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Changing fast, but in the right way

Disrupt or be disrupted? U.S. CEOs are facing a “disruption dilemma.” 

Interest versus caution

This year’s findings point to what we are callingthe disruption dilemma,” as CEOs’ responses seem to be contradictory, showing both interest in disruption and a high dose of caution. Fewer CEOs than last year (73 percent compared with 86 percent in 2018) claim that rather than waiting to be disrupted by competitors, their organizations are actively disrupting the sectors in which they operate. At the same time, 76 percent agree that their growth relies on their ability to challenge and disrupt any business norm.

If the ability to disrupt is so crucial, why are fewer CEOs than last year ready to do so? As KPMG’s Lynne Doughtie noted in her letter, the crux lies in the ability to not only change fast but also in the right way. And some of the U.S. CEOs may have issues with the latter. As this year’s survey findings show, emerging and disruptive technology is perceived as a top risk, and protecting the core business is seen as a sign of true resilience. Both of these findings may be why CEOs are inclined to take a more cautious approach to disruption this year.  

Which of the following risks pose the greatest threat to your organization’s growth?

Which of the following risks pose the greatest threat to your organization’s growth?

Please select the option that best completes the following statement:
Above all, in an uncertain business climate, a truly resilient business is one that can...

Source: 2019 Global CEO Outlook, KPMG International.

Surviving disruption

For Kathy Warden, CEO and President of Northrop Grumman—a leading global security company—having the resilience to survive repeated, accelerating disruption is about listening and acting with agility. “You need market awareness,” she explains. “If you don’t see it coming, you certainly aren’t going to be prepared for disruption. That requires a level of customer engagement that many companies did not need to have in the past. They absolutely need to stay closely attuned to their customers’ needs in a much deeper way now."

“You also need to be able to respond very quickly,” she adds. “The lead times in seeing those indicators as disruption and trying to take advantage of that disruption is accelerating. A company has to be able to adapt very quickly.”

If you don't see it coming, you certainly aren't going to be prepared for disruption.

Kathy Warden
CEO
Northrop Grumman

In addition, it is essential for organizations and their functions to anticipate and manage potential disruptors in order to mitigate risks and remain competitive and relevant in a world where traditionally successful business models no longer work. Jeffrey C. LeSage, Americas Vice Chairman-Tax at KPMG points to the impact of tax reform. “For corporate America, scrutiny of and sensitivity to tax have never been greater. U.S. tax reform, in addition to global economic and political uncertainties, government interventions and technological advances are placing greater demands on the C-suite, at a time when most companies are already struggling to meet or exceed growth expectations. Leaders face questions about tax projections, the outcomes of processes and planning, and the options regarding how their organizations can navigate in the new tax landscape – and their responses can have consequences for both regulatory and reputational risk,” he says.