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the future of the organisation

The future of the organisation

The future of the organisation

As I talk to clients across the TMT sector, there are some consistent questions that I am asked. How do we serve our customers better? How do we engage with our employees more? What should we do about investment in robotics and AI? What implications will these have for our workforce, and how do we ensure our governance processes are transparent and fit for purpose?

No longer does the question start with, “Can we re-engineer our processes? We need to save cost”. Sure, saving costs can be a by-product and, in some part, it is essential as organisations look to compete in today’s environment. What has changed is the relentless focus on the experience and also doing the right thing from a transparency and governance perspective. We see six main areas of focus that we will cover in our new series on “The future of the organisation”.

One: Relentless focus on the customer

We have all become more demanding as consumers. We only need to look as far as the consumer goods and retail sectors and our own personal expectations of service to see that organisations are under pressure but failing to keep pace with expectations.

KPMG Nunwood research shows that “despite the intense focus on customer experience, UK consumers are finding little real improvement in the experiences they have overall, with just 1% improvement in the previous year [2017/2018]”. There are, however, definite examples of organisations achieving breakthrough performance in the delivery of experiences to their customers1. Their success share common characteristics:

  • A commitment to understanding their customer
  • Rapidly responding to customer needs
  • Seamless service and instant delivery at the right price.

If customers do not get this, they will switch their buying decisions.
These B2C principles are also being applied in the ‘consumerisation’ of B2B relationships and a shift in how these organisations engage with their clients.

The focus of the customer is also transforming how employees consider their relationship with work. Employees increasingly view themselves as customers in their own right with expectations of their employee ‘experience’. Organisations must seek to understand the needs of their employees and work to define an environment for them to thrive and be successful.

Two: The future of work is changing

Individuals at all stages of their career are asking for more flexibility. They also want the ability to work with purpose and to live in a society that promotes opportunities for all, irrespective of gender or social background.

In parallel, there is much discussion and considerable disquiet about robotics and AI; should I, shouldn’t I, what are the benefits and what are the implications for our workforce? Our KPMG Global CEO Survey shows many CEOs take a more positive view of the long term implications, with 62% globally and 71% in the UK saying AI will create more jobs that it destroys over the next three years.

Humans are not going anywhere any time soon. Not unless a scientist knows something I don’t, and this means that a shift in approach is required.

There are inevitable implications on the workforce, and the KPMG “Rise of the Humans” series highlights that there is a greater need to focus on collaboration, engagement with strategy and the ability to build new skills amid emerging task requirements. Five years from now, over one-third (35 percent) of the skills considered important in today’s workforce will have changed2. Alexandra Badenoch, Telstra group executive of HR, is quoted in the same ‘Rise of the Humans’ series that “What we can see is that about a sixth of the core skills of our workforce will need to be different in about three years from what they are today. That’s a massive volume shift”.

The use of technology is enabling organisations to re-invest in different areas and with this, the opportunities for people will change.

It is widely recognised that technological advancement through the 20th century improved employment rates, productivity, earnings and our lifestyles. The future is about humans and machines working together in modern, efficient and productive ecosystems. The boundaries of the traditional organisation will be challenged as employees seek greater flexibility and focus on purposeful work. The nurturing of organisational culture will become an increasingly important enabler of digital transformation, together with leadership skills to set the direction and purpose in this digital age.

Three: Digital as usual

Digital is no longer a nice-to-have as business is fundamentally digital. According to the World Economic Forum, Digital platform business models are forecast to comprise up to 30% of global economic activity by 2030. Yet fewer than 5% of traditional companies have a coherent platform strategy that is integrated with their corporate strategy. The Internet of Things is enabling everything to be connected, disrupting traditional goods and services to fuel growth and development in our hyper-connected world.

Moving traditional business to compete with new platforms will require different types of investment strategies, measurement techniques and some brave decision making to compete with new market entrants. The technical skills and leadership required will also be different. Organisations must embrace people with a different technical capabilities and appetite to learn. Leadership will be ever more critical to steer the ship forward.

As reported in the KPMG CEO survey, leaders are up for the challenge, many are now taking personal ownership and charge of the Digital agenda. Fifty-four percent of CEOs reported that they are actively disrupting the sector that they are working in, rather than waiting to be disrupted by competitors.

With digital at the front of strategy it gives rise to the amount of data that organisations collect and have access to, which leads me to the fourth area of focus, data.

Four: There is data everywhere, but can it be used for effective decision making?

Data is everywhere and for many of our clients in the TMT sector, its impact ranges from shaping competitive advantage to fundamentally changing how CEOs and the rest of C-suite make business decisions.

Data is fast becoming the enabler for both growth and efficiency. Becoming more data driven is a top 3 strategic priority for CEOs. The ability to create and combine data sets with increasing speed and accuracy will become essential for organisations to maintain their competitiveness.

In the 2018 KPMG Global CEO Survey, 67% of participants – globally and in the UK – say they have ‘overlooked the insights provided by data and analytics models because they contradicted their own experience or intuition’. They want to understand where the data comes from and whether it can be trusted. In turn, it is also essential for leaders to be agile in their thinking, have the ability to use their experience and combine their instinct with what the data is telling them.

With the increasing use of data comes the importance of data governance and security, all of which are at the top of news headlines in recent months. Trust and transparency have never been more important, in all aspects of business, but most notably where data is involved.

Five: Transparency and trust is paramount

Organisations, both old and new, are increasingly under scrutiny to be doing the right thing, by their customers and for their employees. In the 2018 KPMG CEO survey Miles Roberts, Group Chief Executive of DS Smith Plc, sums up the widely held sentiment that growth has to come in the right way, “We have to be a better company, not just a bigger company, and it’s better through the eyes of the receiver, how they feel we are a more responsible company and earning the right to be a larger company. That’s what we’re working on. Those hurdles are only going to increase for all of us”.

Developing the right culture is at the heart of creating the right governance model; policies and procedures only get you halfway there. Creating a corporate identity with a sense of purpose is one way that organisations are seeking to engage their employees with the broader role that the company has to play in a sustainable society.

Financial services organisations and those in the Telecoms industry have been regulated for many years. The consequence of this has been improved and more transparent behaviours, but this pressure is new for many organisations operating in the Media and Tech space. The recent notification that the UK competition authority will launch a review into the Digital Advertising market is just one example that highlights how regulatory focus is broadening. The expectation is that we will see an accompanying shift in approach, culture and behaviour.

Six: The back office has not kept pace with the front office

Whilst this is a broad generalisation, in my experience, TMT companies are divided into two halves, the “new” and the “old”. Generally, those born since the year 2000 have very different operating structures to those that have been around for a long time. Those that have been around a lot longer, struggling with legacy core systems and data, seem to be permanently in a state of “transformation and change”, with moderate success. No sooner has the dial moved, then the goal changes. As explained in our most recent Harvey Nash CIO Survey (2018), spending more on new technologies, in itself, does not improve performance: it also requires the ability to incorporate new technologies into existing or redesigned business processes.

Employees are also becoming increasingly frustrated that technology that they have to use on a day to day basis at work is out of date with much of the consumer technology they use in their everyday lives. Organisations need to respond in order to attract the highest quality of talent.

Companies that are effective at redesigning business processes are far more likely to report success in their digital transformation efforts. There is no point automating a bad process, it will still be a bad process. The companies that are seeing the benefits of digital technology are those that are using Design Thinking to look at what is right for the future organisation, with customers and employees in focus. Bold decisions are often needed to make the change and invest for the future. Those that have done this already are starting to reap rewards.

Building an adaptable business model

I, for one, am excited about what the future holds. The world of work is changing, our expectations as consumers, business partners and employees are changing and organisations need to respond in order to survive. At KPMG we are continually adapting to meet the needs of our clients and expectations of our employees. The ability to connect and collaborate will be key to success. Operating in a matrix structure, as KPMG has always done, gives us a unique perspective on the importance of connectivity and collaboration that organisations will need to succeed.

Analytical thinking, supported by insightful data sets will be critical to help companies navigate the right path in today’s digital everywhere word. The use of technology platforms will become the norm to speed up decision making and connect disparate organisations. The skills of leadership agility and the ability to create the right culture across ecosystems will be essential in the organisation of the future.

At KPMG, we are changing the way we help our clients. Programmes are always collaborative, but increasingly we draw on disciplines from across the firm to help our clients think through these complex and often challenging scenarios.

We do not always have all the answers and no one problem is the same. What we do have is exceptionally talented people, deep expertise and experience in all of the areas discussed above and a culture of collaboration. We are investing in technology assets that enable our people to create innovative solutions and help our clients build an adaptable business model, fit for what the future holds.

Over the coming weeks we will be diving deeper into the themes covered above and talking to our specialists who support our clients think through some of these topical issues.

If any of the topics above resonate, do not hesitate to get in touch for a conversation.

 

Watch the first interview: