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The Disruption Opportunity: Eight Takeaways from BCG’s 2018 North American Strategy Leadership Summit

Related Expertise:Strategy, Growth, Innovation Strategy

The Disruption Opportunity

Eight Takeaways from BCG’s 2018 North American Strategy Leadership Summit

November 5, 2018

Nearly 80 senior executives convened in New York for BCG’s eighth North American Strategy Leadership Summit. The theme—“The Disruption Opportunity”—challenged participants to see disruption as a friend, not a foe.

Through stories related by executives from ABInBev, Bayer Pharmaceuticals, Bombardier, Forterra, General Motors, John Deere, ING, Kroger, Mars, Microsoft, and United—and research shared by BCG experts—a common thread emerged: organizations that thrive in the face of disruption are more customer-centric, innovative, and agile. Here are eight specific takeaways from the sessions:

Don’t wait for disruption to come to you—disrupt yourself. Companies that seize the disruption opportunity don’t wait until performance declines force them to change—they transform themselves preemptively. And the data strongly supports that strategy. Martin Reeves, global director of the BCG Henderson Institute, shared research showing that the relative ROI of preemptive transformations (in which organizations transform before their performance declines) was 50% higher than that of reactive ones. Greg Hagy, GM’s global vice president for corporate development and M&A, noted that disrupting yourself, while not easy, is possible. It takes the right external moves—for example, GM’s groundbreaking deal for Cruise Automation, which has positioned the OEM as a leader in the emerging mobility landscape—and the right internal ones to build organizational networks for change. As Hagy remarked, “Choose who you bring with you…and they’ll bring along the rest.”

Technology is enabling organizations to radically reimagine their customer interactions in new, more personalized ways. Linda Jojo, chief digital officer of United Airlines, shared an inspiring story of how her organization is leveraging digital to dramatically enhance customer-centricity, employee experience, and personalization. Through new tools and platforms that support teaming, free frontline staff from behind their podiums, and empower flight attendants with information, the company is defining a customer experience that is more personal when things go right—and more connected and responsive when delays or other challenges arise.

While emerging-market consumers still represent a huge growth opportunity, success requires a de-averaged approach. From 2010 to 2016, household consumption expenditures in emerging markets grew at a 10.5% compound annual growth rate, versus just 3.9% in developed markets. But that average masks significant differences between—and, most important, within—countries. BCG’s Daniel Azevedo shared recent data shedding light on these traditionally “data dark” environments and then interviewed Juan Martin, Mars’ international president for KIND. In the dialogue, a number of themes emerged. Consumer decision criteria vary significantly from country to country. Opportunities are not limited to the rising middle class—in several countries, an affluent market is emerging. Young consumers and smaller cities offer the highest potential, and digital will shortly influence about 50% of consumer journeys.

Innovation is essential—and increasingly not do-it-yourself. Taking advantage of disruption typically requires new capabilities to bring new products, services, and business models to life. Leading companies are looking outside via M&A and partnerships to accelerate progress and responsiveness in rapidly evolving markets. GM’s Hagy discussed not only the Cruise acquisition, but also the rationale for the acquisition of LIDAR-on-a chip innovator, Strobe. Leslie Donato, vice president of strategy for Bayer Pharmaceuticals, described how that company is leveraging partnerships in gene editing and in general embracing data science across the whole value chain to drive innovation, better patient outcomes, and greater productivity.

AI provides opportunities to rethink every aspect of business. Joseph Sirosh, Microsoft’s chief technology officer for AI, shared stories of how AI is transforming products and services, optimizing operations, empowering talent, and enabling new customer offers across a variety of sectors from energy to retail, health care to food processing—and even cattle breeding. BCG’s latest AI research with MIT Sloan Management Review—also shared with participants—shows that early adopters are stepping up their AI investment.

Large, incumbent companies are successfully embracing agile. As markets move faster, organizations that aspire to set the pace need to up their clock speeds and get closer to their customers. To do that, many are adopting the agile ways of working of digital-native firms—well beyond the IT department, across the whole enterprise. One of the foremost stories of agile transformation is at ING Netherlands, where the work led to a faster, more competitive bank. Marijke Brunklaus, ING’s former chief human resources officer, shared insights from the experience, notably how ING required a dramatically different approach from leadership: setting broad boundaries, stepping away, and then supporting the success of empowered teams.

Today’s shifting geopolitics and trade policy landscape represent a new storyline in a longstanding vector of disruption. Panelists with experience from Bombardier, Forterra, the McLarty Group, and BCG highlighted that geopolitics and trade—because of their impact on costs, operations, and market access—pose major strategic risks and opportunities for organizations. The current dynamic is here to stay. Panelists viewed scenario planning as an underleveraged tool for understanding the impact of possible trade developments and for determining how to proactively shape outcomes for competitive advantage. They argued that beyond shaping policy, organizations must prepare for and adapt to this new business environment. Panelists discussed actions to take involving sourcing, supply chain, and pricing—and encouraged participants to think beyond just physical inputs, as data and financial assets could be affected as well.

In a world where leaders need to run and reinvent their businesses simultaneously, corporate vitality is essential to competitive advantage. John May, Deere’s President, Worldwide Agriculture and Turf Division – Global Harvesting and Turf Platforms, Ag Solutions, Americas and Australia, shared the latest chapter in the company’s 181-year history of market leadership, which involves leveraging digital technology and data to deliver powerful decision support solutions and a hitherto unimaginable level of operational precision to customers. Calvin Kaufman, senior vice president of operations for leading grocer Kroger told a similar story of serial reinvention over a 140-year history and spotlighted how Kroger is delivering growth through channel innovation and experimentation with new products, services, offers, and formats. BCG’s Reeves made the point that those companies that thrive in turbulent times are “ambidextrous”—skilled at positioning themselves for tomorrow’s game while playing today’s—and that corporate vitality is essential for organizations that aspire to be serial reinventors and capture the disruption opportunity.

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