Gauging Business Disruption with the Disruptability Index | Accenture

2. Copyright © 2019 Accenture. All rights reserved. ATAGLANCE • Industry disruption is persistent and rising • Playing it safe risks future financial performance • To succeed, companies must make an “innovation pivot” $41Tin enterprise value is exposed to disruption for 10,000 companies in 18 industries* Pivot out of persistent disruption (*) )% companies from sectors scoring above the weighted average on ‘current level of disruption’. This equates to 4,889 unique companies with Enterprise Value (market cap + net debt) of $41tn (out of $75tn). Sample comprises the largest (by revenue) 10,000 operating, publicly listed companies, with 471 excluded because they are multi-sector holding companies or in industries out of scope. 2

3. Copyright © 2019 Accenture. All rights reserved. C-suite mentions of “disruption” have increased significantly over the past decade . And with it, the anxieties of executives across industries “I’ve been living in this cozy world of old brands, big volumes, nothing changing very much…but now we are being disrupted in all ways…we are running to adjust.” Jorge Paulo Lemann, co-founder 3G Capital ADECADEOFDISRUPTION Executives are aware of the threat 71%of companies are currently in, or stand on the brink of, significant disruption 3

4. Copyright © 2019 Accenture. All rights reserved. Measured industries’ current level of disruption and susceptibility to future disruption Examined how the nature of disruption has evolved since 2011 for 18 industry sectors SO,HOWWELLARE INDUSTRIESCOPING WITHDISRUPTION? Our research has… 4

5. Copyright © 2019 Accenture. All rights reserved. 83%of industries we analyzed spent at least five years in the same period of disruption DISRUPTIONISA PERSISTENTCONDITION Industries fall within one of four periods of disruption: 5 Viability The opportunity lies in growing the core by offering new products in existing markets, but also existing products to new markets. Durability Period where companies have a great opportunity to seek and experiment with new business ideas. Vulnerability This blind spot distracts many from a great opportunity: scaling up new ideas and venturing into new markets. Volatility Most companies focus on resolving pressing issues in the core business; what’s much harder is redirecting investment capacity to grow new businesses.

7. Copyright © 2019 Accenture. All rights reserved. Our research shows all industries have taken action to reduce their susceptibility to disruption. But, why then are they still being disrupted? Because they are taking proven, familiar paths to respond, rather than seeking out new terrain. PLAYINGITSAFE— ANDFALTERING 7

8. Copyright © 2019 Accenture. All rights reserved. They don’t just protect their position, they truly change it. They Make an Innovation Pivot THEREISA BETTERPATH Some companies confront disruption in an unconventional way. 8

9. Copyright © 2019 Accenture. All rights reserved. 4WAYSTOSTARTAN INNOVATIONPIVOT Disruption informs when and how to focus innovation efforts Strategic considerations: Create Your Next Cutting Edge Fund Your Future Bets Find Partners to Scale With Disrupt From the Inside when your industry is in VIABILITY when your industry is in DURABILITY when your industry is in VULNERABILITY when your industry is in VOLATILITY 9

10. Copyright © 2019 Accenture. All rights reserved. Embrace new technologies to develop potentially disruptive ideas, in and outside of your current industry. Createyournext cuttingedge If you’re in Software & Platforms, Communications & Media, or High-Tech (Viability period)… 10

11. Copyright © 2019 Accenture. All rights reserved. Progressively bolster and allocate your innovation investments so you can test and turn new ideas into commercial realities faster. Fundyour futurebets If you’re in Health, Life Science or Chemicals (Durability period)… 11

12. Copyright © 2019 Accenture. All rights reserved. Commit to scaling new ideas with ecosystem partners who can provide access to technologies and specialized talent. Findpartners toscalewith If you’re in Banking, Capital Markets, Industrial Equipment & Machinery, Insurance, Utilities, Automotive or Energy (Vulnerability period)… 12

13. Copyright © 2019 Accenture. All rights reserved. Establish a specialized entity, such as a “digital factory” to bring meaningful innovation into your established business. Disruptfrom theinside If you’re in Consumer Goods & Services, Infrastructure & Transportation Services, Natural Resources or Retail (Volatility period)…

14. Copyright © 2019 Accenture. All rights reserved. Leading companies push out of their comfort zone to shape their own future. They don’t just protect their position, they truly change it. EMBRACE THE POWER OF THE WISE PIVOT HOWDOYOU WININTHEAGE OFDISRUPTION? TIME FOR COURAGE 14

15. Copyright © 2019 Accenture. All rights reserved. 62 INDICATORS 10,000 COMPANIES 12M DATA POINTS 2011 TO 2018 TIME SERIES Automotive, Banking, Capital Markets, Chemicals, Communications & Media, Consumer Goods & Services, Energy, Health, High Tech, Industrial Equipment, Infrastructure & Transportation, Insurance, Life Sciences, Natural Resources, Retail, Software & Platforms, Travel, Utilities. ABOUTTHERESEARCH We used our own disruptability index to measure an industry’s current levels and susceptibility to disruption 18 industry sectors 15 Disruptive Incumbents Disruptive Start-ups Disruptive Capital Growth & Expectations Profitability Volatility CURRENT LEVEL OF DISRUPTION DISRUPTORS PERFORMANCE SUSCEPTIBILITY TO FUTURE DISRUPTION DEFENCES INNOVATION EFFICIENCY Transaction Intensity Asset Intensity Labour Intensity Commitment Digital Effectiveness Positioning for the Future Brand Prominence Openness & Strength Value Creation Potential DISRUPTABILITY INDEX 2.0

16. Copyright © 2019 Accenture. All rights reserved. OMAR ABBOSH Group Chief Executive,Communications, Media and Technology Group. PAUL NUNES Global Managing Director of Thought Leadership at Accenture Research. DR. VEDRANA SAVIC Managing Director of Thought Leadership at Accenture Research. MICHAEL MOORE Senior Principal, Thought Leadership at Accenture Research. He serves on Accenture’s Global Management Committee and was previously Accenture’s Chief Strategy Officer. He has extensive experience in advising C-level and board-level members across a wide range of industries. He focuses on technology–driven innovation in business and marketing strategy. His research has helped to shape the company’s strategic vision as well as its critical imperatives for change, spanning three decades. She has extensive experience in strategy and management consulting, and in financial services. She is a thought leader focused on innovation strategy, value creation in the digital age, and corporate reinvention. He has extensive experience in strategy consulting, developing growth strategies for energy companies. His research looks at how companies can understand, harness and scale disruptive innovation in support of inclusive growth. 16 ABOUTTHEAUTHORS Our team is at the forefront of helping organizations navigate a path through disruption and pivot to the future.

17. Copyright © 2019 Accenture. All rights reserved. VISIT www.accenture.com/decodedisruption 17Copyright © 2018 Accenture. All rights reserved. Explore the three preconditions to enable your Wise Pivot. “Make Your Wise Pivot” Decode disruption to power your Wise Pivot. “Breaking Through Disruption” “Discover Where Value’s Hiding” How to unlock the value of your innovation investments. TELLMEMORE

18. Copyright © 2019 Accenture. All rights reserved. Accenture Research shapes trends and creates data-driven insights about the most pressing issues global organizations face. Combining the power of innovative research techniques with a deep understanding of our clients’ industries, our team of 300 researchers and analysts spans 20 countries and publishes hundreds of reports, articles and points of view every year. Our thought-provoking research—supported by proprietary data and partnerships with leading organizations such as MIT and Harvard Business School—guides our innovations and allows us to transform theories and fresh ideas into real-world solutions for our clients. Visit us at www.accenture.com/research ABOUTACCENTURE Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions—underpinned by the world’s largest delivery network—Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With approximately 477,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com 18