pensioned, between 65 and 74 years, go on vacation at least once a year with an average-stay of 26 nights, more than young and adult people Segmentation by retirement pension and consumption aptitude
  18. 18. Copyright © 2015 Accenture All Rights Reserved. 18 Income and Net family Wealth per age class (% on Italian population) New technology adoption (% per age) Access in mobility 8% 33% Buy product and services 21% 32% Social Network 21% 54% Internet Utilization 20% 55% PC ownership 20% 54% Total > 60 years oldSource: Elaboration on ISTAT data Based on internet users 114 122 102 94 88 84 102 140 118 60 1919 140 120 100 80 60 40 20 - over 6455 - 6445 - 5435 - 4419 - 34up to 18 Net family wealthIncome Age class Source: Elaboration on Istat Bilanci Famiglie Italia Ageing is impacting in the "digital divide", potentially excluding the most interesting customer in term of spending power Demographic: Ageing population and digital divide (Italy)
  19. 19. Copyright © 2015 Accenture All Rights Reserved. 19 Technology  Internet of things  Social Network  3D printing Demographic  Aging population  She factor  Cloud  Big Data  Mobility  Middle class  Millennials Demographic and Technology trends are changing consumer behaviours Main trends Consumer behaviours  Gamification  Trading up & down  Sustainability  Sharing Economy SELECTION
  20. 20. Copyright © 2015 Accenture All Rights Reserved. 20 Digital Technologies are driving the global growth Tecnology 10% 3% Utilities Energy 3% Materials 10% Telco Consumer staples 7% Industrials 2% Consumer Discretionary Information Tecnology 16% Health Care 15% 21% 13% Financials S&P 500 ITS&P 500 7,84% 9,83% Equity Market 10 years annual return S&P 500 per industry sectors +10 pt in Digital Density Index +0.4% in Total Factor Productivity for advanced economies vs. +0.65% for emerging markets +0.25% YOY GDP increase in advanced economies vs. +0.5% in emerging markets = = Accenture Digital Density Index Source: Digital Density Index Guiding digital transformation, Accenture and Oxford Economics
  21. 21. Copyright © 2015 Accenture All Rights Reserved. 21 From the emerging technology, Internet of Things will emerge as key driver to boost efficiency, revenue growth and customer experience Emerging technologies Access to internet (bln)  Transforming Country Infrastructure  Improve the Corporate Value Chain  Connecting Personal assets (eg. Car and House)  Changing "daily life" trough wearable devices Sources: Accenture elaboration on Macroeconomic Insights What is the Internet of Things?, Goldman Sachs • Social Network • Mobility • Analytics & Big Data • Cloud • 3D printing • Voice Recognition • Internet of things • … 28,0 6,0 1,0 x28 "Things" (’06-’20) Mobile (’06-’20) Fix (’96-’15) Technology: Internet of Things
  22. 22. Copyright © 2015 Accenture All Rights Reserved. 22 Internet of Things will emerge as key driver to boost efficiency, revenue growth and customer experience for Corporate … Technology: Internet of Things Create new revenues stream Improve worker productivity 81,00Reduce operationa Cost 74,00 74,00 67,00 Enhance worker safety Improve sustainability 36,00 64,00Enhance customer experience 79,00Opmitize Asse Utilization Source: World Economic Forum Industrial Internet Survey, 2014  Sensors, analytics and real-time data to anticipate equipment failures and respond more quickly to critical situations, such as leaks or adverse weather events  Latest locomotives, are equipped with more than 250 sensors that measure 150,000 data points per minute  Networked sensors for its predictive maintenance system designed to reduce down time and unnecessary trips by service personnel for elevator repair (Extremely Important + Very important) IOT Benefits (How important are the following benefits in driving businesses to adopt the Industrial Internet? ) Selected examples
  23. 23. Copyright © 2015 Accenture All Rights Reserved. 23 … and in the consumer markets already had a huge impact Amazon Dash Smart umbrellaD Lynk Home suite Drug dispenser Technology: Internet of Things - Examples ILLUSTRATIVE
  24. 24. Copyright © 2015 Accenture All Rights Reserved. 24 Technology  Internet of things  Social Network  3D printing Demographic  Aging population  She factor  Cloud  Big Data  Mobility  Middle class  Millennials Demographic and Technology trends are changing consumer behaviours Main trends Consumer behaviours  Gamification  Trading up & down  Sustainability  Sharing Economy SELECTION
  25. 25. Copyright © 2015 Accenture All Rights Reserved. 25  Rising costs for material, energy, land, water  Extreme volatility in commodity markets  Economic and social risk of supply disruptions Resources optimization as became a big issue and customer consciousness around sustainability is improved Consumer: Sustainability Sourrce: Circular Advantage Innovative Business Models and Technologies to Create Value in a World without Limits to Growth, Accenture Resources supply/demand imbalance 2015-2050
  26. 26. Copyright © 2015 Accenture All Rights Reserved. 26 Business as usual simply cannot continue, Governments and companies around the world are looking for alternative approaches to drive future growth Consumer: Sustainability the rising of Circular Economy 1. Circular Supplies: Provide renewable energy, bio based- or fully recyclable input, material to replace single-lifecycle inputs 2. Resource Recovery: Recover useful, resources/energy out of disposed, products or by-products 3. Product Life Extension: Extend working lifecycle of products and components by repairing, upgrading and reselling 4. Sharing Platforms: Enable increased utilization rate of products by making possible shared use/access/ownership 5. Product as a Service: Offer product access and retain ownership to internalize benefits of circular resource productivity Emerging Business model in the circular economy Circular Economy framework Sourrce: Circular Advantage Innovative Business Models and Technologies to Create Value in a World without Limits to Growth, Accenture
  27. 27. Copyright © 2015 Accenture All Rights Reserved. 27 Resources optimization is about space, waste and energy and next innovation will come from emerging market Dyson Cube Car Parts incubatorMobile Recovery services Gillette Guard Consumer: Sustainability - Examples ILLUSTRATIVE
  28. 28. Copyright © 2015 Accenture All Rights Reserved. 28 The sharing economy, most impactful trend in consumer behaviours change, in the future will reach the traditional rental industry value Consumer: Sharing Economy 335,0 15,0 20252013 29,5% Sharing Economy revenues (bln $ and cagr) Sources: Sharing Economy sizing the revenue opportunity, PWC  P2P lending  On Line staffing  P2P accommodation  CarSharing  Music/ video Streaming  Technology breakthroughs that can easily connect asset and people  Sustainability consciousness increase and resource scarcity  Social change and trust on peer review system Market Segment Traditional Rental sectors 240,0 335,0 Growth drivers
  29. 29. Copyright © 2015 Accenture All Rights Reserved. 29 The sharing economy is gradually shifting from Consumer to Business market UBER Executive assistantInvoices Co work space Consumer: Sharing Economy - Examples ILLUSTRATIVE
  30. 30. Copyright © 2015 Accenture All Rights Reserved. 30 Technology  Internet of things  3D printing  Social Network Demographic  Gender "Pink"  Multiethnic society  Cloud  Big Data  Mobility  Millennials  Aging population Demographic and Technology trends are changing consumer behaviours Main trends Consumer behaviours  Gamification  Trading up & down  Sustainability  Sharing Economy SELECTION
  31. 31. Copyright © 2015 Accenture All Rights Reserved. 31 Agenda Key Global Trends Impact for Business Strategy Wrap up
  32. 32. Copyright © 2015 Accenture All Rights Reserved. 32 Unicorns by industryRank FORTUNE 500 (2000 vs 2015) We are in the "Big Bang Disruption" Era, where business models are replaced very quickly Rank 2000 Rank 2015 284 5 Not Present 40 229 13 87 147 29Not Present Source: Accenture analysis on market data (Fortune, CBInsights) Innovation is necessary to survive 37 363 Company 124 Not Present (# - 100%=140) 7 3 3 5 6 7 7 9 10 13 17 22 31 Others Adtech Media Mobile Software & Services Hardware Social Cybersecurity On-Demand Healthcare Big Data Fintech Internet Software eCommerce/Marketplace *merged with EMC 56 Not Present 30 82
  33. 33. Copyright © 2015 Accenture All Rights Reserved. 33 Digital is creating extraordinary new challenges and opportunities  New Contestable Markets creating and disrupting industries, markets, products, services and value chains  Disruptive Speed product and service development lifecycles are changing from years or months to weeks  The New Value Equation companies must simultaneously deliver value for customers AND society AND shareholders Digital Innovation is necessary to survive
  34. 34. Copyright © 2015 Accenture All Rights Reserved. 34 The disruptive speed of innovation is changing traditional industry models from years to weeks How changed the innovation curve adoption Innovators (2.5%) Early Adopters (13.5%) Majority Anticipatory (34%) Late Majority (34%) Laggards (16%) Trial Users All Market segments in the Big Bang Disruption Technological innovation allows us to offer better products at ever lower prices Fonte: "Big Bang Disruption,” di Larry Downes e Paul F. Nunes, Harvard Business Review (Marzo 2013)
  35. 35. Copyright © 2015 Accenture All Rights Reserved. 35 The rule of the game are changing The four stages of the Big Bang Disruption 1.Looking at the future 2.Climbing the operating model 3.Disengage from assets 4.Repositioning Strategic priorities (In various stages) Singularity Big Bang Big Crunch Entropy Fonte: "Big Bang Disruption,” di Larry Downes e Paul F. Nunes, Harvard Business Review (Marzo 2013)
  36. 36. Copyright © 2015 Accenture All Rights Reserved. 36 The rule of the game are changing Suggested actions for the different stages of the Big Bang Disruption  Listen to their "truthtellers"  Time to market  launch experiments  Surviving the catastrophic success  Conquer markets where the winner takes all  Create the slow motion effect  Anticipate saturation  Dispose of assets before they become liabilities  Quit while you are ahead  Escape from the black hole  Become component suppliers  Move to a new singularity Singularity Big Bang Big Crunch Entropy Phase What to do Example Fonte: "Big Bang Disruption,” di Larry Downes e Paul F. Nunes, Harvard Business Review (Marzo 2013)
  37. 37. Copyright © 2015 Accenture All Rights Reserved. 37 Implication and good news for you is the rise of the "Open Innovation" which are moving across the whole industry sectors The rise of Open Innovation for Large Corporate Companies' preferred partners for collaboration (survey % of respondents) 90 84 84 80 78 78 63 Customers Large Companies R&D Institutes Public Institutions/ Government Startups/ Entrepreneurs Academics/ Universities, etc. Nonprofit Organizations 17 39 40 42 48 50 53 Enhancing company’s brand/image Enhancing the entrepreneurial culture of your company Improving return on in-house R&D investment Designing new products and services Entering new markets Accelerating disruptive innovation in your company Accessing specific skills and talent Companies' top benefits related to collaboration with entrepreneurs (survey % of respondents) Source: Harnessing the Power of Entrepreneurs to Open Innovation, Accenture 2015
  38. 38. Copyright © 2015 Accenture All Rights Reserved. 38 Dynamics Start Ups and Entrepreneurs (likes you), can easily connect with established companies to accelerate route to market and growth Research and Development Crowd Innovation Ecosystem Innovation Sustaining Innovation Disruptive Innovation Improve The rise of Open Innovation for Large Corporate WhatistheInnovation How to Innovate BWM Drive now BMW New Series 3 Motorola Smart Watch P&G Connect & Develop Apple Car Apple Developer Program Apple Renewable Energy BMW Active Hybrid GE Innovation Platform for Connected Products  Need to address some cultural issues from both sides (Start ups and Large Corporate)
  39. 39. Copyright © 2015 Accenture All Rights Reserved. 39 The cultures of entrepreneurs and large companies often diverge significantly and those differences must be understood and managed effectively if the collaboration is to be successful Cultural differences between Start-ups and Large company Comparative cultural trends between startups and large companies  Align to the market  Adapt culture  Adopt mentors  Time it well Source: Harnessing the Power of Entrepreneurs to Open Innovation, Accenture 2015 Suggestions for Start Ups
  40. 40. Copyright © 2015 Accenture All Rights Reserved. 40 Agenda Key Global Trends Impact for Business Strategy Wrap up
  41. 41. Copyright © 2015 Accenture All Rights Reserved. 41 To summarize  The world is changing very fast, demographics and new technologies are creating new consumer behaviours  Startups and New Entrepreneurs can take a competitive advantage thanks to their agility and flexibility  The rising of Open Innovation from the large Companies is a further and concrete opportunity to monetize Be connect with the ecosystem
  42. 42. Copyright © 2015 Accenture All Rights Reserved. 42 Danilo Mazzara Danilo Mazzara @DaniloMazzara Thank you for your time. Danilo.Mazzara@accenture.com

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