PwC Pulse Survey: Finding opportunity in reinvention: Sectors: PwC

Executive summary

Industry executives recognize the need to reinvent, but some industries are further along than others. And there are different perspectives on how long their average competitor will stay in business. Which industries see their competitors failing in the near term?

Consumer markets

70%

of consumer markets leaders agree that their current business model needs to change fundamentally to support the future company vision

Consumer markets recognize urgency for business reinvention

Innovation has been vital for the consumer markets (CM) industry to adapt to changing consumer needs and expectations. At the same time, the industry faces a significant paradigm shift, moving from concentrated business transformation to redefining business models as a means of survival. According to our June 2024 Pulse Survey, 53% of US executives in the CM industry say an average competitor will stay in business for six years or less if it doesn’t change its current business model, compared to 45% of all respondents.

What’s driving this need for change? CM leaders say that the uncertain macroeconomic environment poses a moderate or serious risk to their company (81% versus 75% of all respondents). CM executives also cite technological disruption as a risk (77% versus 74%).

In the next 12 to 18 months, CM leaders plan to invest in new technologies, and in generative AI specifically, and to reorganize their operating model. Looking out further, 70% of CM executives agree that their company’s current business model needs to fundamentally change, compared to 64% of all respondents. However, the CM industry slightly trails others in believing that they have the capabilities to execute business model changes at scale (69% versus 76% of all respondents).

As they set out on the road to reinvention, CM leaders are focused on making their future company vision a reality, even if it means building capabilities along the way. About three-fourths of CM leaders say they’re creating new ways to reach their customers directly and reduce costs, and 69% have made or are making their products “smart” to improve the customer experience using data. Despite uncertainty when it comes to the economy and creating a blueprint for scale, CM leaders are leaning in and gearing up for unstoppable reinvention.

Energy and utilities

71%

of EUR leaders say day-to-day operations prevent them from focusing on future vision, compared to 56% of their peers

For energy and utilities leaders, business model reinvention swamped by daily concerns

A new PwC Pulse Survey suggests that energy, utilities and resources (EUR) leaders may be focused on the ever-increasing demands of the day to day, limiting their ability to focus on future vision.

The findings echo an industry trend toward incremental business model reinvention, as EUR executives work to balance today’s most pressing obligations with tomorrow’s energy transition. Meaningful transformation takes time and significant resources — and it introduces uncertainties — in an industry where safety, reliability and affordability are foundational.

Here are three key issues EUR executives note and strategies to address them.

Keeping a watchful eye on the election and economy. In an industry more susceptible to events outside their control, it’s no surprise EUR leaders are more likely than their peers to believe that the 2024 US election cycle could significantly alter the way they do business, with 73% of EUR leaders agreeing versus 59% of all executives. EUR leaders were also more likely than their peers to think a recession is on the horizon within the next six months — 67% of EUR leaders, compared to 49% of all executives surveyed.
- Industry leaders are well-versed in scenario planning for emergency events. Advanced scenario planning around geopolitical risk and evolving energy policy has been proven to pay large dividends. While it’s important not to become mired in the unknown, we can take steps today toward long-term objectives.
Cultivating innovation in a culture obsessed with perfection. EUR executives are more likely than their peers to cite company culture as an impediment to supporting the desired speed of change, with 51% calling it a significant challenge. Nearly half (44%) also cite poor succession plans as a significant challenge.
- Shift your view of company culture, turning an obstacle into an asset. Recognizing existing cultural strengths can help shift the focus to experimentation and innovation (as opposed to perfection), and tailor initiatives to achieve strategic and operational objectives. For companies that make the investment, emerging technologies can bolster adaptability and agility, which can inspire your workforce to bring innovation to life and evolve the operating model.
Leveraging data and analytics when embarking on operating model changes. When considering the next year to 18 months, 44% of EUR leaders report plans for major operating model reorganizations, but only 35% plan to leverage data and analytics to develop new offerings. Historically, reliable data access has been a major barrier in the industry, but generative AI’s ability to quickly organize even highly unstructured data offers a shorter path to data modernization.
- Data can pave the way forward, whether by helping companies rethink customer engagement and deliver new, seamless experiences or by having more informed decisions when it comes to improving the performance and health of physical assets or tracking progress toward carbon reduction targets. Leveraging an integrated, cloud-based data environment may be essential.

The stakes remain high. In a world of increasing energy demand, added pressures for reliability and rising expectations to address climate risks, it’s no wonder EUR executives have a deep list of very real concerns. The good news is that there’s a constant stream of new approaches, evolving technology and other tools available that can help. The key is to stay focused on the steps that can be taken today (progress vs. perfection), advancing your company’s evolution one day and one challenge at a time.

Financial services

53%

of financial services executives agree that their company’s business model needs to fundamentally change to compete effectively and support the company’s vision

Financial services turns to technology for strategic change

Financial services may be on the cusp of a technological leap forward, according to our June 2024 Pulse Survey. Six in 10 financial services (FS) leaders say their top strategic business change is investing in new technologies, such as cloud, in the next 12 to 18 months. Their investment in that area outpaces the 51% of all respondents who say the same. Coming in second is investing specifically in GenAI, chosen by 55% of FS leaders — also higher than all respondents (51%). Other strategic FS priorities include major changes to the operating model (presumably powered by new software and more agile operations) and leveraging the oceans of data they possess.

The push into technology is as much about becoming a stronger competitor in a changing world as it is about long-term survival. Fifty-four percent of FS executives say competitors are better at adapting to changing industry trends, and 53% agree that their company’s business model needs to fundamentally change to support the firm’s vision. Little wonder, then, that technology plays such a prominent strategic role in our survey.

But technology, as FS leaders know well, can be a double-edged sword. In our survey, they say the internal challenges to transforming their firm include the cost of new technology and inflexible operations that prevent them from moving fast enough to win in the market.

Industrial products

73%

of industrial products companies cite margin pressures affecting earnings as a risk to their companies

Industrial products companies look to embrace business model changes

Are incremental changes today enough to keep industrial products (IP) companies relevant into the next decade? PwC’s June 2024 Pulse Survey finds that industrials may have a shorter window of opportunity to evolve than they think: 73% of IP leaders expect their average competitor to be out of business in 10 years if they don’t change how they make money.

Even so, a potential blind spot stands out: 73% say they only need to make small changes to their business models to continue to grow — more than other sectors.

As industrials do make changes, they face challenges. Forty-one percent of IP leaders say transforming their operating model in support of their long-term vision poses a significant challenge. Another significant challenge for IP leaders is thinking beyond their current profit pools (40%). These companies are, however, actively developing solutions for their future.

As they think ahead to what’s next in 2024 and beyond, these leaders are turning to the adoption of digital technologies across the overall business. More than half (52%) are investing in new technologies such as cloud, and 54% are investing in generative AI specifically.

Industrials are also at the forefront of creating interactive digital products to reach more customers and boost loyalty. In fact, 39% have already created such products — surpassing other sectors surveyed.
IP leaders have a bullish outlook, with 93% citing C-suite consensus around their future company vision, and 81% agreeing they have the capabilities to execute business model changes at scale.

Technology, media and telecom

85%

of TMT leaders agree they’re ready to execute business model changes at scale

Headwinds aren’t cooling tech, media and telecom leaders’ reinvention optimism

Technology, media and telecommunication (TMT) leaders are grappling with unprecedented disruption. Emerging technologies are both a boon and a threat that could render existing business models obsolete. Significant skill gaps compound this challenge. In our June 2024 Pulse Survey, 77% of TMT executives cite a lack of relevant skills in the workforce as a moderate or serious risk. More frequent and broader cyber attacks also loom large, as does geopolitical uncertainty.

Regulatory concerns rank lower on the list of risks, which is surprising given recent ordinances directly impacting the sector. However, while looking ahead to their business strategy over the next three to five years, 85% of executives acknowledge that complying with new regulations –– such as Pillar Two, SEC rules and country-specific laws concerning AI (GenAI), data and manufacturing –– pose a challenge to their ability to transform.

Despite a high-risk environment, TMT executives seem optimistic: 93% say there’s consensus (some or strong) in the C-suite on the future company vision. Consensus is also high on which business models should change to support that future vision. And when it comes to business model reinvention, TMT is ahead of other industries. What’s motivating TMT to lead the pack? AI-led disruption and digital transformation are some possible drivers, and so is getting out in front of the competition. There may also be less of a learning curve for TMT. The sector is often at the forefront of innovation, and that’s reflected in their confidence: 85% of TMT leaders agree or strongly agree that they have the capabilities to execute business model changes at scale. And 76% say they’ll use GenAI to make those changes.

Still, there are real hurdles to progress. Obstacles topping the list include financial constraints and extracting value from new tech, as well as changing their operating model. Data monetization is also on the radar, with nearly half (46%) saying it’s one of the most significant challenges to transforming in the next three to five years. This will be a key problem for sector leaders to overcome. Unlocking data’s value and devising viable data collaboration strategies can help organizations transcend current profit pools and create compelling new customer value propositions, along with new revenue streams –– especially for media and telecoms.

Get access to the complete survey response data and future insights

Download the chartpack

View the main Pulse Survey

View the survey

About the survey

Between May 15 and May 22, 2024, PwC surveyed 673 US executives, including CFOs and finance leaders (13%), tax leaders (12%), risk management leaders, including CROs, CAEs and CISOs (12%), CIOs, CTOs and technology leaders (12%), CHROs and human capital leaders (12%), COOs and operations leaders (12%), corporate board directors (8%), CMOs and marketing leaders (12%) and CEOs (7%). This is the first time we included CEOs. Respondents were from public and private companies in six sectors: industrial products (28%), consumer markets (21%), financial services (15%), technology, media and telecom (20%), health industries (4%), energy and utilities (8%), and other (4%). The Pulse Survey is conducted on a periodic basis to track the changing sentiment and priorities of business executives.