In the past year in particular, the dramatic shift in the global economic balance from developed to developing countries has created new growth opportunities for businesses. Add to this the resurgence in M&A and capital markets activity, and the result is a reshaping of the competitive environment as organisations refocus their growth strategies into emerging markets.
In parallel, rapid advances in technology and innovation are triggering changes to business models and providing greater opportunities to generate higher value, especially from analytics. Equally, these same drivers present risks of disruption and competitive displacement to businesses that fail to respond quickly and effectively.
Cyber security and the growing importance of data and analytics are great examples of the disruptive shifts under way. With cyber threats escalating relentlessly, no business any where in the world can afford to ignore them. And with the opportunities and challenges around data rising up board agendas globally, differentiation through data is ever more important – and achievable.
Meanwhile, as the reverberations from the financial crisis continue to play out, public policy makers and regulators are intensifying their oversight of markets, seeking to avoid a repeat of the turmoil. This expansion in regulation is taking place against a background of rising systemic risks, as global business becomes increasingly interconnected. And with talent remaining a key competitive differentiator, business leaders worldwide are concerned that a shortage of skills will limit growth.
The global forces at play – and the resulting uncertainty – are impacting all of our clients: mid-sized organisations are no longer shielded from global trends, because they now operate in the same complex international environment as multinationals. And, with market instability and uncertainty expected to continue, our clients know that any sustained advantage is elusive or challenging at best – making resilience, and the ability to seize opportunities, increasingly vital.
These shifts are changing the drivers of competition in the advisory industry.
First, the rising complexity generated by the megatrends is impacting the full breadth of our clients’ organisations. As a result, their demand for projects is becoming increasingly multi-disciplinary.
Second, with growth expected to be faster in emerging markets, businesses are looking to those firms with a global footprint to help them navigate new markets.
Third, the rising sophistication of procurement and increasing use of ‘preferred supplier’ lists has consolidated businesses’ spending. The expectation of a consistent global experience and a desire for the efficiencies to be gained by using one supplier is rapidly becoming a global trend.
In response to these shifts, the value proposition of our Advisory businesses has evolved towards a higher emphasis on global reach and end-to-end capabilities. This, in turn, is pushing the industry towards further consolidation, reflecting the widespread acceptance that those firms that can deliver strategy through execution – and at a global scale – can bring improved value to clients.
While scale itself is not the differentiator, it does matter. Why? Because it helps to provide the investment in relationships, diversification and investment capacity to do things that are differentiating – like building relationships, recruiting capabilities in anticipation of demand, and accepting performance risk. In other words, being able to bring together all the tools needed to solve complex problems.
Societies themselves are also being challenged by the megatrends. We will continue to work on the implications of these trends and help our clients tackle their toughest problems. This process of defining our future relevance needs to be driven by a clear purpose: to build trust in society and solve important problems.
On these pages last year, I highlighted how we’d responded to shifts in the marketplace by delivering ‘strategy through execution’. This is a multi-specialist model, under which we integrate deep competency and sector expertise across PwC’s global network to address clients’ needs across their full value chain.
Put simply, today’s clients want the right strategy and the ability to execute it. ‘Strategy through execution’ enables us to deliver on both fronts, by providing strategic advice based on an understanding of the risks and opportunities in implementation. ‘Strategy through execution’ is equally relevant to Deals, where our vision is to be recognised as the undisputed leading global transactions and crisis adviser. While our global Deals business is already market-leading, we still foresee major potential for further profitable growth.
This potential was increased even further by our purchase earlier this year of Strategy&. It’s an exciting and transformational acquisition – disruptive in the market and equipping us to meet clients’ needs and deliver the value they’re looking for. The results to date confirm that adding Strategy& has made our already compelling client offering even stronger.
By bringing Strategy& on board, we’ve moved to meet – and get ahead of – the evolution of our marketplace. The unique blend of our combined Consulting, Deals and crisis capabilities, together with our proposition to deliver from ‘strategy through execution’, makes sure we continue to deliver and support our clients with their business issues, no matter where they are situated.