maintaining your culture in an era of disruption · intangibles, including data, make up a growing...
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Maintaining your culturein an era of disruptionAn approach to culture transformation
Disruption is redefining enterprise productivityand influencing strategic investments…. including Culture.
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Evolving landscapeAn OECD Study shows labor productivity trends in manufacturing and services have widened the performance gap between top “frontier” enterprises and the rest.
Source: Frontier Firms, Technology Diffusion and Public Policy, OECD, 2015
Percentage difference in labor productivity levels(Index, 2001 = 0)
0
10
20
30
40
2001 2003 2005 2007 20090
10
20
30
40
2001 2003 2005 2007 2009
MANUFACTURING“Frontier” firms
SERVICES“Frontier” firms
Everyone elseEveryone else
3.5%per annum
1.7%per annum
5%per annum
0.3%per annum
10%Frontierfirms
90%Laggingfirms
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Productivity gap: Frontier vs. followers$4 trillion gap between efficient frontier firms and less efficient followers
Productivity gap
Followers
Frontier
Source: SAE, KPMG Global Enterprise Productivity Study
Time
Prod
uctiv
ity
Revenue growth for 1,500 firms onthe TFP frontier more than twiceas fast as followers
Key findings
Productivity leaders create enormous economic value. If sample follower firmsand frontier firms had the same TFP, they would produce $4 trillion in additional annual global value-add on average.
There are differences between services and manufacturing: From 2008 to 2016, the gap between frontier and follower firms increased 14% in services and 9%in manufacturing.
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These technologies require an enterprise investment shiftIntangibles, including data, make up a growing share of enterprise investment and value creation. Frontier firms leverage the full power of intangibles to drive productivity and growth.
Past: 20th century enterprise Today: 21th century enterprise
Intangibleassets
Tangible assets
Productivity frontier
Intangibleassets
Productivity frontier
Tangible assets
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Productivity gains require major intangibles investmentThe changing investment compositionExamples of intangible business investments include:
Ratio of intangible to tangible investment varies by sector
Software
Databases
R&D
Design
Skill development
Market research
Branding
Business processes
Organizational design
Organizational culture
Management leadership
Data analyticsSource: UK Office for National Statistics, 2018
A distinguishing feature of organization capital is its efficiency is partly firm-specific and is embodied in the firm’skey talent, business processes, and culture. While sectors’ intangible intensity varies, all enterprises rely onintangibles and need to increase their future investments.
0.18
0.19
0.3
0.31
0.8
0.89
1.37
1.81
2.16
2.82
2.86
0 0.5 1 1.5 2 2.5 3
Electricity, gas and water supplyAgriculture, forestry and mining
ConstructionTransport
Administrative serviceAccommodation and food services
Wholesale and retailManufacturing
Information and commmunicationsFinancial services
Professional and scientific activities
Industry
Intangible ratio
Organizational culture
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Enabling new ways of working
Leadershipmust effectively empower, enable and inspire theirpeople more than ever
New skills & capabilities must be supported through learning and development opportunities andcareer experiences that havenever been available before
Connecting workers with needsmust allow for different workforcemodels (e.g.: employees, vendors, workers, bots) that provide Flexibility & connectivity
A Culture must beestablished to enable peopleopportunity and innovationwhile balancing the necessary governance to support ahuman and digital workforce
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A brave new world of skills and capabilities
What’s needed in a world of disruption
StrategicStrategic thinkingInnovation & ideasProgram managementAmbiguity and white-space
Analytics, technology & data
TechnicalBusiness modeling Analysis E2E process design and navigationRobotic management
BehavioralRelationship managementCollaboration, creativityFeedback, communication, negotiation Influencing and inspiring
Analyticsand insightsVisualizationData modeling
Roboticquotient (RQ)1
Programming expertise
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The conversation around culture is intensifying as senior leaders understand the need for culture change to drive business performance
of senior executives agree culture is as important as strategy for business success91%
Culture is seen as a “Top 3” or “Top 5” factor affecting firm value by 78% of CEOs
Top3
of executives agreed a
company without a winning culture
was doomed to mediocrity
81%
CEOs that agree improving culture would improve company value
90%
of employees at companies with strong
cultures feel senior leadership listens to them
86%93% of CEOs says it’s important their organization has a strong corporate purpose that’s reflected in its culture
94% of executives believe a distinct workplace culture is important to business success
Sources: 1) https://www.newyorkfed.org/medialibrary/media/research/conference/2015/econ_culture/Graham_Harvey_Popadak_Rajgopal.pdf 2) https://www8.gsb.columbia.edu/newsroom/newsn/3874/ceos-and-cfos-share-how-corporate-culture-matters 3) https://hbr.org/2008/02/creating-and-sustaining-a-winn-1 4) https://www2.deloitte.com/content/dam/Deloitte/global/Documents/About-Deloitte/gx-core-beliefs-and-culture.pdf 5) https://www.forbes.com/sites/alankohll/2018/08/14/how-to-build-a-positive-company-culture/#743c4b8a49b5 6) https://www.pwc.com/gx/en/services/people-organisation/organisational-culture-and-purpose.html 7) https://hbr.org/2008/02/creating-and-sustaining-a-winn-1
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Getting culture right is critical to achieving business performance, but needs to be specific
Organization’s statement on how they wantto be perceived by customers, clients,
employees, and communities they serve
Organization’s roadmap and tacticson how to achieve purpose
Underlying behaviors and beliefsthat define how work gets done
Organization’s resultsrelated to targets and goalsBusiness performance
Organizational strategy
Culture
Purpose
Culturecan enable or inhibit business performance
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Culture is the underlying behaviors and mindsets that define how work gets done
Behaviors
Culture
MindsetsThe personal beliefs of an organization’s members due to what they actually experience
The formal and informal behaviors the organization’s members manifest due
to their personal and group beliefs
There is no cultural one size fits all. Culture depends on the desired performance to meet organizational goals.
12© 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 828539
Creating cultural change takes several steps –but companies struggle most with making it clear
Make it known Make it real Make it happen Make it stickMake it clear
Communicate the culture change to the organization—take the organization on the journey
Determine how the culture change will be done and what it will take—including how it relates to other transformations going on in the company
Execute and continuously evaluate the plan—monitor progress and adjust the plan
Embed the culture in the organization—let the culture take root
Identify and clarify the culture change purpose by understanding the key business performance challenges—including the change scope and extent (“as-is” to “to-be”)
Obj
ectiv
es
Initial Focus
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People’s workplace mindsets are influenced by a variety of factors
Observed behaviorsWhere are the gaps between what the organization says is important and how peopleare actually behaving?
Organizational historyHow does theorganization talk aboutits past and connect itto where it wants to go?
Past work experiencesHow do my experiences at other organizations influence how Ithink about my current workplace?
Feedback loopWhat have been the consequences—good or bad—of my past actions?
Experiences outside the workplaceWhat else in my life influenceshow I think about work?
The right mindset creates a foundationfor the behaviors you want to see in your culture
14© 2018 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
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2 3
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Align cultural driversPinpoint momentsthat matter
Identify keyscenarios & roles
Define “culture of”
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Articulate desired behaviors
Our cultural change approach
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Drivers can work for or against the culture intended
Leadershipand
behaviors
Relationshipswith the
outside world
Thephysical
environment
Storiesand
symbols
Structures,systems, and
processes
Decisionmaking
GovernanceValues
CustomercentricityPurpose
and strategyRegulatory
engagement
WorkingenvironmentWorkplace
design and layoutOffice
locations
Communicationfrom the top
Commonlanguage
Accessibilityof informationOrganizational
history
Risk appetiteTechnology
Performance managementIncentives
Consequence managementPeople development
Skills and competencies
Cultural Drivers
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Key considerations for culture change
Getclear on
outcomesIdentify what culture
of is needed to support business
performance.
Define this culture of and clearly
articulate what it means to the organization.
Align leadership
Leaders mustalign culture change
to strategy, andwork to prioritizeit on agendas atthe c-suite level.
Articulate and modelthe right behaviors.
Planfor other
cultures of Take stock of
co-existing cultures of.
Determine if there are any dilemmas and
reconcile them.
Use complementary cultures of to
accelerate change.
Build accountability
Ensureemployees
Know the core values and expectations
and understand consequences/
ramifications for failingto uphold the desired
behaviors and actions.
Designthe right
experienceKeep people atthe center of allculture activities.
Use the right change management tools to design an employee centric experience to
bring your people along.
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© 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG name and logo are registered trademarks or trademarks of KPMG International.
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