cfo symposium auckland cfos as innovators cfo symposium sept 2014 we live in a vuca world… where...

Deloitte CFO Symposium Sept 2014

CFO Symposium

Auckland

September 2014

CFOs as innovators


We live in a VUCA world… where the future is difficult to predict

REGULATORY

CUSTOMER DEMANDS

CEO OR EXEC CHANGE

GLOBALISATION

TECHNOLOGY ADVANCES

COMPETITIVE INFLUENCES

DEREGULATION

DECLINING ROE

MACRO EVENTS


Changing focus of the CFO… more of a catalyst & strategist

Catalyst Strategist

Operator Steward


Do nothing, or Do Agile… learning to dance with the wind

AGILE MINDS

Rapid Learning Dynamic Shifting

AGILE ECOSYSTEMS Modular, Enables Options to switch

AGILE STRATEGY Continuous Innovation

Agility is the ability to

rapidly and

thoughtfully respond to changing

conditions, moving seamlessly from one

position to

another


Agile Strategy… an integrated set of choices that is continuously sense-checked

Jan/Feb 2014 HBR - Strategic Choice Cascade

Source: Deloitte Monitor Roger Martin


Answers for W2P & H2W… supported by innovation

Ten Types of Innovation


Network

Connections

with others to

create value

Process

Signature

or superior

methods for

doing your work

Product System

Complementary

products and

services

Channel

How your offerings

are delivered to

customers and

users

Customer

Engagement

Distinctive

interactions

you foster

Profit Model

The way in which

you make money

Structure

Alignment

of your talent

and assets

Product

Performance

Distinguishing

features and

functionality

Service

Support and

enhancements

that surround

your offerings

Brand

Representation

of your offerings

and business


Network Target works with renowned external designers to differentiate itself

Process Zara’s “fast fashion“ strategy moves its clothing from sketch to shelf in record time

Product System Scion thinks beyond the car to cater to drivers’ lifestyle needs

Channel Nespresso locks in customers with its useful members’ only club

Customer Engagement Wii’s experience draws more from the interactions in the room than onscreen

Profit Model Gillette uses the “razors and blades” model to create locked-in value

Structure Whole Foods has built a robust feedback system for internal teams

Product Performance OXO Good Grips cost a premium but its “universal design” has a loyal following

Service “Deliver WOW through service,” is Zappos’ #1 internal core value

Brand Virgin extends its brand into sectors ranging from soft drinks to space travel


Empirical research and analysis

A random sample of companies who announced innovations in 2009-11, using bibliometric scans of journals and social media

A merged list of the top innovators in 2010-11, taken from leading publications (to avoid any Doblin bias)


Research: the Joes The average innovator tends to pursue singular, product-based innovation which integrates few other types

0 Types 1 Type 2 Types 3 Types 4 Types 5 Types 6 Types 7 Types 8 Types 9 Types 10

Types

Number of companies

Average number of types integrated:

1.8 types

175

0

140

105

70

35

Source: Doblin Analysis


Research: the Pros Successful innovators look beyond product performance, and integrate twice as many types of innovation

Average number of types integrated:

3.6 types

175

0

140

105

70

35

0 Types 1 Type 2 Types 3 Types 4 Types 5 Types 6 Types 7 Types 8 Types 9 Types 10

Types

Number of companies

Source: Doblin Analysis


Research: the Pros The top innovators outperform the S&P 500…

All “top innovators”

138 companies

S&P 500

5-Year Indexed Stock Price Returns of the Top Innovators vs. S&P 500

Sto

ck P

rice

(in

de

xe

d to

10

0)

2007 2008 2009 2010 2011


Research: the Pros …And integrating more types of innovation delivers superior financial returns

3-4 Types of

Innovation

59 companies

5+ Types of

Innovation

45 companies

S&P 500

1-2 Types of

Innovation

34 companies

5-Year Indexed Stock Price Returns of the Top Innovators vs. S&P 500

Sto

ck P

rice

(in

de

xe

d to

10

0)

2007 2008 2009 2010 2011


Changes are happening now…

Deloitte CFO Symposium Sept 2014 © 2014. For information, contact Deloitte Touche Tohmatsu Limited.

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Source files from here on – not part of main deck

16

Deloitte Greenhouse PowerPoint

timesaver – October 2013

What are our goals &

aspirations?

Where to play?

How to win in chosen markets?

What capabilities

are needed?

What management

systems?


The best strategies are coherent, aligned and reinforcing

• The most robust strategies are those in which the how to win reinforces the where to play and vice versa

• The most satisfying strategies are those in which the where to play and how to win choices have the potential to meet the desired goals and aspirations

• The most sustainable strategies are those in which the where to play and how to win choices are buttressed by appropriate, distinct, and reinforcing capabilities, organizational systems and initiative programs


Agility and innovation qustions

• Can our strategy change course at the execution level based on market demand

and other pertinent factors?

• Are strategic priorities pushed throughout the organisation? Do we have the

ability to identify strategy connections and implement mid course?

• Do our current projects deliver value during the project or only at the end?

• Does our vision and values provide guidance and direction on how people

should act and behave in times of uncertainty?

• Is there a relentless focus on customers? Is there a trend towards customised or

productised experience? Does our organisation shape or react to customer

needs?

• Is there a strong continuous improvement mindset to drive new ideas in

anticipation of changes and uncertainty?

• What is the appropriate decision framework for our organisation? Does it take

many layers and time to make decisions at any level?

• Is our organisation a project team oriented workforce that creates flexibility and

incorporates dynamic skills to move as per market demand?

• How easily can new technologies be deployed in our business? How do we

manage and execute change in technology?

AGILE STRATEGY

AGILE MINDS

AGILE ECOSYSTEMS


we need

and be able to adapt quickly


“Play to Win” -- Overview of Cascading Strategic Choices

What Are

Our Goals and

Aspirations?

Where

to Play? How to Win?

Required

Capabilities?

Configuration of

Processes and

Systems?

What are

our growth

requirements?

What are our

values and culture?

What kind of

organisation do we

want to be for our

constituents?

What are the key

activities required to

win in our “Where to

Play?”, Choice?

Differentiation:

What positioning

differentiates

us from our

competitors in terms

of services?

What are the

sources of

differentiation in

terms of go-to-

market strategy?

Markets:

In which markets

should we compete?

In which part of the

value chain should

we compete?

Segments:

Where should we

compete

geographically?

Which customer

segments should we

prioritise?

What specific

capabilities are

required to enable

the ‘how to win’

choice?

What performance

must functions

provide in terms of

cost, quality, and

lead time?

What gaps exist in

terms of capabilities

and how can they be

filled?

How should assets

and activities be

configured and

managed to create

the required

capabilities?

What kind of people,

systems and assets

create these

capabilities?

What are reasonable

alternatives?

What are the

expected economic

implications of the

chosen path?

What metrics and

incentives?

The Primary Objective of the effort is to formulate a strategy which provides guidance to making key decisions and/or lays out an

analytical path forward for issues that remain open

cfo symposium auckland cfos as innovators cfo symposium sept 2014 we live in a vuca world… where...

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