CEOs see tech disruption as business opportunity

11 October 2017 5 min. read
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US CEOs are looking to use technology to their advantage, with around 60% seeing technological disruption as more of an opportunity for their business than a threat. Companies in today’s accelerating business environment are attempting to utilize innovation to offset global uncertainty. Tellingly, cybersecurity risk has decreased in severity in the eyes of businesses, as management of the issue has increased.

Technological advances and subsequent rapid consumer adoption are forming a business landscape where start-ups and cross-border competitors are able to quickly leverage new ideas and enter new markets. ‘Disruptive’ startups have launched business models and product lines that threaten the market share of traditional players and incumbents across multiple industries. Disruptors are forcing businesses to quickly adapt to changing market conditions, or else face declining revenues.

In a new report from KPMG, titled ‘Disrupt and Grow: 2017 Global CEO Outlook’, the professional services firm examines how global CEOs are reacting to current disruptive trends, as well as the various side-effects of the area in which the lion’s share of disruption is occurring – digitalisation.

CEOs view on disruption

While disruption creates numerous risks for businesses unable to adapt to rapid and significant changes in their market segment, the potential for disrupting their own market – or leveraging disruption to diversify – is seen as an opportunity by a majority of CEO respondents.

74% of all CEOs responded that their organization is actively disrupting the sector in which they operate, rather than waiting to be disrupted by competitors. 65% of CEOs also responded that they see technological disruption as more of an opportunity than a threat.

CEOs disrupting sector in which they operate

Indian CEOs were the most active in regard to ‘disrupting their own sectors’. 83% of Indian CEOs claimed that they were actively engaged in disruption. French respondents followed, with 79% saying that potential disruption is the way forward for their market position.

72% of US CEOs said they were disrupting their sector, tied for fifth with Germany and Australia. Most CEOs are, therefore, reticent to say that their firms are not engaging in ‘tech disruption’.

Views on technological disruption

CEOs were also asked whether they perceive technological disruption as more of an opportunity or a threat. India took the number one spot again, with 80% of respondents stating that they see it as an opportunity. Mirroring a recent survey from KPMG, China followed at 75%, while Germany took third spot with 74%. 60% of US CEOs surveyed responded that they see technological disruption as an opportunity, with around 40% saying that they see tech disruption as more of a threat.

Leveraging technology to drive disruption is easier said than done, however. “New, disruptive technological innovations are emerging at a rapid pace. Today’s hot tech breakthrough could soon be yesterday’s news. With so many options to choose from, it’s extremely hard to methodically scan, assess, pilot, and deploy new technologies,” commented KPMG UK head of technology Tudor Aw.

Risk landscape 2017-2016

The perceived risk landscape of disruption has changed slightly since last year. Cybersecurity, then occupying the number one spot, has dropped to fifth, while operational risk has launched to number one. As with companies increasingly invest in governance and risk management in light of market uncertainties, operational risk has risen to the forefront of CEOs’ minds. Reputational/brand risk is a new entry to the top five as well, driven principally by emergent social media risks, as well as a growing proportion of ‘on-demand’ employees who are less likely to ‘live’ a brand’s values.

The reason for the decline of cybersecurity as a CEO concern is, potentially, that many CEOs are increasingly confident that they have the particular risk under control. Nevertheless, in Autumn 2017, the world’s largest cybersecurity consultancy, Deloitte, was rocked by a cyberattack. If more high-profile incidents occur, cybersecurity may well retake the top spot on the risk rankings.

Industries prepared for a cyber event

With respect to CEO confidence in regard to cybersecurity preparedness in case of a cyber event, almost half (49%) of infrastructure CEOs say that they are fully prepared. In the automotive industry, 47% of respondents also felt fully prepared. Consumer and retail, which has been hit by numerous customer information breaches – with large amounts of personal information, including credit card numbers, ending up on the street – is, nonetheless, confident about their preparedness for a cyber event, at 45%.

Commenting on the study and the challenge ahead for global CEOs, KPMG International Chairman John Veihmeyer said, “They say they are taking the necessary steps for their business to be a disruptor, rather than be disrupted. They recognise the impact of increased geopolitical and economic uncertainties on their business, and are working hard to be prepared. Moreover, they understand that speed-to-market and innovation are strategic priorities for growth in these uncertain conditions.”