Fall Session 2019

Thursday, November 7, 2019

WELCOME TO IIEB:DISRUPTION & INNOVATION

DISRUPTION HAS GONE MAINSTREAM

Source: Accenture Research analysis, Disruptability Index2Copyright © 2019 Accenture. All rights reserved.

Half of S&P companies are expected to be replaced over the next 10 years

BUT HOW DO YOU MEASURE DISRUPTION?ACCENTURE DISRUPTABILITY INDEX

Transaction intensity

(COGS/Revenue—avg. &

variance)

Labour intensity

(Labour cost portion of GVA)

Investment in R&D

(R&D/Revenue; R&D

investment per patent)

Positioning for the future

(Future Value proportion)

Brand dominance

(Prominence of incumbent

brands; Customer

acquisition)

Value creation

(Proportion of companies

with Trapped Value)

Asset intensity

(CAPEX/Rev.; Revenue

/Invested Capital; PP&E/

Rev.—avg. & variance)

Investment in new digital

technologies

(Spending on IoT, Cloud,

Analytics)

Openness

(Concentration of market

share; Regulatory

environment)

ABILITY TO OPERATE

EFFICIENTLY

PURSUIT OF

INNOVATION

SUSCEPTIBILITY TO FUTURE DISRUPTION

EFFICIENCY1 INNOVATION

PRESENCE OF

BARRIERS TO ENTRY

DEFENCES

CURRENT LEVEL OF DISRUPTION

Tech-propelled disruptors

(Incumbents growing fast or

disrupting other segments)

Start-up penetration

(Presence and valuation of

given start-ups in the

industry)

Venture capital

(Value of VC capital flows

into the industry)

PRESENCE AND

PENETRATION OF

DISRUPTORS

PERFORMANCE OF

INCUMBENTS

Profitability

(5-yr EBITA CAGR and

consistency)

Growth

(5-yr revenue CAGR and

consistency)

Volatility

(5-yr corporate bankruptcy

rate)

DISRUPTORS PERFORMANCE

28 indicators 20 industry sectors 98 industry segments 3,629 companies 80 countries

1For each of the efficiency measures (other than labour intensity) we create scores based on both the industry average and the variance

in industry performance. This is to account for structural differences between industries. For example, the score of an industry with high

capital intensity would be offset if there was limited variance in capital intensity between companies in the industry, and vice-versa.

DISRUPTION HAS GONE MAINSTREAM

Source: Accenture Research analysis, Disruptability Index

63%of companies

are experiencing disruption

44%of companies are

highly susceptible to future disruption

4Copyright © 2019 Accenture. All rights reserved.

ENABLED BY ACOMBINATION OF FACTORS

The rules of the game are changing

Growth is challenged (again)

Combinatorial impacts of these factors are significantly accelerating disruption

The playbook is outdated

Customer divorce rate is on the rise

The risk of ambush is high

5Copyright © 2019 Accenture. All rights reserved.

FOUR PERIODS OF DISRUPTION

LOW HIGHSusceptibility to future disruption

LO

WH

IGH

Cu

rre

nt

lev

elo

f d

isru

pti

on 04. VIABILITY

• Endured a significant disruption• Short-lived competitive advantage• Disruption is constant

03. VOLATILITY

• Eroded barriers to entry • Strengths become weaknesses• Disruptors unlock value

01. DURABILITY

• Efficient, mature industries• Structural incumbent advantages• Relatively few disrupters

02. VULNERABILITY

• Structural inefficiencies• Low levels of innovation• Compressed profitability

6Copyright © 2019 Accenture. All rights reserved.

SOME INDUSTRIES ARE MORE EXPOSED

Comms & Media

High-TechSoftware & Platforms

Banking

Capital Markets

Insurance

Health

Automotive

CG&S

Industrial …

Infrastructure & Transportation Services

Life Sciences

Retail

Travel

Chemicals

EnergyNatural Resources

Utilities

Industry Sector Matrix—2018 Results18 industry sectors

2018 WEIGHTEDAVERAGE 0.51

20

18 W

EIG

HT

ED

A

VE

RA

GE

0.5

4VIABILITY(18% of companies)1

VOLATILITY(33% of companies)

VULNERABILITY(38% of companies)

DURABILITY(11% of companies)

LO

WH

IGH

CU

RR

EN

T L

EV

EL

OF

DIS

RU

PT

ION

LOW HIGHSUSCEPTIBILITY TO FUTURE DISRUPTION

7Copyright © 2019 Accenture. All rights reserved.

Property and Casualty Insurance

Life and Health Insurance

Reinsurance

Multi-line Insurance

Insurance Brokers

Consumer Finance

Investment Banking and Brokerage

Diversified Capital Markets

Asset Management and Custody Banks

Specialized Finance

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.20 0.30 0.40 0.50 0.60 0.70 0.80

CU

RR

EN

T L

EV

EL

OF

DIS

RU

PT

ION

SUSCEPTIBILITY TO FUTURE DISRUPTION

VOLATILITY

DURABILITY VULNERABILITY

2018 WEIGHTED AVERAGE: 0.46

20

18 W

EIG

HT

ED

A

VE

RA

GE

: 0

.52

VIABILITY 1 Segments

Related segments

Insurance

Other segments

INDUSTRY SEGMENT MATRIX 2018 LEGEND & NOTES

SEGMENT PERFORMANCE 2018: INSURANCE

SECTOR PATHWAYS: INSURANCEInsurance moved across Volatility to Vulnerability, then back to Volatility, over an eight year period

Sources: Accenture Research Disruptability Index 2.0

INDUSTRY SECTOR PATHWAYS 2011-2018

LOW HIGHSUSCEPTIBILITY TO FUTURE DISRUPTION

VIABILITY

DURABILITY VULNERABILITY

VOLATILITY

LO

WH

IGH

CU

RR

EN

T L

EV

EL

OF

DIS

RU

PT

ION

Insurance (2011)

Insurance (2018)

WHY IS DISRUPTION PERSISTENT?Disruptors have increased in scale and speed; incumbents continue to lean on disruption fighting

strategies and their reservoir of assets and routines to merely protect their position.

Sources: Accenture Research Disruptability Index 2.0

Increase between 2011–18 in total assets on the

balance sheets ofthe companies we

analysed

30%Of industries that

reduced their transaction intensity

as they sought efficiency gains in

their core

83%

Incumbents have revertedto past strengths

Increase in totalFintech funding

raised, 2011 to 2018

10xOf the total unicornsoperating at the end of 2018 had achieved

their status in that same year

1 in 3

Disruptors have increasedin scale & speed

They don’t just protect their position,

they truly change it.

THEY MAKE ANINNOVATION PIVOT.

THERE IS ABETTER PATHSome companies confront disruptionin an unconventional way.

CONFIDENTIAL. Copyright © 2019 Accenture. All rights reserved. 11

HARNESSING DISRUPTION REQUIRES THE WISE PIVOT

Transform The Core

Scale the New

Grow the Core

Wise Pivot

In an age that demands companies stay in a permanent state of change.

Companies that survive through disruption will constantly reinvent themselves, always striving to keep their businesses relevant to the future.

12Copyright © 2019 Accenture. All rights reserved.

ROLE OF LEADERSHIP INTHE WISE PIVOT

13Copyright © 2019 Accenture. All rights reserved.

Pathfinder view of skill importance for leadership

C-suite view of skill required for leadership

BizTech: Understanding of new tech & having the right skills to advise teams

Data Analytics and Insights

Design thinking and experimentation

Agility to make tough decisions effectively

Being Innovative and vigilant to external environment

Our research shows that the companies that adopt this whole-brain approach to leadership see a positive bottom-line impact, realizing on average 22% higher revenue growth and 34% higher profitability growth

7 KEY STRATEGIES OF WISE PIVOT

01.

Hyper Relevant

02.

TechnologyPropelled

03.

Data driven

04.

Asset Smart

05.

Network Powered

06.

Inclusive

07.

Talent Rich

14Copyright © 2019 Accenture. All rights reserved.

Enhance

Customer

insights &

experience

Leverage

technology &

innovation

Enhance

Value

Creation

through Data

Drive for

economies of

scale, skill and

scope

Deliberate capability

investments across

core and new

Foster an

Innovation Culture

Create flexible,

augmented &

adaptive workforce