Hyperconnected organisations: How businesses are adapting to the hyperconnected age

THE HYPERCONNECTED ECONOMY: PHASE 2

HYPERCONNECTED ORGANISATIONS

HOW BUSINESSES ARE ADAPTING TO THE HYPERCONNECTED AGE

© The Economist Intelligence Unit Limited 20151

The hyperconnected economy: Phase 2Hyperconnected organisations

About this study 2

Executive summary 3

Introduction 5

Understanding the challenge 6

Organisational adaptation 8

Market disruption 11

Conclusion 13

Appendix: Survey results 14

Contents

1

2

3



The hyperconnected economy is a multi-phase research programme conducted by The Economist Intelligence Unit (EIU) and sponsored by SAP.

Hyperconnectivity is defined as the sharp increase in the interconnectedness of people, organisations and objects that has resulted from three consecutive waves of technology innovation: the Internet, mobile technology and the Internet of Things (IoT). This report investigates its impact at an organisational level and draws on the following two research methods.

1. A global survey of 561 executives. Survey respondents were drawn from a range of industries, including 16% from financial services, 13% from manufacturing and 11% from IT and technology. One-third of respondents are of C-level seniority or higher; one-third are senior vice-presidents, heads of department or of equivalent seniority; and the remaining one-third are other senior managers representing a range of industries. Just over half of respondents (58%) work for companies with annual revenues of up to US$5bn; the remaining

42% have annual revenues above US$5bn. The geographical split is as follows: 30% North America, 30% Europe, 30% Asia-Pacific, and the remainder from the rest of the world.

2. A series of expert and executive interviews. The EIU interviewed the following experts and executives for this report (listed alphabetically):

l Phil Abram, chief infotainment officer, GM

l Andrew Brem, chief digital officer, Aviva

l Jim Buczkowski, director of electronics and electrical systems engineering, Ford

l David McCorquodale, UK head of retail, KPMG

l Mark Curtis, chief client officer, Fjord

l Davide Strusani, assistant director, economic consulting, Deloitte

The Economist Intelligence Unit would like to thank these interviewees for their time and insights.

The report was written by Michael Kapoor and edited by Pete Swabey.

About this study



Hyperconnectivity is high on the corporate agenda. The majority of executives believe that failure to adapt to hyperconnectivity—the growing interconnectedness of people, organisations and machines that results from the Internet, mobile technology and the Internet of Things—is the biggest risk their organisation faces.

Executives generally feel positive about hyperconnectivity—most say it presents more opportunities than threats, and they believe they are doing a good job of adapting to it.

But while experts warn of the need for substantial change to meet the challenges of hyperconnectivity, only about one in five survey respondents expect to restructure “radically” as it intensifies in future. These are the findings of a study by The Economist Intelligence Unit, sponsored by SAP. The study, which is based on a global survey of 561 executives, examines their views on hyperconnectivity and its impact on their organisation.

The key findings are as follows:

Adapting to hyperconnectivity is a matter of survival, most executives agree. Six out of ten survey respondents agree that failing to adapt to hyperconnectivity is the biggest challenge their company faces. This view was especially common among retailers, reflecting the considerable disruption seen in this sector in the last decade.

Hyperconnectivity is nevertheless viewed positively, and organisations believe they are adapting well. Eight out of ten respondents believe that hyperconnectivity has been beneficial for their organisation, and only one-third say it presents more threats than opportunities. This may reflect the fact that its impact within organisations has been broadly positive by boosting collaboration, for example.

However, the extent to which organisations have adapted is limited. Under half of respondents have introduced digital skills training, and while experts predict that it calls for deep organisational change, just under one in five (19%) expect to reshape their business “radically” in response to hyperconnectivity.

The Internet is still seen as having more potential to be revolutionary than mobile technology and the Internet of Things (IoT). This is true even among industries such as manufacturing, in which embedded IoT connectivity is expected to have far-ranging implications. This suggests that companies expect the future impact of hyperconnectivity to be a continuation of historical trends, rather than introducing new and unprecedented changes.

Executive summary



Executives see digital offerings from established competitors—not start-ups—as their biggest source of competitive pressure. The threat of disruption by a Silicon Valley start-up is one of the most widely discussed challenges businesses face today, but in fact more respondents say they have felt severe or moderate competitive pressure from the digital strategies of their established competitors.

Hyperconnectivity is seen as important, but there are signs of inertia or complacency. Experts interviewed for this report warn of the need for “deep” and “fundamental” organisational change, and the risk of “irrelevance”. While they acknowledge hyperconnectivity’s significance, most respondents give few signs of this kind of radical action. Time will tell if their confidence is merited.



It is not yet known how many smart watches—a recent high-profile extension of hyperconnectivity—Apple has sold since they were introduced in April 2015. Market watcher Slice Intelligence, which analyses US consumer spending, believes the number to be around 2.5m worldwide, which suggests that annual sales will be around 11m units.

This is not a bad start for a new product, but it’s a drop in the ocean compared with the 60m-plus iPhones sold in the first quarter of 2015 alone. Observers are eagerly watching for clues whether the Apple Watch will be a short-lived toy, with limited functionality and a fierce price tag, or whether it will follow the lead of earlier Apple products, from the iPod to the iPad, and create a new market segment.

Mark Curtis, chief client officer at service-design consultancy Fjord, is among the believers. Sales will be big, he expects, “because you don’t have to take them out of your pocket”. It’s the sort of simple advantage that has the potential to change consumer behaviour—and in so doing change the face of business.

In October 2014 The Economist Intelligence Unit (EIU) published The hyperconnected economy, an examination of how the rapid increase in the interconnectedness of people, organisations and

objects seen in the last 30 years is affecting the global economy. It found that from a global perspective, this hyperconnectivity is a tide that raises all boats—in fact, hyperconnectedness is expected to be especially valuable for developing economies.

But for organisations, it poses challenges as well as opportunities. Look no further than the industries disrupted by online media delivery or mobile apps, such as publishing or camera manufacturing, to see how high the stakes are.

In the second phase of the hyperconnected economy programme, therefore, we investigate the organisational impact in more detail through a survey of executives and a series of expert interviews (see “About this study”).

This reveals that businesses are well aware of the significance of hyperconnectivity—indeed, the majority believe that adapting to it is the key challenge their organisation faces.

But there are also signs of a degree of complacency. The majority of companies believe they are doing a good job of adapting to hyperconnectivity. Yet while experts warn of the need for substantial changes, there is little evidence in our survey sample that radical measures are under way.

Introduction



Organisations are well aware of how significant hyperconnectivity is for their future, this study reveals. Nearly six out of ten (59%) respondents agree that failing to adapt to hyperconnectivity is the biggest danger faced by their company.

Predictably, its importance is most keenly felt in those industries that have been most acutely affected by the Internet so far. More than two-thirds (68%) of retailers say that the need to adapt to hyperconnectivity is their company’s biggest challenge, for example, with a well above-average 44% saying that it “presents more threats than opportunities” (compared with one-third of all respondents). This is not surprising given the disruption caused to their industry over the past

decade or more.A wave of retailers, from the bookseller Borders

to the video chain Blockbusters, has been driven out of business as sales have migrated to the net. More recently, retailers have been struggling to get to grips with omnichannel retail, linking different sales platforms such as physical stores, the Internet and smartphones. These have often been launched as separate divisions and profit centres, leading to unfortunate outcomes, such as the refusal by a retailer, for example, to accept at a physical store returned items that had been bought online.

Addressing this situation requires “fundamental change”, says David McCorquodale, head of retail

Understanding the challenge 1

Agree Disagree Don’t know

Consumer goods

Financial services

Healthcare, pharmaceuticals and biotechnology

IT and technology

Manufacturing

Retailing

Chart 1. The majority of firms believe that failure to adapt to hyperconnectivity is their organisation’s biggest risk

Failure to adapt to hyperconnectivity is the biggest risk that our organisation faces (% respondents)

Source: The Economist Intelligence Unit survey, May 2015.

45 33 21

64 24 12

55 33 13

67 29 5

60 30 10

68 21 12



at KPMG. Sometimes, even established retailers are at a surprisingly early stage here. UK retailer Marks & Spencer only took control of its own website last year; previously its online sales had been outsourced to Amazon. Now, it has relaunched some of its stores to offer omnichannel services, with iPad-wielding sales assistants and Internet kiosks allowing customers to buy items online if they are not available in-store.

Retail remains one of the starkest examples of the upheaval that can be wrought by rapidly changing consumer behaviour enabled by new connectivity, but the same argument applies to many other sectors. Some of these sectors may be underestimating hyperconnectivity’s disruptive potential, the survey suggests.

Only 45% of consumer goods companies, for example, consider hyperconnectivity to be their greatest threat (see chart 1). In fact, these companies are arguably among the most exposed.

Hyperconnectivity is disrupting the retail channels through which they reach customers. It is also assisting the globalisation of manufacturing, which affects the goods they sell, and it is empowering customers to provide feedback over the Internet and social media, which affects everything from branding to marketing.

Nike, for example, has transformed itself from a sportswear maker to a fitness and lifestyle brand, using social media to foster communities and driving customer engagement through mobile fitness apps. Car companies are integrating digital connectivity both into their production and into the products themselves, thereby improving component design and mechanical reliability.

Most companies have acknowledged the scale of the challenge posed by hyperconnectivity, the survey reveals. However, it also suggests that they have not acknowledged how much they will need to change.



The three components of hyperconnectivity, as defined in this study, are the Internet, mobile technology and the Internet of Things. It is not surprising that for the majority of respondents the first of these—the Internet—has had a revolutionary or significant effect on their organisation so far (84%, versus 71% for mobile and 71% for the IoT).

It is surprising, however, that respondents are most likely to say that the Internet will have such an effect in the next three years (80%, versus 75% for mobile and just 57% for the IoT).

Even among manufacturers, only 61% believe the IoT will have a revolutionary or significant effect. This is especially surprising given the transformational impact that the embedded systems are expected to have both on the manufacturing process and on the resulting products. This suggests that respondents might be more focused on the hyperconnectivity trends they know and understand than the ones that are still emerging.

This helps to explain why respondents are remarkably confident about their progress in adapting to hyperconnectivity. Overall, a significant majority (69%) say they are doing a decent job of adapting to hyperconnectivity—even in the least confident sector (healthcare), around two-thirds of respondents reckon they are adapting well.

This confidence may also reflect the fact that for many respondents, hyperconnectivity has had a

positive organisational impact so far. For example, 45% believe that collaboration, both within and between divisions, has improved as a result of hyperconnectivity.

The most commonly cited organisational impact of hyperconnectivity is that business processes have accelerated, as identified by 47% of respondents. Companies appear to be reacting to this acceleration of pace through automation: the most common organisational response to hyperconnectivity is to have automated business processes (46% of respondents).

Nonetheless, respondents’ bullishness masks fairly limited progress. For example, only 39% have introduced digital skills training. With companies from banks to shops saying that their offerings need to span web and physical stores and manufacturers talking of the importance of digitalisation to improving efficiency, digital skills might be expected to be standard across industries by now.

Many respondents believe that the continued growth of hyperconnectivity will change power dynamics in the organisation, with 45% saying the control of central management will be reduced. This is a positive indication, given the recommendation of Fjord’s Mr Curtis that companies need to become more agile, with less rigid hierarchies, if they are to evolve at the pace of hyperconnectivity.

Mr Curtis likens the process to the different states of matter. Many companies are still in a solid

Organisational adaptation2



On autopilot“Infotainment has become a core source of competitive advantage for the auto industry,” according to Phil Abram, chief infotainment officer at US car manufacturer General Motors. Now that engine and component design are increasingly standardised and fuel economy is regulated, in-car information and entertainment systems are among the few ways in which carmakers can differentiate their products these days.

GM is currently rolling out 4G connectivity across its vehicle range worldwide, offering its customers more rapid Internet access on the move. Mr Abram says that “the essential elements of an infotainment system do not vary by [geographical] market, although the detail components might”.

Another iconic US car maker, Ford, gained a competitive edge by launching an effective infotainment system back in 2007, ahead of many of its rivals. However, it damaged its reputation with a glitch-ridden upgrade some time later, which is now being replaced by a simpler, more reliable system.

In reality, both companies are largely outsourcing the work for these infotainment systems to companies like Microsoft, which have developed software that allows people to link their smartphones to the car’s own systems. The carmakers themselves are concentrating many of their own resources on the information side, feeding car-performance information to drivers

and dealers to allow for timely maintenance, and to their own development teams so that real information continuously informs product development and production.

According to Jim Buczkowski, Ford’s director of electronics and electrical systems engineering, one challenge is the need to sieve the mass of information now available from in-car sensors to extract that which is usable. Ford hired in a chief data and analytics officer at the end of last year to co-ordinate these efforts in what Mr Buczkowski describes as a “company reorganisation”.

In other words, these companies are putting some “meat on the bones” of theories of smart production and product development as they start to get to grips with analysing the wealth of data they can now generate. They are also keeping a keen eye on developments from tech competitors such as the search engine Google, which has a project to develop a driverless car. GM has worked with Google (and Apple) on bringing phone integration to its vehicles. Phone integration allows users to interact with select applications from their smartphones through the vehicle systems (steering wheel controls, touch screen, etc.).

“We make sure that we can change with the market by building platforms,” he says, adding that driverless cars could completely change the market for everything from commuter cars to taxis. Rather than fighting to protect its existing customer base, GM plans to ensure that it has the products to sell to the new type of customer.

state, stable and predictable but slow to react to change. More advanced firms have become fluid, with adaptable structures that can flow into new areas as they emerge. The real need, he says, is for companies to become like gas—formless beasts that exist to cater for constantly changing customer demand.

Indeed, hyperconnectivity calls for “deep organisational change”, according to Mr Curtis. However, only 19% of survey respondents believe

they will have to restructure “radically”. The same proportion (19%) has introduced a

chief digital officer (CDO). There is some evidence to suggest that appointing an executive to lead digital activities is a growing trend: the CDO Club (a global network of chief digital officers) says that the number of CDOs is doubling each year—to 1,000 worldwide in 2014 and an expected 2,000 this year.

US motor giant General Motors, for example,



hired Phil Abram as its chief infotainment officer last year to advance the information and entertainment systems built into its cars. Previously, Mr Abram had worked for electronics firms such as Japan’s Sony as the carmaker recognised that shifting consumer tastes meant looking beyond its traditional expertise. Similarly, Aviva, the international insurer, hired Andrew Brem as its chief digital officer in August last year to overhaul its digital interaction with customers. His background was with utility and mobile-phone

companies, rather than in insurance. It is debatable whether a new executive role is

the best way for every company to adapt to hyperconnectivity, so the low base of CDOs in our sample is not necessarily evidence of inertia.

Nevertheless, there are signs in the survey data that on an organisational level, companies are overly confident of their ability to weather the hyperconnectivity storm. When asked about how it has affected their competitive stance, the story is quite different.

Revolutionary impact

Significant impact

Limited impact

No impact Don’t know / not applicable

Internet

Mobile

IoT

Chart 2. More respondents believe the Internet will have a more significant or revolutionary impact in the next three years than the Internet of Things

What impact do you expect the following technologies to have in the next three years? (% respondents)


34 46 13 3 4

33 42 14 5 6

31 26 18 6 18



Much has been written about the disruptive potential of digital companies, from big retailers such as Amazon and eBay to person-to-person platforms such as Airbnb, a site allowing people to rent out their houses to people who might otherwise choose a hotel. The impact of these companies has been strong, driving scores of shops, magazines and indeed hotels to the wall as they lose sales to online competitors.

Nonetheless, our survey finds that executives are more concerned with competition from existing companies than with being wiped out by a wave of new-tech upstarts: some 57% say that they have faced notable competitive pressure from digital products launched by established companies, compared with less than half who feel pressure from digital start-ups. Respondents expect competition on both fronts to grow in future.

This is not as surprising as it might seem at first glance. While the likes of Amazon and Airbnb are highly visible owing to their novelty, in many industries established players remain dominant. In these sectors, the main contribution of digital start-ups has been to force companies to adopt digital practices.

Supermarkets offer an example. In many countries, online groceries were first launched by Internet-only brands, such as Ocado in the UK. As time went on, supermarkets launched their own Internet-based grocery services. Online sales still account for only a small proportion of grocery shopping, but the big supermarket chains, from

Carrefour in France and Asia to Walmart in the US, are spending heavily on their own online offerings. These operate in parallel with services such as Click & Collect, which exploit their big store networks and provide an advantage over Internet-only retailers such as Amazon.

The strategic significance of such moves online is evident in the fact that supermarkets appear to be underpricing this service. According to HSBC’s retail analyst Dave McCarthy, the true cost of a home delivery is around £20 (about US$30), whereas supermarkets typically charge £3-4. In the UK alone, he estimates that this underpricing costs the major supermarket chains £100m a year. Clearly, though, supermarket retailers consider this burden to be preferable to the losses suffered by rivals which are only now struggling to break into the online market.

It is a similar story in other sectors. International banks, from HSBC to Citibank, have started to offer smartphone apps allowing people to make payments and complete other transactions from mobile devices.

Other sectors of the financial services industry are following suit. Insurance, for example, has lagged behind banking to date, but that is beginning to change as the sector is waking up to the competitive consequences of hyperconnectivity says Mr Brem at Aviva.

“It’s only a matter of time before a digital disrupter hurts insurers,” he says, pointing to the impact of digital start-ups from PayPal to the taxi

Market disruption3



Will create severe competitive pressure

Will create moderate competitive pressure

Will create limited competitive pressure

Will create no competitive pressure

Don’t know / not applicable

Start-ups driven by digital technology

Digital offerings from our traditional competitors

Established companies that are using digital technology to enter our market(s) for the first time

Chart 3. Respondents are more likely to see digital offerings from traditional competitors as sources of severe or moderate competitive pressure than start-ups

How do you expect the following to affect competition in the next three years? (% respondents)


25 33 20 17 6

23 43 20 9 4

22 35 25 13 5

service Uber. “With Uber, it’s one click and your car is on its way. You can see it approach on a map. You know who your driver is. No cash, no hassle. People will start to resent firms that do not offer this [kind of] convenience.”

He points out that digital has already transformed many areas of finance, from payments to lending and investing, but that insurance has yet to embrace the change. Customers now expect a choice of ways to interact with their insurer or broker, in person, over the phone, online or through chat rooms. That means insurers must join up their services in the same way as omnichannel retailers.

Mr Brem adds that “we have a mass of data allowing us to personalise offerings to customers”. Motorists can use data from their cars to show that

they are safe drivers, reducing premiums, while homeowners and people buying health insurance can be monitored to show their risk levels, allowing them to take out cover tailored to their needs and lifestyles. “It’s a great opportunity—and we will become irrelevant if we don’t take it.”

Fortunately, just as hyperconnectivity exposes companies to new sources of competition, it also allows them to exert some pressure of their own. Nearly half of respondents (47%) say their organisations have reacted to the competitive pressure resulting from hyperconnectivity by entering new markets—far more than those who have lowered prices (28%) or exited the market (18%), for example. Meanwhile, 41% say hyperconnectivity has allowed them to identify new markets that are suitable for them to enter.



Our study shows that companies are well aware of the significance of hyperconnectivity. The unprecedented uptick in interconnectedness that began with the Internet, was extended by mobile technology and now continues with the Internet of Things is not just a technological trend—it is one of the era’s defining characteristics. It’s little wonder that companies see adapting to it as their greatest challenge.

Their confidence in their ability to do that should not be dismissed out of hand. Compared with the aftermath of the dot-com crash, when anyone making grand claims about the Internet was treated with suspicion, there is now widespread acknowledgment of the significance of digital technology. It stands to reason, therefore,

that organisations have made some progress in putting it to use.

However, the consensus among experts in the field is that gradual progress will not be enough to meet the growing competitive pressure that companies will encounter as hyperconnectivity intensifies. They believe radical restructuring is in order—and yet only one in five survey respondents expect to undertake such an endeavour.

This implies a deficit in leadership. Whether or not they appoint an executive with specific responsibility for digital business, organisations will only effect substantial change if it is led from the top. The hyperconnected economy calls for hyperconnected leaders.

Conclusion



Appendix: Survey results

Percentages may not add to 100% owing to rounding or the ability of respondents to choose multiple responses.

In which of the following business functions does the Internet play a crucial role at your organisation? Select all that apply. (% respondents)

Finding new customers

Communicating with customers

Working with suppliers

Managing internal operations

Developing and delivering products and services

Collaborating internally

80

80

73

73

73

72

In which of the following business functions does mobile technology play a crucial role at your organisation? Select all that apply. (% respondents)







68

68

53

53

50

42



In which of the following business functions does the Internet of Things (IoT) play a crucial role at your organisation? Select all that apply. (% respondents)







46

41

40

37

32

32

In which functions do you expect the Internet to play a crucial role in three years’ time? Select all that apply. (% respondents)







77

77

75

74

73

73

In which functions do you expect mobile technology to play a crucial role in three years’ time? Select all that apply. (% respondents)







74

67

61

60

59

57



In which functions do you expect the Internet of Things (IoT) to play a crucial role in three years’ time? Select all that apply. (% respondents)







59

50

49

49

45

45


Significant impact

Limited impact


Internet

Mobile

IoT

How would you describe the impact that the Internet, mobile technology and the Internet of Things (IoT) have had on your organisation so far? (% respondents)

44 40 11 3 1

24 47 18 4 6

18 23 27 12 20


Significant impact

Limited impact


Internet

Mobile

IoT

What impact do you expect them to have over the next three years? (% respondents)

34 46 13 3 4

33 42 14 5 6

31 26 18 6 18

Agree Disagree Don’t know / not applicable

Hyperconnectivity has been beneficial for my organisation

Hyperconnectivity has been beneficial for my industry

Hyperconnectivity presents more threats than opportunities

Failure to adapt to hyperconnectivity is the biggest risk that our organisation faces

My organisation is doing a good job of adapting to hyperconnectivity

Do you agree with the following statements? (% respondents)

86 7 7

83 9 8

30 56 13

59 30 11

69 18 13



Have created severe competitive pressure

Have created moderate competitive pressure

Have created limited competitive pressure

Have created no competitive pressure





To what degree have the following factors placed competitive pressure on your firm in the last three years? (% respondents)

17 32 23 22 6

17 40 29 10 4

14 35 27 18 6

Will create severe competitive pressure

Will create moderate competitive pressure

Will create limited competitive pressure

Will create no competitive pressure





And how do you expect them to affect competition in the next three years? (% respondents)

25 33 20 17 6

23 43 20 9 4

22 35 25 13 5

How has your organisation adapted to the competitive pressure resulting from hyperconnectivity? Select all that apply. (% respondents)

Lowered prices

Lowered margins

Entered new markets

Exited markets

Divested divisions

Acquired one or more competitors for their digital capabilities

None of the above

Don’t know

28

28

47

17

19

26

14

4



Which of the following strategies have you adopted as a result of hyperconnectivity? Select all that apply. (% respondents)

Diversified our channel partners

Used digital channels to enter new markets (ie, sell new categories of product or service)

Launched products or services that are only available through digital channels

Adopted dynamic pricing for sales through digital channels

Sold directly to customers for the first time

Offered prices that are only available through digital channels

None of the above

Don’t know

38

38

35

29

25

25

12

3

How do you think the continued growth of hyperconnectivity will affect your organisation’s position within your industry in the future? Select all that apply. (% respondents)

Digital channel partners will become the dominant force in our markets

We will acquire one or more digital start-ups

Our market share will be significantly reduced as a result of digitally-enabled competition

We will merge with a more digitally capable organisation

We will divest or close production and focus on distribution

We will divest or close distribution and focus on production

None of the above

Don’t know

34

31

19

17

15

14

19

8

What impact has hyperconnectivity had on global competition in your industry? Select all that apply. (% respondents)

Hyperconnectivity has:

Lowered barriers to entry for foreign companies in the developed economies in which we operate

Lowered barriers to entry for foreign companies in the developing economies in which we operate

Boosted local competition in the developing economies in which we operate

Boosted local competition in the developed economies in which we operate

Helped us identify new markets that are suitable for us to enter

None of the above

Don’t know

33

30

35

32

40

11

5



What impact has hyperconnectivity had on your supply chain so far? Select all that apply. (% respondents)

Hyperconnectivity has:

Improved our ability to find suppliers from around the world

Improved our ability to select suppliers competitively

Improved our ability to work with international suppliers

Reduced our supply costs

Increased the range of materials we can purchase through our supply chain

Increased visibility into our supply chain

Increased the complexity of our supply chain

Improved the reliability of our supply chain

None of the above

Don’t know

34

39

38

35

27

33

20

26

8

6

What impact do you think the continued growth in hyperconnectivity will have on your company’s global business and its supply chain? Select all that apply. (% respondents)

Declining barriers to market entry will help us grow internationally

Declining barriers to market entry will place us under increasing pressure in our established markets

An increasingly globalised supply chain will allow us to reduce costs significantly

An increasingly globalised supply chain will expose us to greater risk

Increasing demand from global markets through digital channels will require us to expand globally

Increasing automation of supply chain transactions will expose us to greater risk

34

39

45

26

27

16

What impact has hyperconnectivity had on your relationship with customers? Select all that apply. (% respondents)

Customers mostly hear about us online

Customers typically check online reviews or social media before purchase

Our online reputation is the biggest influence on customer perception of our company

We are reaching customers around the world for the first time through digital channels

Digital channels allow us to search proactively for customer demand

Digital channels have allowed more direct contact between customers and employees

Digital channels are our principal means of communicating with prospects and customers

29

38

34

31

35

39

20



Which of the following measures have you adopted as a result of hyperconnectivity? Select all that apply. (% respondents)

Taken efforts to improve our visibility and reputation on social media that have improved our business

Used digital processes to customise products and services to individual customers

Fed customer information from digital channels into product development

Embedded digital functionality into our products to measure customer use and/or improve customer service

Built an integrated view of our customer interactions across all digital channels

Boosted customer privacy as a way to differentiate our products and services

49

40

37

37

33

30

What impact do you think the continued growth of hyperconnectivity will have on your interactions with customers in the future? Select all that apply. (% respondents)

Products and services will be increasingly tailored to customers’ individual needs

Input from customers will be deeply integrated into product development

Customer service will be mostly automated

A more globally diverse customer base will challenge our ability to communicate with and engage with customers

Our business will be more vulnerable to negative online publicity

Mobile will become our primary customer interaction channel

51

41

33

33

32

31

What impact has hyperconnectivity had on your organisation? Select all that apply. (% respondents)

Business processes have accelerated

Collaboration within divisions and geographies has improved

Collaboration between divisions and geographies has improved

Organisational strategy has become more data-driven

The pressure we are under to innovate has increased

Our ability to innovate has increased

Organisational strategy has become more effective

47

45

45

42

33

32

29



What organisational measures has your company introduced as a result of or to derive greater benefit from hyperconnectivity? Select all that apply. (% respondents)

Automated business processes

Adopted agile development and/or project management techniques

Introduced digital skills training

Outsourced functions to accelerate digitisation

Flattened the organisational hierarchy

Appointed a chief digital officer

46

39

39

33

25

19

How do you think the continued growth of hyperconnectivity will affect your organisation in the future? Select all that apply. (% respondents)

Our ability to effect substantial organisational change will increase

We will reduce our staffing levels as more work is automated

We will match employment opportunities to candidates faster and more effectively

Information overload will damage the wellbeing of our employees

Our organisation will have to radically restructure

Ability of central management to control the organisation will be reduced

39

38

37

24

23

22

Better than average Worse than average Don’t know

Profit

Revenue growth

Innovation

Organisational agility

How does your organisation’s performance compare with the average in its industry? (% respondents)

73 18 9

71 21 8

63 25 12

52 35 13



$500m or less

$500m to $1bn

$1bn to $5bn

$5bn to $10bn

$10bn or more

What are your organisation’s annual revenues in US dollars?(% respondents)

0

22

36

14

28

North America

Asia-Pacific

Western Europe

Latin America

Middle East

In which region are you based?(% respondents)

30

30

30

7

2

Board member

CEO/President/Managing director

CFO/Treasurer/Comptroller

CIO/Technology director

CMO/Head of marketing

COO/Head of operations

CDO (Chief digital officer)

CXO (Customer experience officer)

Other C-level executive

SVP/VP/Director

Head of business unit

Head of department

Manager

Other

Which of the following best describes your job title? (% respondents)

2

6

4

8

3

2

1

1

3

12

6

19

31

2

Financial services

Manufacturing

IT and technology

Healthcare, pharmaceuticals and biotechnology

Consumer goods

Retailing

Energy and natural resources

Aerospace and defence

Automotive

Chemicals

Professional services

Telecoms

Transportation, travel and tourism

Construction and real estate

Logistics and distribution

Education

Government/Public sector

Agriculture and agribusiness

Entertainment, media and publishing

What is your primary industry? (% respondents)

16

13

11

7

6

6

5

4

4

4

4

4

4

3

3

2

2

1

1



Finance

IT

Sales

General management

Human resources

Marketing

Procurement

Strategy and business development

Supply-chain management

Operations and production

Customer service

Information and research

Risk

R&D

Legal

Other

What is your main functional role? (% respondents)

11

11

11

10

9

9

9

7

5

4

3

2

2

2

1

3



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Hyperconnected organisations: How businesses are adapting to the hyperconnected age

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