Three no-regret moves to reinvent for growth

The coming decade will be a wild ride, as AI and climate change reshape the economy. These will be extraordinary shifts, likely resulting in a very different industrial system than the one we’re starting with. Along the way is a once-in-a-lifetime mix of possibilities and constraints, spurring innovation and collaboration among companies and putting trillions of dollars up for grabs.

How will this play out? In our analysis, AI, climate change and other megatrends will push companies to create new value propositions and business models, supported by new capabilities, often including those of ecosystem partners. These partnerships will come together, break apart and form and reform in dynamic ways to serve a set of basic human needs—how we move, how we make and build things, how we feed and care for ourselves, and how we fuel and power society. We call these ‘domains of growth,’ and you can think of them as value pools or zones of economic activity.

This novel way of looking at our economy requires leadership teams to think and act in new ways. Whether your company leads or lags—or hasn’t left the starting gate—we’ve identified three sets of no-regret moves.

Ignite innovation everywhere. Start by examining your business, operating and energy models, as these areas are the most likely to require big changes. As industry boundaries blur, smart companies will seek out new ways to transform how they create, deliver and capture value.

A good example is Japan-based Sumitomo Chemical. To pursue growth opportunities in the circular economy, the company created a digital platform that draws on its skillset in material analysis. The platform, called Biondo, connects buyers and sellers of a wide range of materials useful in recycling and upcycling.

Master the right sources of advantage. As you chase new growth opportunities, which foundational sources of advantage will you rely on, and how robust are they? Take technology, which creates non-linear advantages. Top companies pursue tech investments beyond a threshold level. They don’t just migrate certain aspects of the business to the cloud, for example; they move entirely to cloud-native technologies, including front-, middle- and back-office data.

Turn obstacles into enablers. Last, competing in the coming decade will require transforming today’s obstacles into enablers of growth. Common blockers include slow decision-making, poor resource allocation and insufficient capabilities needed to succeed as part of an ecosystem. Top-performing organisations already generate more than 60% of their revenues from business ecosystems and expect that percentage to increase in the future. Even more significant is how leading companies use ecosystems to outperform. PwC research finds that leading companies are 1.6 times as likely as other companies to leverage ecosystems in search of new customers and markets; take advantage of privileged insights, such as data on customers’ needs; and identify complementary skills and capabilities.