| | | | | | | | | | | | | | | | | | Agility Update September 2020 In keeping with the arrival of spring amidst the chaos of the pandemic, Agility Update September is focusing on the rare opportunity to ‘Build it Better’. First off is the results of a survey by INSEAD that throws a spotlight on how European board members are dealing with the elephants-in-the-room issues of the day. Following this is an evidence-based article on the traits of transformative CEOs and how their leadership translates to success for their organisations. To conclude, we introduce the idea of the MBM – the modern business model. | | | | | | How Boards are Coping with COVID-19 Climate change has popped up as a red flag in a new survey by INSEAD on how corporate boards are managing pandemic-driven challenges. Climate risk came in dead last in the rankings of risk categories by more than 300 participants across Europe including CEOs, CFOs, board chairs, executive and non-executive directors. INSEAD comments: “Arguably, this is the risk area that should most (emphasis by INSEAD) concern business and society, as many stakeholder groups are taking action to change corporate practices in this regard. And without a clear plan, many companies could face government regulations, employee retention issues and customer defections, compounding the Covid-19 crisis with new value-destroying risks.” Major findings include: - a high degree of confidence in the board’s ability to manage risks, with some uncertainty that boards were receiving timely information, and lesser confidence in their ability to manage risks outside regulatory compliance and finance.
- 51% have yet to revisit their culture and diversity practices.
- a great deal of confidence in the state of their resilience so far, though only 57% had a post-pandemic business strategy.
How does your organisation compare? In Australia, organisations that have publicly moved on the issue of climate include BHP, the Farmers’ Federation, Suncorp insurance, and AGL energy. | | | | | | | | The Five Traits of Transformative CEOs Do you have what it takes to lead your business in a crisis? According to BCG, a proven set of five traits set transformative CEOs apart. Successful transformative CEOs: - take decisive action quickly and launch a formal transformation program. BCG research shows 57% of companies launch a formal transformative program within a year, and 14% of companies improved both growth and margin in the previous four US downturns.
- unlock immediate gains to fund the journey and tell a convincing story of change. In addition to cutting costs to free up capital, top-performing organisations improve capital efficiency and deliver quick wins to boost revenue e.g. using digital to improve pricing or optimise promotions can increase revenue by 4% to 6%, while also improving EBIT margins by up to 2 percentage points.
- include an explicit emphasis on boosting growth and vitality, often through a higher level of investments. Investments in R&D and digital for new business models create more value and increase the likelihood of success by up to 29 percentage points.
- are able to think like a new CEO, with no legacy bias, and take bold steps shaking up established ways of thinking to boost the odds of a successful transformation by 7 percentage points, on average.
- understand that transformation is a race without a finish line. BCG analysis revealed that companies with an above-average long-term strategic orientation for their transformations outperformed those with a below-average orientation by almost 5 percentage points. In turbulent times, this lead increased to 7 percentage points.
| | | | | | SaaS to MBMs Businesses accelerating their move to digital solutions in the pandemic lockdowns have driven US$14.3 billion in global VC investment into B2B productivity solutions in Q2, 2020. Within the B2B sector, software-as-a-service (SaaS) startups seem to be the winners, reports Sifted. An example is Romanian SaaS company UiPath and the first European Decacorn. Started just five years ago, the robotic process automation vendor is now worth US$10.2B and joins the Accel Cloud Decacorn family which includes Atlassian, Crowdstrike, Docusign, Dropbox and Slack. In Australia, KPMG’s Venture Pulse Report showed startup investment hitting new highs reaching US$944.7M, up from US$627.3M in H1 2019. However, the number of investments in Q2 was significantly lower at 44 compared with 99 in the same period of 2019 showing the continuation of an existing trend: Bigger chunks of capital are being pumped into scaleups, while less is going into seed-stage rounds and angel investment. Three of Q2’s largest deals were Judo Bank, EdTech startup Go1, and design darling Canva. To get ahead of the curve, investment company Build Group argues that entrepreneurs need to grow traditional SaaS into a three-pronged Modern Business Model (MBM) that incorporates a: - community of active B2B and B2C users that creates a network effect due to their interactions.
- marketplace that delivers offers from sellers and suppliers to meet customers’ needs.
- secured data lake powered by AI that enables customised offers and insights.
MBMs already occupy four of the top 10 spots of the S&P 500’s most valuable companies: Apple, Amazon, Alphabet (Google), and Microsoft. Click here for more examples of new MBMs including one that matches consumers who need car repair financing with lenders; and an online marketplace and AI-driven software solution for boutique gyms, salons, spas, and their clients. Naturally, managing cyber risk will rise in lockstep with increasing dependency on technology, creating more entrepreneurial opportunities. An overview of the Australian government’s recently released cyber security strategy is here, and the 52-page report is here. | | | | | | | | | | | | | | | | | | | | | |
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