More than any other time in our history, businesses and markets are operating in an extremely complex and interconnected system - and therefore, are constantly subject to geo-political, socio-political, environmental, competitive, economic and technological change (and pressure).
Because of this, experts argue that we are living in the most disruptive time in human history. Whether this is true or not, there’s no questioning that the interconnectedness of market forces and key trends are critical for business to understand.
Systems are highly dynamic. In order to understand a system, you need to know and understand its component parts and the relationship between those parts and the effect they can or will have on each other. It’s for this reason that the traditional two-dimensional models used in strategy development and risk assessment are no longer fit for purpose.
This new reality applies equally to defining the direction and strategies for the business as it does to identifying and assessing the risks and building resilience. After all, the act of developing strategies creates organisational risk. This is likely the reason that increasingly more CEOs are aligning the strategy and risk functions within their organisations.
When done right, this will lead to greater resilience - even in the face of extreme market volatility.
The complexity and disruptive nature of the environment within which we operate can seem overwhelming. But it’s interesting to note that most of the executives participating in the 2019 KPMG Global CEO Outlook, as well as the 2019 KPMG NZ CEO Outlook, view disruption as an opportunity to turn to their advantage.
In the reports, nearly 75% of CEOs believe their organisation’s growth depends on their ability to be agile, innovative and disruptive in their market. This will require a new approach to mapping and assessing the key information which, if done well, will become a distinct competitive advantage.
CEOs expressed concern over the variety of potential disruptors, their global nature, the speed at which the impact could be felt and their inability to link the trends, risks and opportunities.
More than 80% expressed concern over their ability to link their growth with societal purpose.
Complacency can be fatal in today’s dynamic markets. Business models that have lasted for decades are now under increasing threat as a result of digital disruption. Our findings show that chief executives recognise that the rules of the game have changed, and a new resilience is required. A significant majority (71%) said that their company’s growth relies on their ability to challenge and disrupt any business norm.
But to do so, first your executive team must have an accurate and deep understanding of how their strategy and risks are interconnected.