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Technology-driven disruption

Growing pains

Technology-driven disruption: Scope, speed and timing

U.S. CEOs are aggressively pursuing digital disruption. Eighty-six percent of CEOs consider their companies to be active disruptors compared with 72 percent last year. And there are no doubts about what is fueling this disruption—for a vast majority of U.S. CEOs, technology is the only significant disruption their business faces, and they see their technology investing as strategic rather than tactical.

For some industries, the change, driven by technology combined with rapidly changing demographics, will be nothing short of a full transformation. Regina Mayor, KPMG’s Global and U.S. Energy Sector Leader, points to energy and car companies as being at the crossroads. “As an energy company, how do you stay relevant in a world with new sources of energy and focus on carbon footprint reduction? With cars not being a status symbol for millennials the way they were for their parents—which companies will dominate car sharing? Will it be carmakers or technology companies that will prevail in the automobile industry, considering that Tesla is being viewed as an extension of a smartphone by millennials?”

86% consider

Disruption means different things for different CEOs, as they strive to replace what’s fast becoming obsolete and keep what works for their companies. Deciding what to disrupt, to what degree and when may be the most difficult decisions any CEO faces. So, while a vast majority of U.S. CEOs consider themselves disruptors, they are nuanced about their approach. “It’s not always an all-out transformation, but a focused introduction of technology that can create value and secure competitiveness,” explains Mike Nolan, KPMG’s Vice Chair of Innovation and Enterprise Solutions.

To Michael Lamach, CEO of Ingersoll Rand, a global industrial manufacturing company: “Technology is the disruptor, and digital is the area of technology that we’re investing in most heavily. Digital is an overlay to our product and service offerings, and it would be difficult for others to disrupt our industry because of the complexity of the physical assets we design, install, and service. But there are opportunities for companies like us to be on the edge of digital technology.”

Other CEOs disrupt certain areas, while keeping others intact. P.F. Chang’s Osanloo considers human interaction in his company’s restaurants to be an integral part of the dining experience, making a customer feel special and facilitating the celebration of a meal with family or friends. “Disrupting human interaction with technology makes me nervous,” he says. The company has, however, completely disrupted its marketing operations. P.F. Chang’s no longer does any traditional marketing or work with advertising agencies. The company’s marketing is now 100 percent digital, with all content created in-house. 

Although she operates in a highly regulated industry, Susan Story, the CEO of American Water, emphasizes the importance of technology to relevance in her sector. “We no longer have binary choice of high-tech work or low-tech work. In the past there was business, and then you laid technology on top of it. Today business is technology. Everything has technology threaded through it. How you most effectively and efficiently incorporate technology within business is what distinguishes digitally transformed companies from those companies that aren’t,” she says.

While the intensity and scope of change may vary by industry, it is inevitable for all CEOs. Sums up Margaret Keane, CEO of Synchrony Financial: “All businesses are at an inflection point. The next few years will be critical for information technology leaders to make key decisions about the intersection of technology and business.”

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