Fit for the future A CEO guide to succeeding in a changing world - www.kpmg.comeu/en/succeeding

 
Fit for the future A CEO guide to succeeding in a changing world - www.kpmg.comeu/en/succeeding
Fit for the future: A CEO guide to succeeding in a changing world 

       Fit for
  the future
   A CEO guide to succeeding
         in a changing world

www.kpmg.com/eu/en/succeeding
Fit for the future A CEO guide to succeeding in a changing world - www.kpmg.comeu/en/succeeding
 Fit for the future: A CEO guide to succeeding in a changing world                                                                                                                                                                                  Fit for the future: A CEO guide to succeeding in a changing world 

                                                                                                                                                                                                 Summary: Are you fit or
                                                                                                                                                                                                 fragile?
Introduction
                                                         Understanding what business
                                                         leaders are concerned about in this
                                                                                                                       Growth needs to be pursued in a
                                                                                                                       disciplined, rigorous and realistic
                                                                                                                                                                                                  1.                 It is useful to know how you are performing in your sector, but it is
                                                                                                                                                                                                                     more critical to understand how peers’ business models put them at
                                                                                                                                                                                                                     an advantage or a disadvantage. CEOs should not, however, become
                                                                                                                                                                                                                     so preoccupied with competitors that they overlook the potential for
                                                                                                                                                                                                                     disruptive influences from beyond their peer group.
                                                         changing world, was one of the key                            way, and beyond that, changes to
                                                         prompts for carrying out the first                            governance and operated models,
                                                         Succeeding in a Changing World                                many formulated in response to

                                                                                                                                                                                                  2.
                                                         (SiCW) Business Leaders Agenda                                the financial crisis, need to be                                                              Many organisations have used the downturn to refocus on their core
                                                         survey.                                                       institutionalised. Many businesses                                                            value-creating competencies. CEOs need to treat streamlining as more
                                                                                                                       have deferred costs or made                                                                   than just cost-cutting. It can help organisations focus more of their
                                                         With responses from over 1,000                                sweeping cuts across the board to                                                             energies upon those areas that create most value. The benefits can
                                                         senior business leaders from 10                               improve short-term performance.                                                               be felt in improved margins and also in better decisions and business
                                                         countries in Europe and across 12                             Neither of these approaches is likely                                                         performance.
                                                         industry sectors the results provide                          to deliver sustainable improvement
                                                         a comprehensive overview of the                               in a higher risk environment.

                                                                                                                                                                                                  3.
                                                         issues they are facing. The results
                                                         of this are available on:                                     This CEO guide covers the issues
                                                                                                                                                                                                                     Business resilience is back on the agenda. The CEO needs to consider
                                                         http://www.kpmg.com/EU/en/succeeding                          identified in the SiCW Business
                                                                                                                                                                                                                     whether cost-cutting or layoffs have left their organisation vulnerable or
                                                                                                                       Leaders Agenda survey. The
                                                                                                                                                                                                                     more efficient and how well they can respond to unexpected events,
                                                         The survey confirmed that the                                 successors in this changing world
                                                                                                                                                                                                                     both positive and negative.
                                                         business environment remains                                  will be those who ask more
                                                         challenging all over Europe, though                           substantial questions of their

                                                                                                                                                                                                  4.
                                                         levels of confidence are starting                             business model and truly embrace
                                                         to return to the marketplace.                                 the dynamics of the new market.
                                                         Organisations in the UK, Belgium,                             The successful CEOs will be those                                                             The CEO needs to be clear who is scanning the landscape for new
                                                         the Netherlands and Greece say                                who excel at managing uncertainty                                                             taxes and regulatory changes, whether industry-specific, such as
                                                         developing strategies for future                              and are committed to delivering                                                               capital adequacy, or more widely drawn, such as carbon emissions. It
                                                         growth is the priority, while in                              long-term value by not only focusing                                                          is important to understand the externalities in the business model, how
                                                         Germany, Austria, Spain and Iceland                           on growth but also on implementing                                                            these are changing and how these may be affected by new policies,
                                                         there is comparatively greater focus                          robust operating and financial                                                                such as tax regimes. Specifically, the sustainability agenda is creating
                                                         on solving short-term business                                models.                                                                                       both uncertainty and new growth opportunities in many sectors.
                                                         needs.

                                                                                                                                                                                                  5.
                                                                                                                       Jeremy Anderson
                                                         Altogether businesses are still                               Head of ELLP Markets
                                                         cautious – and are placing strong                                                                                                                           Now, more than ever, the CEO needs to lead by example. We have seen
                                                         emphasis on the fundamentals of                                                                                                                             that charismatic leaders are not beyond reproach. Leaders also need to
                                                         greater cost efficiency, managing                                                                                                                           ensure that senior management are suitably incentivised and that their
                                                         cash flow and supply chains, and                                                                                                                            conduct is sending the right message to peers, stakeholders and the rest
                                                         embedding risk into strategic                                                                                                                               of the organisation.
                                                         planning.

          © 2011 KPMG Europe LLP, a UK limited liability partnership, is the legal entity which effectively controls a number of the independent KPMG member firms    © 2011 KPMG Europe LLP, a UK limited liability partnership, is the legal entity which effectively controls a number of the independent KPMG member firms
          affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG Europe LLP and KPMG International provide no client services.   affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG Europe LLP and KPMG International provide no client services.
Fit for the future A CEO guide to succeeding in a changing world - www.kpmg.comeu/en/succeeding
 Fit for the future: A CEO guide to succeeding in a changing world                                                                                                                                                                                   Fit for the future: A CEO guide to succeeding in a changing world 

                                                                                                                                                                      Tracking the
                                                                                                                                                                      competition: What
                                                                                                                                                                      business leaders
                                                                                                                                                                      are focusing on
                                                                                                                                                                                                                      In the words of Charles Darwin, “the fittest win out
                                                                                                                                                                                                                      at the expense of their rivals because they succeed
                                                                                                                                                                                                                      in adapting themselves best to their environment.”
                                                                                                                                                                                                                      The words seem as relevant today as when he wrote
                                                                                                                                                                                                                      them nearly 150 years ago, but does long-term success
                                                                                                                                                                                                                      always rest on being a market leader?

                                                                                                                                                                                                                      This question preoccupies many                                times influencing its situation,
                                                                                                                                                                                                                      CEOs and organisations often                                  is more important than striving
                                                                                                                                                                                                                      expend considerable time and effort                           to lead the pack. Without this
                                                                                                                                                                                                                      on gauging how they compare with                              understanding, competitor analysis
                                                                                                                                                                                                                      key competitors. However, the                                 can be a fruitless, backward-looking
                                                                                                                                                                                                                      most successful companies, like                               task that yields little strategic insight.
   CEO checklist                                                                                                                                                                                                      successful athletes, often focus less                         It becomes a self-affirming exercise.
                                                                                                                                                                                                                      on beating the opposition than on
   • Do you have genuine insight into                                                                                                                                                                                 improving their own performance                               Competitor analysis is only worth
     your competitor’s strengths and                                                                                                                                                                                  and service to their customers.                               doing if it yields real insight into
     weaknesses?                                                                                                                                                                                                                                                                    strategy. It should seek to truly
                                                                                                                                                                                                                      A preoccupation with one’s position                           understand how rivals’ business
   • Beyond branding and product                                                                                                                                                                                      against competitors can breed hubris                          models differ in terms of cost
     differentiation, how do your competitors                                                                                                                                                                         and complacency when one is                                   structures, funding, supply chain and
                                                                                                                                                                                                                      leading, and unnecessary panic when                           risk and control culture, to assess
     gain an edge through supply
                                                                                                                                                                                                                      one is not. It can lead the CEO to                            what advantages or disadvantages
     chain efficiency, client relationship                                                                                                                                                                            underestimate emerging players and                            result from what differences. In
     management, responsiveness to                                                                                                                                                                                    new, disruptive influences. There are                         addition, it should look beyond the
     market needs/developments, decision-                                                                                                                                                                             risks that come with being leading                            organisation’s traditional peer group
                                                                                                                                                                                                                      edge, not least that one ends up at                           for new ideas about efficiency and
     making processes and structure?
                                                                                                                                                                                                                      the “bleeding edge”, spending too                             strategy.
                                                                                                                                                                                                                      much on R&D, developing innovative
   • Are you scanning your whole
                                                                                                                                                                                                                      new approaches that are effortlessly                          To understand the issues within your
     environment, looking beyond your                                                                                                                                                                                 mimicked by peers, and committing                             sector visit the SiCW website at
     peer group for disruptive competitive                                                                                                                                                                            too quickly to new products and                               www.kpmg.com/eu/en/succeeding
     influences? Who in your organisation is                                                                                                                                                                          markets.                                                      and view the results from the
     specifically tasked with doing this?                                                                                                                                                                                                                                           Business Leaders Agenda survey.
                                                                                                                                                                                                                      How effectively an organisation
                                                                                                                                                                                                                      understands and adapts to a
                                                                                                                                                                                                                      changing environment, while at

          © 2011 KPMG Europe LLP, a UK limited liability partnership, is the legal entity which effectively controls a number of the independent KPMG member firms     © 2011 KPMG Europe LLP, a UK limited liability partnership, is the legal entity which effectively controls a number of the independent KPMG member firms
          affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG Europe LLP and KPMG International provide no client services.    affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG Europe LLP and KPMG International provide no client services.
Fit for the future A CEO guide to succeeding in a changing world - www.kpmg.comeu/en/succeeding
 Fit for the future: A CEO guide to succeeding in a changing world                                                                                                                                                                                           Fit for the future: A CEO guide to succeeding in a changing world 

                                                                                                                                                                      Sustainable Cost
                                                                                                                                                                      Efficiencies: Why every
                                                                                                                                                                      euro needs to count
                                                                                                                                                                                                                              After years of growth fuelled by easy credit and
                                                                                                                                                                                                                              increasing consumption, the economic crisis has caused
                                                                                                                                                                                                                              many organisations to reassess their business models
                                                                                                                                                                                                                              and refocus on real drivers of value. In the past year,
                                                                                                                                                                                                                              some organisations have moved beyond initial cost
   CEO checklist                                                                                                                                                                                                              cutting and scaling back investment to implement long-
   • Has your response to the downturn                                                                                                                                                                                        term strategic change programmes. In contrast, some
     moved beyond cost cutting to                                                                                                                                                                                             have not moved beyond these short-sighted steps and
     institutionalising real and widespread                                                                                                                                                                                   have only deferred costs or made one-off sweeping
     transformation?                                                                                                                                                                                                          cuts to improve short-term performance.
   • Have you streamlined business
                                                                                                                                                                      Real operational streamlining should                    For many sectors, transforming the                            lead by example in taking more time
     processes and have you checked                                                                                                                                   mean there is no going back to                          supply chain and other supporting                             to delegate, and using this additional
     if these are delivering benefits to                                                                                                                              old habits and the operating and                        functions can not only reduce cost                            time to spend with key customers
     the bottom line? Is streamlining of                                                                                                                              governance model is transformed.                        but improve the quality of service                            and people throughout the business.
                                                                                                                                                                      However, balancing streamlining                         to customers. The CEO needs to                                Leadership means sharing face
     processes starting at the point of
                                                                                                                                                                      and business demands give                               consider how technology can be                                to face what is happening, and
     customer engagement and co-design                                                                                                                                CEOs a formidable mandate – to                          harnessed to transform and connect                            engaging and empowering people to
     and extending right through your                                                                                                                                 simultaneously increase revenues                        different processes while pursuing                            be part of the organisation’s future
     company’s value chain?                                                                                                                                           and cut costs. To do this in a                          other enhancements including tax-                             success.
                                                                                                                                                                      lasting way may require substantial                     efficient supply chain models, and
   • What performance metrics have                                                                                                                                    investment, in new systems and                          leaner manufacturing, sourcing and
                                                                                                                                                                      strategies. For example, by re-                         procurement strategies. As the CEO
     you introduced to measure the
                                                                                                                                                                      empowering the finance function,                        considers outsourcing or shared
     effectiveness of your change                                                                                                                                     the CEO can give the CFO more                           services strategies, he or she needs
     programme?                                                                                                                                                       capacity to guide the business and                      to choose between make or buy
                                                                                                                                                                      deliver high-value information that                     models and between the flexibility of
   • Do you monitor overhead expenditure                                                                                                                              informs strategy.                                       multiple vendors or the reliability of a
     and has it recently started to increase                                                                                                                                                                                  single source.
     again?                                                                                                                                                           In practice, streamlining can
                                                                                                                                                                      permeate every part of the business.                    How can the CEO be sure that
   • How much time have you spent with                                                                                                                                It can occur through standardisation                    business transformation efforts
                                                                                                                                                                      or elimination of processes or by                       are working, without imposing
     customers in the last year?                                                                                                                                      simplifying steps within a process.                     yet another layer of reporting and
                                                                                                                                                                      An example is to rationalise the                        bureaucracy? These changes may
   • Have you really succeeded in
                                                                                                                                                                      approval steps in a decision-making                     deliver benefits to the bottom
     improving discipline around cash and                                                                                                                             process to find ways to not only                        line, but the benefits could also
     working capital?                                                                                                                                                 improve speed and efficiency but                        be reflected in other performance
                                                                                                                                                                      also heighten accountability and                        metrics, such as reduced overtime,
                                                                                                                                                                      therefore lead to better quality                        faster decision-making and shorter
                                                                                                                                                                      results.                                                response times. The CEO needs to

          © 2011 KPMG Europe LLP, a UK limited liability partnership, is the legal entity which effectively controls a number of the independent KPMG member firms             © 2011 KPMG Europe LLP, a UK limited liability partnership, is the legal entity which effectively controls a number of the independent KPMG member firms
          affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG Europe LLP and KPMG International provide no client services.            affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG Europe LLP and KPMG International provide no client services.
Fit for the future A CEO guide to succeeding in a changing world - www.kpmg.comeu/en/succeeding
 Fit for the future: A CEO guide to succeeding in a changing world                                                                                                                                                                                   Fit for the future: A CEO guide to succeeding in a changing world 

                                                                                                                                                                      Revisiting the
                                                                                                                                                                      Organisation:
                                                                                                                                                                      succeeding in a
                                                                                                                                                                      changing world
                                                                                                                                                                                                                      There are valuable lessons to be learned from the many
                                                                                                                                                                                                                      crises that have befallen businesses in the past two
                                                                                                                                                                                                                      years. In a recession, or in the early phases of economic
                                                                                                                                                                                                                      recovery, strategic planning should be approached as a
                                                                                                                                                                                                                      structured process that brings together external market
                                                                                                                                                                                                                      dynamics with deep insights from key customers and
                                                                                                                                                                                                                      internal stakeholders, to map the future path of the
                                                                                                                                                                                                                      organisation and build a resilient business model.

                                                                                                                                                                                                                      This planning process needs to                                Heightened counterparty risk has
                                                                                                                                                                                                                      establish how an organisation should                          been a hallmark of the recent
                                                                                                                                                                                                                      respond to a range of scenarios or                            financial crisis and by no means
                                                                                                                                                                                                                      business disruptions. The loss of a                           confined to the financial sector.
                                                                                                                                                                                                                      key customer can be the biggest                               It may be something that was
                                                                                                                                                                                                                      form of disruption that many                                  overlooked in strategic planning.
                                                                                                                                                                                                                      organisations will ever face.                                 The CEO should consider whether
                                                                                                                                                                                                                                                                                    capital expenditure plans are flexible
                                                                                                                                                                                                                      Preparedness for all such outcomes                            and capable of being delayed or
                                                                                                                                                                                                                      needs to include an assessment                                postponed without major penalty or
   CEO checklist                                                                                                                                                                                                      of financial impacts, plans for                               inconvenience.
                                                                                                                                                                                                                      communication with internal and
   • Is there resilience in your organisation?                                                                                                                                                                        external stakeholders, and processes                          It can be harder to build a culture
     Have you prepared for a major event                                                                                                                                                                              for identifying and mobilising backup                         of business resilience when the
     affecting your people, your bottom line                                                                                                                                                                          and support systems. Are cash                                 concept is associated with outlier
                                                                                                                                                                                                                      and working capital sufficient to                             events and continuity planning. In a
     or your share price?
                                                                                                                                                                                                                      withstand another rapid deterioration                         bull market, entire risk management
                                                                                                                                                                                                                      in business conditions? Stress                                functions can be pushed to one side
   • Have your business continuity plans
                                                                                                                                                                                                                      testing can be a means to assess                              in the pursuit of new opportunities.
     been reviewed and refreshed in light of                                                                                                                                                                          these risks; is not just an exercise
     recently-implemented cost cutting and                                                                                                                                                                            for the banks.                                                Scenario planning rests on good
     streamlining measures?                                                                                                                                                                                                                                                         business intelligence. With unified
                                                                                                                                                                                                                      In times of austerity, strategic                              IT platforms providing consistent
   • Is scenario planning alive and well in                                                                                                                                                                           planning need to be based on                                  data according to predefined key
     your business?                                                                                                                                                                                                   practical and cost-effective measures                         performance indicators, the CEO is
                                                                                                                                                                                                                      while remaining flexible enough                               in a better position to understand
                                                                                                                                                                                                                      to handle changes in people and                               how different types of disruptions
                                                                                                                                                                                                                      processes.                                                    will impact the business at different
                                                                                                                                                                                                                                                                                    levels of scale.

          © 2011 KPMG Europe LLP, a UK limited liability partnership, is the legal entity which effectively controls a number of the independent KPMG member firms     © 2011 KPMG Europe LLP, a UK limited liability partnership, is the legal entity which effectively controls a number of the independent KPMG member firms
          affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG Europe LLP and KPMG International provide no client services.    affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG Europe LLP and KPMG International provide no client services.
Fit for the future A CEO guide to succeeding in a changing world - www.kpmg.comeu/en/succeeding
10 Fit for the future: A CEO guide to succeeding in a changing world                                                                                                                                                                                        Fit for the future: A CEO guide to succeeding in a changing world 11

                                                                                                                                                                      Turning risk to
                                                                                                                                                                      advantage: The CEO’s
                                                                                                                                                                      critical role
                                                                                                                                                                                                                              Increased regulation and oversight are frequently
                                                                                                                                                                                                                              highlighted as a primary concern for CEOs globally.1
                                                                                                                                                                                                                              They are harder to influence and can result in increased
                                                                                                                                                                                                                              capital needs, higher taxes, and unacceptable risk/return
                                                                                                                                                                                                                              ratios leading to businesses being curtailed or exited.

                                                                                                                                                                      Since the onset of the financial                        Another area of public concern                                If handled properly, adapting to more
                                                                                                                                                                      crisis, regulation has increased.                       where governments are being                                   stringent regulations or guidelines
                                                                                                                                                                      Tax authorities have also become                        forced to respond relates to                                  can be an opportunity to develop
                                                                                                                                                                      more aggressive in their collection                     data privacy and security. Many                               new processes that bring insight to
                                                                                                                                                                      of tax revenue and have placed                          businesses are increasingly reliant on                        the senior management and better
                                                                                                                                                                      some organisations under greater                        electronic or mobile communications                           visibility over performance. New
                                                                                                                                                                      scrutiny. Financial sector reforms                      to market or sell their products,                             taxes or pricing mechanisms could
                                                                                                                                                                      and regulations imposed in western                      make payments and share personal                              provide competitive advantage to
                                                                                                                                                                      economies have had repercussions                        data. Requirements to change how                              those who are setting the best
                                                                                                                                                                      for institutions in Asia Pacific, even                  data is handled or stored can present                         practice and best able to cut through
                                                                                                                                                                      for those that had little to do with                    challenges to an organisation if its                          an additional layer of complexity.
                                                                                                                                                                      the financial over-engineering seen                     IT architecture and key processes                             These are benefits that can also be
                                                                                                                                                                      in London or New York. One impact                       are not well mapped out. In the                               communicated forcefully to external
   CEO checklist                                                                                                                                                      these reforms may have on wider                         most extreme examples it can                                  stakeholders.
                                                                                                                                                                      business conditions concerns the                        undermine critical delivery or
   • Do you have any means to measure                                                                                                                                 ability of organisations throughout                     payments systems, or lead to
     the costs and benefits of compliance                                                                                                                             the economy to access capital or                        significant reputational damage.
     activities to your business? Is there                                                                                                                            extend lines of credit.                                                                                               1   ”Davos Report: Business Leaders Warn Regulations

     a clear link to brand protection and                                                                                                                                                                                     The responses of many global                                      May Crimp Recovery,” Reuters, 27 January 2010

                                                                                                                                                                      The emerging issue of sustainability                    organisations to the climate change
     reputation?                                                                                                                                                      has become another catalyst for                         agenda or data privacy concerns
                                                                                                                                                                      new regulations and potentially                         illustrate how they can be optimised
   • Can your systems be used to assess                                                                                                                               other tariffs including carbon                          through proactive engagement, with
     other externalities, such as carbon or                                                                                                                           taxes or pricing mechanisms. The                        the CEO as a key spokesperson.
     energy impacts?                                                                                                                                                  environmental debate has now                            The CEO has a responsibility to
                                                                                                                                                                      moved beyond compliance and risk                        understand the external impacts
   • Have you institutionalised a process                                                                                                                             and the CEO is uniquely placed to                       of one’s own business model. He
     to monitor regulatory developments in                                                                                                                            have the right conversations with                       or she has a role to play in shaping
                                                                                                                                                                      external stakeholders, including                        regulatory policy ensuring that it is
     each country in which you operate?                                                                                                                               governments and regulators, and                         both appropriate, and harnessed to
                                                                                                                                                                      to demonstrate that his or her                          support future success.
   • Are there areas where you can
                                                                                                                                                                      organisation is responding.
     streamline compliance activities
     by applying common systems for
     detection, investigation and reporting?

          © 2011 KPMG Europe LLP, a UK limited liability partnership, is the legal entity which effectively controls a number of the independent KPMG member firms             © 2011 KPMG Europe LLP, a UK limited liability partnership, is the legal entity which effectively controls a number of the independent KPMG member firms
          affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG Europe LLP and KPMG International provide no client services.            affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG Europe LLP and KPMG International provide no client services.
Fit for the future A CEO guide to succeeding in a changing world - www.kpmg.comeu/en/succeeding
12 Fit for the future: A CEO guide to succeeding in a changing world                                                                                                                                                                                 Fit for the future: A CEO guide to succeeding in a changing world 13

                                                                                                                                                                      Building lasting
                                                                                                                                                                      success:
                                                                                                                                                                      Institutionalising the
                                                                                                                                                                      right practices
                                                                                                                                                                                                                       Many organisations instilled a new sense of discipline
                                                                                                                                                                                                                       in response to the downturn, but it was only when
                                                                                                                                                                                                                       growth opportunities reemerged that these were put to
                                                                                                                                                                                                                       the test. Management can slip back into old habits and
                                                                                                                                                                                                                       costs rise once again. Institutionalising the things done
                                                                                                                                                                                                                       during a downturn is not as easy as it may seem when
                                                                                                                                                                                                                       the business is once again looking ahead and short-term
                                                                                                                                                                                                                       survival is less of a concern.

                                                                                                                                                                                                                       Consistency is key. As the business                           of the past two years, many
                                                                                                                                                                                                                       environment changes, people may                               investors are looking for companies
                                                                                                                                                                                                                       view stricter rules or guidelines                             that can demonstrate sound
    CEO checklist                                                                                                                                                                                                      as temporary and thereby dismiss                              management and generate more
                                                                                                                                                                                                                       them, particularly if their peers and                         stable earnings. Recent events are
    • Is your leadership team setting the
                                                                                                                                                                                                                       managers are doing the same. At                               a reminder that even the largest
      right tone at the top and taking                                                                                                                                                                                 this point, policies and procedures                           and most reputable of companies
      the lead in implementing company                                                                                                                                                                                 should be reinforced and reviewed to                          can come unstuck if they set overly
      policies and procedures?                                                                                                                                                                                         ensure their ongoing relevance.                               ambitious quarter-by-quarter earnings
                                                                                                                                                                                                                                                                                     targets and get blinded to the
    • What steps are in place to monitor,                                                                                                                                                                              The CEO needs to demonstrate                                  accompanying risks.
      ensure appropriate adherence, and                                                                                                                                                                                and make clear to everyone
                                                                                                                                                                                                                       that the disciplines and rigours                              In any company, the CEO needs
      impose disciplinary actions on non-                                                                                                                                                                              imposed during the downturn were                              to understand what incentives will
      compliance?                                                                                                                                                                                                      not endured for nothing. More                                 work. He or she should reconsider
                                                                                                                                                                                                                       importantly, it must be stressed that                         what earnings are paid back to
    • Are the policies and procedures                                                                                                                                                                                  those impositions were and continue                           investors as dividends and where
      built for adherence over a sustained                                                                                                                                                                             to be part of a strategy to build a                           bonuses are paid. The CEO must
      period?                                                                                                                                                                                                          stronger business for the long term.                          ask themselves whether these are
                                                                                                                                                                                                                       In doing this, management needs to                            aligning the management’s interests
    • Do communications with stakeholders                                                                                                                                                                              set the right tone at the top and lead                        with the long-term benefit of the
                                                                                                                                                                                                                       by example; no senior executive can                           organisation. In the current climate
      demonstrate a focus on long-term                                                                                                                                                                                 be beyond reproach.                                           and with public demands for greater
      success as well as short-term                                                                                                                                                                                                                                                  regulation, the CEO should lead in
      expediencies?                                                                                                                                                                                                    This strategy can have external                               this regard, long before regulatory
                                                                                                                                                                                                                       dividends as well. After the volatility                       pressures force his or her hand to
                                                                                                                                                                                                                                                                                     do so.

          © 2011 KPMG Europe LLP, a UK limited liability partnership, is the legal entity which effectively controls a number of the independent KPMG member firms      © 2011 KPMG Europe LLP, a UK limited liability partnership, is the legal entity which effectively controls a number of the independent KPMG member firms
          affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG Europe LLP and KPMG International provide no client services.     affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG Europe LLP and KPMG International provide no client services.
Fit for the future A CEO guide to succeeding in a changing world - www.kpmg.comeu/en/succeeding
14 Fit for the future: A CEO guide to succeeding in a changing world                                                                                                                                                                                      Fit for the future: A CEO guide to succeeding in a changing world 15

                                                                                                                                                                      For more information, or to discuss the issues raised in this report,
                                                                                                                                                                      contact one of our SiCW experts.

                                                                                                                                                                      Fit for today                                         Poised for growth                                             Focus on the future
                                                                                                                                                                      How do I embed                                        Exploiting growth                                             Future markets

About Succeeding in
                                                                                                                                                                      cash best practice?                                   opportunities through                                         – East & West
                                                                                                                                                                      Andrew Ashby                                          successful transactions                                       Thorsten Amann
                                                                                                                                                                      T: +44 20 76943231                                    John Kelly                                                    T: +49 30 2068-1144
                                                                                                                                                                                                                            T: +44 20 76943528

a Changing World
                                                                                                                                                                      Achieving sustainable                                                                                               Changing customer
                                                                                                                                                                      improvements in cost                                  Informed insights                                             & stakeholder behaviour
                                                                                                                                                                      efficiency                                            in a changing world                                           Hans Winterhoff
                                                                                                                                                                      Jeremy Kay                                            Herman Heyns                                                  T: +49 511 8509-5227
                                                                                                                                                                      T: +44 20 76944540                                    T: +44 20 73114478
                                                                                                                                                                                                                                                                                          Technology
                                                                                                                                                                      Turning risk                                          Revisiting the                                                & the digital age
                                                                                                                                                                      into advantage                                        organisation                                                  Bryan Cruickshank
                                                                                                                                                                      Ian Forbes                                            Martin Scott                                                  T: +44 131 5276640
                                                                                                                                                                      T: +44 20 7311 6465                                   T: +44 20 76943516
                                                         The uncertainty of the economic climate                                                                                                                                                                                          Energy, sustainability
                                                                                                                                                                                                                            Growing public sector /                                       & the green agenda
                                                         combined with the complexity of business                                                                                                                           private sector interaction                                    Barend van Bergen
                                                         today, leaves the Board facing a number of                                                                                                                         Mike Harlow                                                   T: +31 20 656 4506
                                                                                                                                                                                                                            T: +44 20 7311 4227
                                                         issues. KPMG’s Succeeding in a Changing
                                                         World programme is helping define and
                                                         refine the business agenda away from
                                                         traditional and emotional issues to facilitate
                                                         the Board’s success against the backdrop
                                                         of change. Whether it is ensuring the
                                                         business is fit for purpose, poised for
                                                         growth or focusing on the future, we are
                                                         working with clients to ensure they can
                                                         succeed in a changing world.

                                                         The KPMG’s ‘Business Leaders Agenda’
                                                         online survey has the views from over
                                                         1,000 European business leaders of what
                                                         is on their radar over the next six months.
                                                         To view the results go to:
                                                         www.kpmg.com/eu/en/succeeding

          © 2011 KPMG Europe LLP, a UK limited liability partnership, is the legal entity which effectively controls a number of the independent KPMG member firms           © 2011 KPMG Europe LLP, a UK limited liability partnership, is the legal entity which effectively controls a number of the independent KPMG member firms
          affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG Europe LLP and KPMG International provide no client services.          affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG Europe LLP and KPMG International provide no client services.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate
and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon
such information without appropriate professional advice after a thorough examination of the particular situation.

© 2011 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG
International Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.

The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.

KPMG LLP (U.K.)’s Design Services | RRD-246060 | February 2011
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