Innovation: CEOs must admit what they don’t know to prepare for business disruption

Innovation: To face change, admit what you don’t know

CEOs responding to the KPMG 2016 Global CEO Outlook share their concerns about their ability to understand and prepare their organizations to face the unknowns and unfamiliar disruptive forces.


KPMG International


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What are the characteristics of a CEO who can successfully take on the next 3 years? According to KPMG’s 2016 Global CEO Outlook survey, top CEOs share a common concern about their ability to navigate the changing business landscape.

Knowing what they don’t know and admitting it, is the first step. CEOs recognize that they are operating in a new world. For example, the KPMG survey found that 69 percent are concerned about dealing with issues that they have never had to confront before in leadership positions.

“The complexity of the issues CEOs face today and the speed with which the market requires them to respond is putting a significant amount of pressure on the front office,” says Simon Collins, Chairman, KPMG in the UK. “However, the CEOs I speak with have a real sense of optimism about the future of their organizations. They see change in the marketplace and disruptions caused by new technologies as opportunities to take market share. That said, their optimism is usually guarded by a healthy dose of realism regarding the significant amount of work required within their organizations to adapt to these changes and seize on the opportunities.”

KPMG survey highlights top CEO concerns

They are also concerned about the essence of the fourth industrial revolution, integration of cognitive computing and artificial intelligence. CEOs recognize that their current skills and experience may not be enough.

"Digital Darwinism is unkind to those who wait,” says Karl-Heinz Streibich, CEO of Software AG.

To succeed will require taking advantage of the whole ecosystem of partners – clients, suppliers, start-ups or universities.

New Hope Liuhe becomes a watchful disruptor

Chunhua Chen, former CEO of New Hope Liuhe, an agribusiness enterprise in China, keeps a watchful eye out for disruptors. New Hope Liuhe has been an industry disruptor itself, and has been a pioneer in the industry in many ways.

For example, it is the first agribusiness in China to digitize. Its “Farm Development Plan,” launched in 2013, is a service platform to help farmers. It holds the biggest cache of agribusiness data among Chinese companies, including cultivation data from 460,000 farming units and data on 100 million pigs. This data provides insights about situational changes. For example, New Hope Liuhe can immediately detect an epidemic and implement prevention mechanisms.

New Hope Liuhe is also the first agricultural conglomerate to provide financial services. It plans to expand into other business areas around its two core areas of cultivation and food production, which might include new entensions might include raw materials trading or training and management schools.

Chen realizes that to stay on top, she needs to stay vigilant. She believes that new technology and competition will have the biggest impact on the company’s growth in the next 3 years. Fundamental changes in biotech or gene technology could disrupt the development of the agribusiness industry. At the same time, due to a high demand for agricultural products, companies from other industries will want to enter the sector. “Because they have no experience in agribusiness, they can use totally new business models. The changes they could bring are unimaginable,” says Chen.

CEO experience matters

As time goes by, more experienced CEOs and those who have been with organizations longer (i.e. have been CEOs for more than 5 years) lose some confidence in the growth of external economic factors. Despite this, or maybe because of it, they tend to adopt a more strategic approach to innovation.

2016 Global CEO Outlook: CEOs recognize it’s ‘Now or never’ to drive business transformation

Despite current economic and market uncertainty, Global CEOs express confidence in future growth.

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© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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