Business model reinvention

Five megatrends are changing the rules of the game for business success, creating new opportunities while eroding old ones. For example, decarbonising our economy will require vast transformation of how we live, eat, move, and make things, while technological innovation keeps expanding the frontiers of the possible.

Business leaders know that they are facing disruptive forces and must reinvent to survive and thrive. PwC’s 2024 Global CEO Survey shows that 45% of global CEOs think their organisation will no longer be economically viable in ten years if it continues on its current course.

Megatrends

Climate change: Atmospheric greenhouse-gas levels are worsening, global temperatures are rising, and extreme weather events are becoming more frequent and severe.

Technological disruption: Transformative technology is changing how we function and how we understand humanity. It enables huge value creation yet can have harmful consequences we must mitigate.

Demographic shifts: Aging populations are straining the social safety nets of some countries, even as younger countries face threats from unemployment and emigration.

Fracturing world: Nation-states are competing for influence in an increasingly multinodal world. Countries look inward, prioritising national resilience and localisation.

Social instability: Social and economic polarisation, disruption, demographic change, and eroding trust lead to greater social unrest.

"How CEOs and their leadership teams tackle the reinvention imperative will determine their companies’ future. Business model reinvention is about fundamentally redefining a company’s value proposition. It's far more than refining a technology or streamlining a process; it's about rethinking how an organisation creates, delivers, and captures value in a rapidly changing world."

Matthew Duffey
Global Business Model Reinvention Leader, PwC US

Reinventing business models to help clients thrive

True business model reinvention goes beyond making incremental improvements to existing operations — reshaping a tech stack, for example.

True business model reinvention means fundamentally redefining how a company creates, delivers, and captures value — in other words, reimagining how it makes money, serves customers, and provides new products or services.

To reinvent their companies, business leaders need to be comfortable with challenging long-held assumptions about their organisations’ business models, perhaps especially when these assumptions are what won success in the first place.

This requires looking not just inside the organisation but outside, studying how a fast-changing business environment opens doors to new opportunities.

This year, the PwC network has helped clients across the world reimagine the value they create, from strategic vision all the way through implementation. For example, we’ve helped clients redefine as a service rather than product business, launch disruptive offerings that deliver new forms of value to customers, expand into upstream or downstream parts of the value chain, become an ecosystem orchestrator, and more. Our vast range of capabilities — across tax, deals, digital, and more - means we can support clients with all facets of deep and effective reinvention.

"In today's relentlessly evolving environment, successful business model reinvention requires agile thinking and a willingness to explore new pathways for value creation. Companies must look beyond what made them successful in the past, and look toward what will make them successful in the future."

Venky Jayaraman
US Business Model Reinvention Leader, PwC US

"The challenges facing your company in the next decade will range from substantial to existential. Embracing business model reinvention now, and taking decisive action, will significantly increase your odds of success and long-term viability."

Veronique Roos-Emonds
EMEA Business Model Reinvention Leader, PwC Netherlands

Highlights of our year

PwC's Global Centre for Transformative Leadership PwC’s Global Centre for Transformative Leadership welcomed 440 client participants across 99 organisations in 61 countries to Leaders Solving for Tomorrow, a programme on transformative leadership.

Business Model Reinvention Framework PwC launched a 4-stage framework that supports clients at all stages of their business model reinvention journey, helping them to rethink their value creation, delivery, and financial performance. This includes redefining their value proposition, leveraging new technologies, exploring new business models, and building new ecosystems.

New global site launch This year, PwC launched a new global site that offers practical advice for companies on the road to reinvention including our 4 stage framework.

Keynote address at Mobile World Congress PwC’s Global Chairman, Mohamed Kande, gave a mainstage address at Mobile World Congress in Barcelona about the importance of technology in helping businesses to navigate change and create value through business model reinvention.

Business Model Reinvention Fundamentals training We delivered regionally hosted training sessions to over 5,000 PwC firm partners and principals on the foundations of business model reinvention.

45%

of global CEOs think their organisation will no longer be economically viable in ten years if it continues on its current course

Source: PwC's 27th Annual Global CEO Survey

PwC perspectives on business model reinvention

This year, PwC shared a range of insights on this critical topic:

The Reinvention Imperative

Technological disruption, climate change, and other accelerating global megatrends are compelling CEOs to adapt at an unprecedented rate. According to PwC’s 27th Annual Global CEO Survey, 45% of global CEOs think their organisation will no longer be economically viable in ten years if it continues on its current course. CEOs are striving to reinvent. In the last five years, 76% of CEOs took at least one action that had a large or very large impact on their company’s business model. Hear more from our leaders as they share four key messages for CEOs navigating reinvention and shed light on the unprecedented confluence of pressures facing executives today.

"Reinvention is not a choice; it's a necessity. Companies that embrace this imperative — and use the right deals to unlock it — will not only survive but thrive in the new era of business. By reimagining their business models, companies can unlock new opportunities for growth and resilience, paving the way for a sustainable future."

Rob Silverwood
BMR Deals Leader and Asia Pacific Business Model Reinvention Lead, PwC Australia

From stagnation to innovation

Make business model reinvention real: In the next decade, companies will face challenges ranging from the substantial to the existential. In our practical guide, we provide senior leaders with actionable insights on how to radically reinvent their business models by fundamentally rethinking how they create, deliver, and capture value. Successful business model reinvention is achieved by being intentional — in shaping strategy based on profit pool shifts and trends, in harnessing existing and new capabilities, in fighting the inertia that saps progress, and in nurturing the pilot projects that may flourish and prove to be the company’s future.

Building a future-fit workforce in an age of disruption

PwC’s latest Global Workforce Hopes and Fears Survey reveals that business leaders have a job to do to bring some of their workers along on the journey to reinvention. Our survey found that more than half of workers feel there’s too much change at work happening at once, and 44% don’t understand why things need to change at all. This year’s survey outlines six critical actions that C-suite leaders can take to build a change-ready workforce to facilitate successful reinvention.

Reinvention in the transportation sector

CN Rail CEO Tracy Robinson talks to strategy+business about the reinvention of the railways and the growth of intermodal ecosystems which bring traditional competitors together.

Reinventing the telco

Embracing a ‘puretone’ approach. For many telecom companies the reinvention journey starts with adopting a ‘puretone mindset’ which means taking a hard look at the individual performance and value of each of the multiple businesses currently nested within the integrated model.

From steam to sensors and solar

HSB’s tale of reinvention. John B. Riggs, CTO and SVP of Applied Technology Solutions at HSB (Hartford Steam Boiler), talks to PwC’s strategy+business about how the company is using technology to build new ventures and create new business models in the historically risk-averse insurance sector.

“Any business reinvention process would involve changes to one or more of the factors of production. Any change or standing up of new requirements across these factors would invariably lead to tax, legal and regulatory implications. These implications can affect the feasibility, profitability, and sustainability of the reinvention outcomes, as well as the overall risk profile of the organisation, making it an imperative to be addressed at every stage of the process.”

Kunj Vaidya
Business Model Reinvention and Transformation Leader - Global Tax and Legal Services, PwC India

Case studies

Sam Everington
Chief Executive Officer,
Engine by Starling

Case study

Helping Starling Bank expand its offering to become a global technology powerhouse

PwC UK first started working with Starling Bank when it was founded back in 2014 as a forward-thinking digital bank with a mission to change the UK banking arena, helping it to launch first in the consumer banking market and then in the business banking market. It has been a huge success. In a remarkably short space of time, Starling has thoroughly disrupted the market, taking an almost 10% share of the business banking market, winning a raft of awards and consistently ranking at the top of customer satisfaction tables.

But that was just the start of the innovation. PwC UK and Starling quickly realised that the technology which was built to power Starling Bank in the UK could also be used to power other banks around the world in the form of a software-as-a-service (SaaS) solution, Engine by Starling.

Engine is a unique proposition that can deliver modern banking technology to banks everywhere. The Engine platform is modular, API-based, cloud-native and proven at scale. It can be used by financial services organisations to rapidly launch new digital banking propositions and businesses, or as a replacement to existing banking technology.

Over the last two years, PwC UK has been working closely with Engine team at Starling to form a robust go-to-market strategy and develop blueprints aimed at delivering services at speed and on time.

Today, PwC UK and Engine are working with numerous clients across the world from the Middle East to the US to implement the Engine SaaS solution. The first joint implementation in Australia is due to go live in the first quarter of 2025. This will not only firmly establish Engine as an innovator in the core banking marketplace, it also represents a business model reinvention for Starling Bank from UK digital bank to global technology powerhouse. PwC UK’s work with Starling is an example of business model reinvention to expand the business to add new revenue streams and deliver greater shareholder value.

“Partnering with PwC, a leader in professional services, will be crucial in helping to deliver Engine, our cutting-edge digital banking platform, to customers around the world. PwC combines an incredible breadth of strategic knowledge with hands-on experience driving business model reinvention using the Engine Platform."

Sam EveringtonChief Executive Officer, Engine by Starling

Romit Dey
Partner, Software Sector Leader,
PwC US

Case study

Enabling a global technology company to reinvent its business model and drive subscription-based growth and customer value

A leading global technology company faced a low stock market valuation and growing customer dissatisfaction with the buyer journey and ownership experience, fueled in part by the sheer complexity of a vast array of highly technical products.

Over a 40-year period the company had acquired over 60 companies, each with their own variations of processes, technology and data. This resulted in fragmented interactions and caused confusion for customers who wanted to purchase multiple products, often requiring multiple contracts, orders and invoices. The organisational challenges were therefore threefold: a legacy of multiple acquisitions, fragmented customer experiences and a non-standard operating model for its products and services.

PwC US collaborated with the company’s leadership team to reinvent both the way it engaged with customers, the subscription based offering structures and the associated operating model. We helped by designing and piloting an industry leading XaaS (Anything as a Service) focused operating model and solution architecture, and working together to shape a strategic roadmap. We also worked with them to standardise processes, automate workflows and move data insights onto a single platform, providing unprecedented visibility across the customer lifecycle, from lead generation to software activation. Most critically, PwC US worked with the company to introduce XaaS offerings with subscription-based pricing into the market. This enabled customers to buy hardware and software products through a digital customer experience with a lower cost of entry, thereby simplifying the buying process and reducing their capex requirements.

This reinvention of the business has produced a very significant improvement in measurable commercial outcomes, including significant year on year revenue growth, an increase in average deal size and a doubling of annual recurring revenue over a two year period. As a result there has been a significant upwards revaluation of the company by investors, along with an increase in sales velocity and digital customer engagement.

"We are delighted to have been able to provide strategic support for this business model reinvention, pivoting the company successfully to XaaS. Adopting an XaaS model increases recurring revenue and also enhances customer relationships and trust, ensuring that customer's needs are met through the buyer journey and the ownership experience."

Romit DeyPartner, Software Sector Leader, PwC US

Case study

Reinventing a maritime company

PwC Australia and PwC South East Asia Consulting were brought in to help a maritime company which had encountered challenges after introducing new technology to the business.

The company was set up in 2001 as a joint venture to vet maritime vessels before they headed out to sea and help establish rigorous standards for the maritime industry to mitigate against the risk of harm to seafarers, the environment, local communities, ships, or their cargoes.

The maritime firm initially achieved this primarily through the manual vetting of vessels by in-house maritime experts. However it later pivoted to an analytics-led approach, which replaced humans with technology. This new approach led to new challenges, including lack of transparency, lack of explainability, and high volatility in recommendations. This resulted in a lack of trust between the firm and its customers as well as the maritime industry.

With its customer base falling away, the firm's core business model was put under threat, requiring an immediate need to turnaround and reconsider every aspect of the business. Its products, services and commercial model, as well as its core operating model, capabilities and ways of working all needed to be reinvented to stabilise the business and build a strong platform for growth.

PwC Australia worked in partnership with the maritime firm to turn around the situation with an end-to-end business strategy that has revitalised and repositioned the business and its future prospects.

The PwC Australia and the PwC South East Asia Consulting team began by listening to customers about their concerns with the firm's existing products and services and agreeing with them a pathway for a set of products and services that combined human and digital expertise. The team then created an end-to-end corporate strategy, holding two board workshops to agree immediate remediation activities. PwC Australia and PwC South East Asia Consulting worked with the client to develop a five year strategy for the business including a wide range of critical actions from helping the company to strike and implement a deal to acquire another company to supporting tax restructuring. The team advised on the design, delivery and replatforming of the core products and services, leveraging human-centred design, cloud architecture data and analytics and a first-principles strategy. The team also worked with the client to create, launch and update the maritime firm's brand and communications.

The reinvention of the business model and supporting operating model has been an outstanding success. The business has not only been saved from either forced exit or wind down, it has returned to double-digit top-line growth every year since its reinvention, thereby protecting both the core business and key customers. The business is now able to attract new talent and the perspective of board members has moved from pessimistic to having an ambitious growth mindset, to the extent that the business is now raising capital to fund future growth.

Yossef La Cherie
Exec sponsor & Strategy Director,
DLC

Case study

Driving evolution at David Lloyd health clubs

David Lloyd Clubs (DLC) is evolving from a predominantly health club business to a fully-developed health and wellbeing brand with 750,000 members across 132 clubs in Europe.

To meet the evolving demands of members who see their health club as part of their social world, and drive digital innovation, DLC invested in cloud-based Software-as-a-Service (SaaS) solutions which provide essential technology foundations for future growth and enhanced member experiences. The technology modernisation programme addressed the challenges of an aging and hard to integrate technology estate, poorly used data and manual processes.

Due to the scale and ambition of this project, DLC had complex IT and third party challenges to manage while lacking all the necessary transformation capabilities. So to make processes more efficient, PwC UK worked with DLC to develop and roll out technology-enabled programmes across Finance, HR and Payroll. This included deploying AI systems to improve HR policy management and member interactions. By enhancing data platforms and business intelligence, DLC will be able to improve member experience.

This project has delivered major transformation to the business while significantly enhancing DLC's confidence and capability for future transformations by introducing consistent systems, data, and processes across all clubs and putting in place a clear, sequenced roadmap for strategic priorities.

DLC has now commissioned PwC UK to help it assess regulatory sustainability requirements, identifying gaps and building a roadmap towards greater corporate sustainability as part of its continued transformation journey.

"We have needed to modernise our technology and data to ensure we are fit for the future, partnering with PwC has enabled us to deliver significant initiatives with confidence. We really value the advice, healthy challenge and the flexibility they demonstrate in supporting us."

Yossef La CherieExec sponsor & Strategy Director at DLC

"Given our growth strategy and focus on enhancing employee and member experience - we need effective systems and data, this has required change. PwC provides us with pragmatic advice, and has helped us navigate through complex initiatives. We feel our relationship is based on mutual trust, driving value both ways and we look forward to continue working with PwC.”

Patrick BurrowsCFO at DLC