Competitiveness & the Digital Innovation Opportunities · Enabling production and supply of new types of resources as well as new product designs to use them Life & Material sciences

Competitiveness &

the Digital Innovation

OpportunitiesLast Call to Europe 2020

Milano Expo 2015

Peter LacySustainability Global Lead

London, UKI

Major market forces and uncertainties make growth

challenging in a margin squeezed environment

Commodity

Cycles

New Demanding

Customers

Globalization &

Regionalization

Supplier

Risk/Traceability

Global Economic Risk

Government & Politics

Volatility

Uncertainty

Complexity

Ambiguity

Copyright © 2015 Accenture All rights reserved. 2

Digital is creating extraordinary new challenges and

opportunities

New Contestable Markets

creating and disrupting industries, markets,

products, services and value chains

Disruptive Speed

product and service development lifecycles

are changing from years or months to weeks

The New Value Equation

companies must simultaneously deliver value

for customers AND society AND shareholders

Digital

Copyright © 2015 Accenture All rights reserved.

The ME Economy

Creating one to one experience at a scale of

one hundred million

To create superior value compared to

competitors companies must be:

4

Competing to Win in this complex business

environment requires a “Triple A” Advantage

Agile

capabilities, cost base and

operating model

Adaptive

growth and innovation

engines, exploiting the

ecosytsem

Aligned

with stakeholder demands

Triple A

Advantage

Triple A

Advantage

Copyright © 2015 Accenture All rights reserved.

Creating the Triple A Advantage is a Journey – where

to start on the journey is unique to each organisation


Fuel for

Growth

A

Responsible

Growth

Create Agility:

• Take out non-working

money and building

new operating models

with lower fixed costs.

• Create operating

models that deliver

greater agility and free

up investments

Be Adaptive:

Develop deep customer insight

Drive profitable revenue growth with current markets, products and services

Develop new growth by making quick and informed decisions on investing and divesting

Leverage an ecosystem of players to enter new markets and build new capabilities

Triple A

Advantage

Create Stakeholder Alignment:

• Secure the license to operate and license to grow companies create a trusted relationship with consumers and customers is the key to long-range competitiveness

AProfitable

Growth

A

Create an

aligned vision

on the what

the future

looks like for

the

organization

Securing your license to operate, innovate & grow for the long-term.

Not just acting in short-term self-interest

Accenture’s “Responsible Growth Framework”


Society/Stakeholders

ValueValue

CustomerShareholder

Value

Sustainability

as Lens for

Value

Creation


1

10

100

The link between economic development and

resource use is strong


Log plot of Resource use and Economic development (2010, 166 countries)1

1 SERI and Dittrich, M. (2014). Global Material Flow Database, World Bank (2014) GDP per capita in current US$ (outliers Mongolia & Bahamas removed)

2 OECD Development Centre, Working Paper No. 285, The Emerging Middle Class in Developing Countries

Reso

urc

e U

se

Economic Development

Tons/Cap

GDP/Cap

10,000 100,000100 1,000

Colombia

China

Bangladesh

Australia

Germany

Chile

Sweden

NigerIndia

!

The supply / demand imbalance is bad news for

business

GDP and commodity price development 1960-2014

Sources: Accenture analysis, The Conference Board, ‘Total Economy Database – Key Findings’, January 2014, http://www.conference-board.org/data/economydatabase/,

The World Bank, ‘World Bank Commodity Price Data (The Pink Sheet)’, December 2014, indexmundi commodities http://www.indexmundi.com/commodities

0

20

40

60

80

100

120

140

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

Index,

2010=100

1960-2000

+1% growth in GDP

-0.2% commodity price index

2000-2014

+1% growth in GDP

+1.5% commodity price index

GDPEnergy commodities Non-Energy Commodities



A 4-dimensional view on waste is required to see the

real potential


Wasted Embedded Values

Components, material

and energy not

recovered at disposal

Wasted Resources

Material and energy that

cannot be continually

regenerated

Wasted Capacity

Underutilized or

unused products

and assets

Wasted Lifecycles

Premature end

of working life of products

Logistics

Product

Use

End of Life

Disposal

Reverse

Logistics

Sourcing

Manufacturing

Marketing

& Sales


A 4-dimensional view on waste is required to see the

real potential


Wasted Embedded Values

Increase recycling,

upcycling, component harvesting

and energy recovery

Wasted Resources

Introduce renewable energy

and bio-based fuel, chemicals

and materials

Wasted Capacity

Increase sharing,

co-owning, co-using,

resource pooling, etc

Wasted Lifecycles

Lifecycle services for resell,

maintain, repair, remanufacture, etc.

Logistics

Product

Use

End of Life

Disposal

Reverse

Logistics

Sourcing

Manufacturing

Marketing

& Sales$1.7trillion

$0.6trillion$1.3 trillionElimination potential 2030

$0.9trillion

Accenture and WEF YGL have studied 120

successful circular pioneers

50Executive

Interviews 120Case

Studies

Circular Supply-

Chain

Recovery &

Recycling

Product Life-

Extension

Sharing Platform Product as a

Service

5 Business Models

5 Capability Shifts

Strategy

Innovation & Product Development

Sourcing And Manufacturing

Sales & Product Use

Return Chains

10 Enabling Technologies

Life & Material Sciences

Modular Design Technology

Cloud

Analytics

Mobile

Social

M2M Communication

3D Printing

Trace and Return Systems

Advanced Recycling Tech



In our research we found five circular economy

business models


Business models of

the circular

economy

Circular Supply-Chain

Recovery & Recycling

Product Life-Extension

Sharing Platform

Product as a Service

Waste

leakage(eliminate)

Logistics

Product

Use

End of Life

Disposal

Reverse

Logistics

Sourcing

Manufacturing

Marketing

& Sales

Share

C. Remanufacture

A. Resell

B. Repair/Upgrade

C. Returning

byproductsOther

loopCircular

SuppliesB. Waste

as a resource

Product

design

A. Re-/

upcycle


Logistics

Product

Use

End of Life

Disposal

Reverse

Logistics

Sourcing

Manufacturing

Marketing

& Sales

Three types of technologies are key


1 Ingrid Pan, ‘Uber’s Breakneck Growth: How the Company Grows and Makes Money’, YAHOO!Finance, June 23, 2014, http://finance.yahoo.com/news/uber-breakneck-growth-company-grows-210007173.html.

2 Barry Levine, ‘Verizon plans to create a sharing platform for virtually anything – not just cars’, Venture Beat, September 8, 2014,

http://venturebeat.com/2014/09/08/verizon-plans-to-create-a-sharing-platform-for-virtually-anything-not-just-cars/

3 Cisco, ‘Corporate Social Responsibility Report’, 2013, accessed November 24, 2014, http://www.cisco.com/assets/csr/pdf/CSR_Report_2013.pdf.

Circular Economy enabling technologies

Product design

CloudDigital

Enabling entirely new ways to access and

understand product use-phase and aid

customers in use efficiency

Hybrid

Enabling moving physical objects back

and forth from value chains with digital

services to drive down cost

Engineering

Enabling production and supply of new

types of resources as well as new product

designs to use them

Life & Material sciences

Modular design technology

Analytics

Mobile

Social

M2M Communication

3D Printing

Trace and return

systems

Google

380m supporters for $50 modular

handset to be released in 2015

Uber

$40bn taxi company in 45

countries with zero cars1

Verizon

Launching a share anything

platform starting with cars2

CISCO

$400m refurbished

equipment take

back and

remarketing3

Advanced recycling tech

Waste leakage(eliminate)

http://finance.yahoo.com/news/uber-breakneck-growth-company-grows-210007173.html

http://venturebeat.com/2014/09/08/verizon-plans-to-create-a-sharing-platform-for-virtually-anything-not-just-cars/

Waste

leakage(eliminate)

Logistics

Product

Use

End of Life

Disposal

Reverse

Logistics

Sourcing

Manufacturing

Marketing

& SalesProduct

design

Leading adopters experiment with 5 new business

capabilities

Circular Economy capability shifts


Source: Circular Economy book project

4. Sales & product use

Excel in lifecycle customer

engagement

1. Strategy

Engage in

circular

ecosystems

Sourcing

3. Sourcing and

manufacturing

Cascade resources

Renault Indra

SKF

5. Return chains

Do opportunity driven take-

back

CISCO

Carlsberg

2. Innovation & product

development

Design for many lifecycles

and users

We have identified a direct potential of up to €40m and to

cover 20% of current material use with secondary sources

Sustainability Value Levers

Case 1:

How Accenture Strategy is improving a global consumer goods company ‘License to Operate & Grow’ through Circular Economy


Volume

potential(share of current

material use replaced)

Value

potential(full value of return

material flow)

Scope of

collection

20% €450m

Profit

potential(recovered bottom

line opportunity)

€40m

7% €200m €7m

Beyond 2020

Manage flow of all

types of home

furnishing products

Up to 2020

Manage flow of

internal waste &

post-consumer

packaging and

textiles€100m additional value opportunity

identified in the long term from

leveraging the Resource Chain

platform for other benefits

New Products/

Services

Incre

ase

positiv

eR

educe

negative

Current value Future value

License to Operate

License to Grow

Differentiation

/ Intangibles

Resource

Efficiency

Risk

Mitigation

• Driving upgrade

in Range &

supply

• Boost in Brand

image

• Driving

efficiency &

volume

• Controlling

resource

challenge

Accenture Strategy identified $28bn in potential new revenues across

30 opportunities, as well as significant outcomes for society

Sustainability Value Levers

Case 2

How Vodafone is using sustainability challenges as an opportunity for growth in new markets for digital products & services


New Products/

Services

Incre

ase

positiv

eR

educe

negative

Current value Future value

License to Operate

License to Grow

Differentiation

/ Intangibles

Resource

Efficiency

Risk

Mitigation

1.7bnnew connections

• Boost in Brand

image, new

markets

€43 billion reduction in

energy costs

• Stakeholders

alignment in

new markets

€43 billionreduction in

energy costs

$138 billionincrease in

agricultural income

$31 billionincrease in

productivity

Carbon

Connections

Connected

Agriculture

Connected

Worker

Conclusion

$4.5 trillion size of prize through …


5Business

models

10enabling

technologies5capability

shifts

Five questions to get you started:• What are the risk and opportunities of moving to a Circular Economy?

• What is the core value we deliver to customers?

• How can digital and other technologies deliver this value in new ways?

• What new capabilities are needed to turn the value chain circular?

• How do we time action to capture low hanging fruit and long term disruption?

18

www.accenture.com/sustainability

Competitiveness & the Digital Innovation Opportunities · Enabling production and supply of new types of resources as well as new product designs to use them Life & Material sciences

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