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impact
IS SU E
21
What
matters now
April 2021
kearney.com
EDITORIAL
“Spring is the time of
plans and projects”
LEO TOLSTOY
For most of us in Europe, March marked the 1-year anniver- ic Forum, are undertaking right now to convene global lead-
sary since COVID lockdowns took hold across the continent. ers from across industry, government, science, academia
As we now move into our second Spring of the pandemic I and civil society, and find solutions to the big issues we face
caught up with Borge Brende, President of the World Eco- and in doing so, shape the kind of inclusive and sustainable
nomic Forum, to reflect on key learnings from the pandemic growth we need more than ever.
and identify the green shoots for recovery as well as poten- In this week’s Impact we reveal the results of this year’s 2021
tial bumps in the road ahead. FDI Confidence Index®, discuss how companies navigate
What the pandemic has proven beyond doubt is that when geopolitical uncertainty and climate commitments, look at
forced into a corner, as we have been, successful public-pri- developing a strategic e-commerce architecture, address
vate sector collaboration is indeed possible to address the the equality dilemma of gender-diverse leadership, and in-
biggest challenges we face as a society. Take the develop- troduce our fast-track transformation podcast.
ment of not just one but multiple vaccines in record time - 9
months (a process which would normally take 8-10 years), As always, if you want to discuss any of these topics in more
with an estimated 535 million vaccinations already provid- detail, we are here to talk.
ed in 140+ countries around the world. Never in history has
an achievement of this scale or speed been accomplished. Thank you,
But we cannot be complacent, and the lack of global coordi- Geir Olsen
nation to ensure equitable distribution across the globe still
leaves much to be desired.
From an Economic perspective, we are already seeing some
positive indicators. Examples include 10-15% growth pre-
dicted in China by year end – which is like adding 2 Austral-
ia’s to the global economy, or E-commerce in the US expe-
riencing a greater growth spurt in an 8-week period of the
pandemic than it did during the previous 5-years. However,
further stimulation packages will be required to support sus-
tainable economic growth. And, as furlough schemes come
to an end, we will need the sort of recovery that creates a
swathe of new jobs to replace the estimated 500m lost in
the past 12 months, as well as major investment in upskilling,
re-skilling and right-skilling programs to respond to the tec-
tonic shifts that have occurred.
For business leaders, the pandemic was without doubt a cat-
alyst to advance the digitization agenda whether it be in en-
abling remote working, establishing resilient supply chains
or evolving more consumer-centric products and services.
Yet, beyond the corridors of industry, the reality is that there
are 3.6bn people on this planet who still have no internet
access, impacting not only the opportunities to create and
drive new business growth, but also hindering access to uni-
versal education for those who need it most. The next gener-
ation workforce. Fixing these inequalities, as well as decou-
pling economic growth and CO2 emissions, are the biggest
challenges we face right now. Transcending the physical
and mental barriers that we have put in place to address
pandemics, and other global challenges including climate
change and digitization, that have no respect for passport
control requires cross-border collaboration and ideation. GEIR OLSEN
My conversation with Borge served as an important remind- HEAD OF EUROPE
er of the work that organizations, such as the World Econom- CONNECT WITH GEIR
2021 FDI CONFIDENCE INDEX®
ON
SHAKY
GROUND
T
TEXT BY PAUL LAUDICINA here is reason for optimism that the increased trade friction, the relentless rise
AND ERIK PETERSON global economy is emerging from the of technology competition, the progres-
long shadow of COVID-19. From the sive fragmentation of global supply chains,
United States to Japan to Australia, several growing national procurement policies, and
economies are expected to surpass their Q4 consumer demand for product customiza-
2019 outputs in the year ahead as vaccines tion could all put even more pressure on the
are administered and economies rebuilt. volume and directions of FDI, at least over
Yet the results of our 2021 FDI Confidence the next three years.
Index® suggest that business leaders world- Perhaps this shift in perspective reflects a
wide remain cautious in their outlook for course correction—last year’s survey, fielded
the next three years. Overall levels of opti- in the first months of 2020 just as the pan-
mism about the global economy have fallen demic was beginning to emerge, found in-
significantly from their pre- and early pan- vestors displaying a strong level of optimism
demic levels last year, and investors now about the global economy and their
appear to be gearing up for a long-haul re- investment outlook. They only appeared to
covery for investment flows. Such concerns see the approaching storm at the last sec-
may be well-founded. The diminished sig- ond, and many were caught flat-footed as
nificance of labor arbitrage, the prospect of the world around them was brought to an
economic standstill. Now, a year into the sistant to vaccines. Likewise, the econom- as a consequence of their dispute with As-
pandemic and its severe disruption to the ic outlook is clouded by uneven rates of re- traZeneca over the COVID-19 vaccine. To
global economy, investors appear to have newed dynamism. be sure, these and other developments il-
been chastened. This all suggests that we will continue to be luminate how uncertain the environment
It comes as little surprise, then, that devel- on shaky ground—and that it will take some appeared to our survey respondents.
oped economies account for the lion’s share time for global investment flows to fully • Unsurprisingly, investors are very cau-
of rankings on our top-25 list this year (see emerge from the long shadow of COVID-19. tious. Only 57 percent expressed optimism
figure 1). There are two primary reasons at about the three-year global economic out-
work. First, established markets represent Executive Summary look, which is much lower than the cor-
more safety and stability to business lead- • Investors are operating in an environment responding figure last year of 72 percent
ers, whose strategies and bottom lines have of uncertainty. In the field from January 12 prior to and at the onset of the pandem-
been shaken by the pandemic. It is no co- to February 12, our 2021 survey captures ic. This suggests continued apprehension
incidence that investors point to concerns the prevailing views of business leaders and uncertainty about how quickly the
about the macroeconomic environment as during that snapshot of time—marked by global economy will recover post-COVID.
the most prominent factor in explaining why the pandemic (reaching 2 million COV- In addition to the fall in confidence about
direct investment might decrease. And, sec- ID-19 deaths globally on January 15 and the economy, most of the overall scores
ond, investors continue to prioritize destina- 100 million cases on January 26), the tu- for the top 25 economies have fallen com-
tions with strong infrastructure and invest- multuous political transition in the United pared with previous years. In fact, only
ment in technology and innovation—natural States (including the January 6 storming of five—the United Arab Emirates, Norway,
strengths of most developed markets. the Capitol and the second impeachment Austria, Portugal, and Denmark—scored
Three months into 2021, with mass vacci- of then-President Donald Trump), and higher than in 2020.
nation programs under way in many coun- complex geopolitical dynamics elsewhere • The United States once again takes the
tries, conditions have started to improve. in the world, including the aftermath of top ranking—for the ninth consecutive
Most projections, including our own GBPC Brexit with the January 29 invocation of year. Canada remains second, and Ger-
Global Economic Outlook 2021–2023, pre- Article 16 of the Northern Ireland Proto- many maintains its third spot. The United
dict the economy will regain significant mo- col governing trade agreements with the Kingdom rejoins the top five after ranking
mentum this year and next. Still, investors European Union and the United Kingdom sixth last year. France falls modestly—to
have several lingering concerns. The speed
and scope of recovery—both human health
and economic—are uncertain. The spect-
er of vaccine nationalism and the contin- “Only 57 percent expressed optimism about the
ued healthcare challenges faced by sever- three-year global economic outlook - compared to 72 percent
al emerging markets underline the threat of prior to and at the onset of the pandemic.”
new virus variants that could be more re-
Figure 1
The 2021 Kearney FDI Confidence Index®
2020 2021
Moved up
1 1 United States 2.17
Moved down
2 2 Canada 2.10
Maintained
ranking 3 3 Germany 2.07
6 4 United Kingdom 1.99
4 5 Japan 1.98
5 6 France 1.95
7 7 Australia 1.90
9 8 Italy 1.88
11 9 Spain 1.86
10 10 Switzerland 1.86
14 11 Netherlands 1.82
8 12 China (including Hong Kong) 1.81
13 13 New Zealand 1.78
15 14 Sweden 1.77
19 15 United Arab Emirates 1.77
12 16 Singapore 1.77
16 17 Belgium 1.74
24 18 Norway 1.73
- 19 Austria 1.72
21 20 Portugal 1.71
17 21 South Korea 1.71
20 22 Denmark 1.70
18 23 Ireland 1.66
Source:
22 24 Brazil 1.64
2021 Kearney FDI
23 25 Finland 1.63 Confidence Index®
“China, which has held strong positions compelling investors to rethink their glob-
in the rankings for years (including topping the Index al supply chains.
from 2002 to 2012)—drops to 12th.” • As investors increasingly rely on data and
the cross-border flow of data to support
their operations, many cite burgeoning
data regulations as impacting their for-
sixth place after holding the fifth spot for and economic stability. When it comes to eign direct investments. Investors say
three years in a row, a position now taken pinpointing the factors that are most im- data is integral to generating revenue, with
by Japan, which dropped from fourth last portant for investment decisions, respond- many stating that a large portion of their
year. It is noteworthy that the top 10 coun- ents say taxation is the top consideration, turnover is generated through data. But
tries remain unchanged from 2020, with but also important are technological and they are also aware of the growing amount
the exception of Spain replacing China. innovation capabilities as well as R&D ca- of data regulations and the costs that
This reflects the continued preference for pabilities—areas of strong competitive ad- they incur. A majority say that cross-bor-
advanced economies. The top 25 remains vantage for most developed economies. der data restrictions have a moderate to
almost unchanged from last year with one • China, the United Arab Emirates, and Bra- significant impact on FDI, while compli-
exception: Austria rejoins the Index, while zil are the only emerging markets to make ance with data regulations already comes
Taiwan (China) falls out. this year’s list. China, which has held with a heavy price tag. Further, many are
• Developed markets maintain their high- strong positions in the rankings for years concerned about how data nationalism—
est share ever—for the third year in a row. (including topping the Index from 2002 to moves by nation–states to ensure control
This year’s survey results largely reaffirm 2012)—drops to 12th. This result is coun- over data—might affect their investments
the shift to safety that had been observed terintuitive when it comes to the fast re- over the next three years.
in prior years and a clear predisposition for start of China’s economy last year, long
larger, more advanced markets. In fact, the before other economies began to regain
Read the full 2021 FDI
results mark the third time in the 23-year momentum. However, it may reflect esca-
Confidence Index®
history of the Index—and the third consec- lated US–China trade tensions and other
utive year—in which the top five spots are policy conflicts along with the exposure
all held by developed markets. This con- of international supply chains to China,
tinued strong showing of advanced econ- which—consistent with Kearney analy-
omies likely stems from conducive regu- sis—has led some companies to restruc-
latory environments coupled with skilled ture their supply chains to avoid geopolit- Connect with Paul
workforces, advanced tech infrastructure, ical and tariff fallout, among other factors Connect with Erik
ENERGY TRANSITION
A changing
landscape
How will companies navigate geopolitical uncertainty, TEXT BY ROMAIN DEBARRE,
RICHARD FORREST, REBECCA
embattled governments, and climate commitments GRENHAM AND ERIK PETERSON
as they respond to the energy transition?
Geopolitical uncertainties abound in today’s world as the COVID-19 While President Biden will face similar issues to his predecessor, his
pandemic has laid bare existing fault lines and rattled political and approach will differ. Instead of isolationism, Biden has previously ex-
economic structures. We started the new year with a new US pres- pressed a desire for the United States to engage allies in efforts to
ident, who has centered climate change within his administration. mitigate common threats. This multilateral approach in many ways
From rejoining the Paris Agreement to pushing forward with plans to marks a return to US foreign policy before the Trump era. But rebuild-
boost US offshore wind production and deploy electric vehicles on ing relations with established allies will surely take time.
a wide scale, President Joe Biden’s agenda marks a sharp turn from This approach will also mean greater pressure on traditional US allies,
that of his predecessor and raises questions about the future of oil such as EU member states and the United Kingdom as Washington
and gas in the world’s largest oil producer. seeks to enlist their support in countering perceived mutual issues.
With a new president also comes new foreign policy priorities, but Central sticking points are already emerging, such as the EU–China
some central, long-standing questions persist. US–China relations, Comprehensive Agreement on Investment, which add to the greater
for instance, remain strained as tensions mount between the two sense of uncertainty as geopolitical priorities shift.
countries. Technology competition between the two nations also Energy is naturally at the heart of many of these tensions. Many US
still rages and looks unlikely to subside in the coming months. Fur- and European lawmakers, for instance, see the planned Nord Stream
ther North, tensions between Russia and the United States show no 2 pipeline as a tool for Russia to expand its influence in Western mar-
sign of abating as the list of issues only grows longer, from cyber- kets. At the same time, the Asian Renewable Energy Hub, under con-
security to energy trade to governance. And in the Middle East, al- struction in Western Australia, plans to eventually export renewables
and hydrogen to countries in the region. The project could bring
Asian nations closer to Canberra, which in turn could create more
“Many of the same geopolitical friction with Beijing as the two jockey for influence in the region.
challenges, which in many ways
the pandemic brought to a boil, Continued emphasis on climate
will remain this year.” Despite this uncertainty, some secular trends are discernible. Climate
change remains a top issue for global policymakers, and momen-
tum to mitigate it is growing. From China, which pledges to become
though President Biden has expressed a desire to rejoin the Iran nu- carbon neutral by 2060, to Japan and the United States, countries
clear agreement, it remains unclear as to how much common ground around the world seem more committed than ever to addressing cli-
remains between Tehran and Washington. This means that many of mate change. The EU is a particularly notable example, as it incorpo-
the same geopolitical challenges, which in many ways the pandemic rated many of its climate objectives in its COVID stimulus package
brought to a boil, will remain this year. and even raised its 2030 emissions target last year.
Demand for renewables and green technologies will only grow as about not only profit but also the consequences of climate inaction.
countries double down on climate commitments, which will mean This could prove challenging, especially as demand for fossil fuels in
a spike in demand for key minerals such as lithium, cobalt, and rare emerging markets grows in the coming years but pressure to shift
earths. As a result, regions that are home to these products, such away from them intensifies. In many ways, the private sector will be-
as Africa, will become even more profound geopolitical hotspots as come a leader in addressing climate change as it strives to meet am-
outside nations seek a steady supply of these much-needed metals. bitious targets and appease demanding consumers and regulators.
At the same time, advanced economies will grow more wary of rely- Companies will find themselves increasingly pulled between meet-
ing on China—the world’s largest rare earths supplier—and will like- ing rising energy demand and addressing climate change in the
ly undertake efforts to boost domestic production and processing. A coming years. Some advanced economies will try to reduce their re-
proposed rare earths processing facility in the United Kingdom and liance on fossil fuels. However, oil and gas will continue to play an
United States plans to boost mining and production of key metals do- important role in the energy mix in the short to medium term, espe-
mestically are early signals of this trend. cially in emerging markets. Most forecasts predict that oil and gas de-
Meeting national climate goals and procuring the resources need- mand will still grow for another 10 to 20 years as consumers in large
ed to aid the energy transition will prove challenging, especially as markets such as China and India grow wealthier. In other words, oil
economies recover from the COVID pandemic. Addressing climate and gas will be needed to meet rising energy demand as renewables
change, though important for many countries, is just one of the many scale up. Some companies are still investing in oil and gas produc-
challenges governments must tackle. And the financial resources tion as a result.
needed to support broad economic and societal goals are diminish-
ing. More specifically, many governments are finding that their ability
to steer the economy is lessening as debt accumulates and interest “Climate change and environ-
rates remain at historic lows. Emerging markets are particularly vul- mental concerns top the list
nerable and could become even more so if commodity prices drop, of problems that consumers
food insecurity worsens, and currencies depreciate—feeding geopo- expect brands to solve.”
litical instability.
“Embattled” governments Renewables, however, are also set to grow in both advanced and
As “embattled” governments try to tackle big challenges, pressure emerging markets as countries seek to diversify energy sources
on the private sector to address societal issues will grow. Public trust while meeting climate objectives. This means that countries will have
in the government is already low, as the 2021 Edelman Trust Barom- to balance advancing climate goals with meeting the energy needs
eter shows, leaving business the most trusted institution in at least of their citizens. Pressure on energy companies, then, will increase as
18 countries. But with greater trust comes greater responsibility, as they strive to meet rising energy demand as quickly as possible while
more and more consumers expect companies to act as a positive also reducing carbon emissions.
force for social change. More specifically, climate change and envi- As the private sector leads the way in mitigating climate change, fur-
ronmental concerns top the list of problems that consumers expect ther investments in renewables, batteries, and other green technolo-
brands to solve. In other words, old models of purely focusing on gies are on the horizon—while those in fossil fuels may dwindle after
profit are no longer enough to compete. Businesses already began demand peaks. Moreover, it means that companies as well as coun-
responding in 2020 by showing support for social movements such tries will demand the much-needed resources to transition to cleaner
as Black Lives Matter, supporting food banks, and doubling down on forms of energy, such as key minerals and land, which could add to
climate commitments. pressures in markets with an abundance of these resources, includ-
Indeed, from business leaders such as Amazon CEO Jeff Bezos to ma- ing several African nations.
jor corporations, climate pledges—and corresponding action—are
becoming the norm in the private sector. US retailer Walmart, for ex- Good neighbors needed
ample, aims to reach carbon neutrality within 20 years and has plans With companies leading the charge, the energy mix is changing at a
to protect and restore the environment. Tech giant Google wants to rapid pace—seemingly without much consideration for energy secu-
operate without producing emissions by 2030. rity, with the risk of an unbalance in energy and supply and demand
Perhaps most notably, several oil and gas companies have an- having gone more or less unaddressed. As the share of intermittent
nounced plans to become carbon neutral. Repsol along with BP, To- power sources, such as wind and solar power, grows, so too do the
tal, Occidental Petroleum, and Shell are among several firms that risks to security of energy supply.
have pledged to reach carbon neutrality by 2050. These companies In countries where such sources become an important share of the
are embracing renewables technologies and projects in an effort to power mix, energy security will depend on their ability to import
meet these goals. For instance, BP has teamed up with Danish renew- from neighboring countries to balance their electric grids. As a re-
able company Ørsted to produce green hydrogen in Europe, while sult, good relations with neighbors will become a central feature for
Total has invested billions in solar power in India. As companies shift energy security in the coming years.
away from fossil fuels and in favor of cleaner energy sources, their Similarly, energy companies will soon have to worry not only about
oil and gas production will likely diminish. BP, for example, has said finding cleaner methods to meet rising energy demand, but also the
it will reduce oil and gas production by 40 percent within 10 years. security implications of their investments.
A growing role for the private sector This article was published in Petroleum Review in March 2021.
As trust in government erodes, more consumers will demand that
companies address key challenges such as climate change. And as
the purchasing power of younger generations expands, the pressure
Connect with Erik
on companies to go green will only intensify. Moreover, the public
Connect with Richard
sector could increasingly turn to the private sector to help in meeting Connect with Romain
climate ambitions. Companies will find themselves having to think Connect with Rebecca
CONSUMER AND RETAIL Big on growth, short on satisfaction: Developing a strategic e-commerce architecture TEXT BY TIM BIERMANN, MAX KILIAN, MIROSLAV LAZIC AND SEBASTIAN SCHOEMANN
It was only in 1995 that eBay burst onto the work, or satisfy consumers’ changing needs and customer reviews have been mixed.
scene and Amazon shipped its first book or- and expectations. Let’s take a look at a cou- Our second example concerns a large online
der. Since then, e-commerce has exploded ple of examples. interior and furniture retailer, which recently
(see figure 1), and will continue to do so. In A national FMCG retailer recently introduced started selling to consumers as well as oth-
some countries, it is expected to increase by a new online order and delivery service. The er businesses. Despite capturing attention
a compound annual growth rate (CAGR) of aim is for customers to order products di- with well-placed display ads, SEO, and social
more than 20 percent by 2024, accounting rectly through a dedicated app and the com- media campaigns, this hasn’t translated into
for more than 22 percent of global sales. And pany’s website, with orders arriving within a the customer numbers expected, with high
with COVID-19 giving online buying and sell- day. In practice, the quality of service and churn rates and practically non-existent re-
ing an extra push, a recent survey from Kear- delivery times vary across different regions, peat purchases.
ney found that some categories could see up
to 300 percent growth in e-commerce.
At the same time, the idea of being “consum-
er first” has gained traction, becoming a top
priority on the C-suite agenda and across in-
dustries. For example, 87 percent of shop-
pers start to look for products online, while
platforms with large subscriber bases such
as Facebook and Instagram can help in-
crease awareness and consideration.
“76 percent of consumers
are still not satisfied
with their e-commerce
experiences and say they
need improvement.”
But to achieve full potential, it’s crucial to
successfully direct consumers to your on-
line store, give them the experience they ex-
pect during their visit, and treat them well so
they will return. Examples of those who have
got it right include Gymshark, which uses its
“athletes” (social media influencers) to boost
product consideration. Skullcandy offers
unique shopping experiences via its web-
sites, and Adidas has devised its Creators
Club, an online community and loyalty pro-
gram to attract consumers and offer them
exclusive benefits.
However, while these pockets of good prac-
tice exist, it’s not universal: We found that 76
percent of consumers are still not satis-
fied with their e-commerce experiences and
say they need improvement.
Why is this? The reason is two-fold: 1) the
strategic north star and 2) the technology
architecture, one or both of which are often
missing or poorly aligned. Without the two
components—the strategic north star and
the enabling technology architecture—fit-
ting together, it’s going to be difficult, if not
impossible, to make your online businessFigure 1
E-commerce offers many opportunities to win
customers and increase sales
Potentials for
Best practices
companies along
in CPG
the journey
• 74% of consumers see WOM recom- “Real beauty” campaign with
Awareness
mendations a s important for pur- large online traction
chase decision.1
• 500 million/2.7 billion users are
active on Instagram/FB.2
• 32 billion sales globally are reached
with email marketing.3
Consideration • 500k influencers are registered on Large influencer programs on
Instagram.4 social media channels
• 149 million users subscribe to the
largest YouTube channel T-series.2
• 87% of shoppers begin product
search online.5
• Two times higher gross margins can Unique customer shopping
Purchase
be reached through D2C.6 experience on D2C shop
• 57% of Amazon sales come from
long-tail products.7
• 3% of visitors convert into sales
across different retail sectors.9
Service • 63% of users who used live chats “Beauty talk” community to
return to t he page.10 unite experts and fellow shoppers
• 49% of businesses report up to
25% cost savings through online
communities.11
• 10% of all apps are business apps.12
• 5% more retention boosts revenue “Creators club” loyalty community
Loyalty by a minimum of 25%.13 for adidas sports products
• 25% more costs through acquiring
new customers compared to retain-
ing.14
• 50% more new product sales
through existing customers.14
Advocacy • 85% of consumers trust online #tweetacoffee as social advocacy
reviews.8 program with 27k advocates
• 19% of online users trust online
reviews as personal.2
• 31% of consumers spend 31% more
on products with excellent reviews.8
1 Adweek 6 Omnicore 11 Marketing Insider Group Notes: WOM is word of mouth.
2 Statista 7 Search Engine Guide 12 Mindsea D2C is direct to consumer. CPG
3 Marketing Week 8 Bright Local 13 Annexcloud is consumer packaged goods.
4 Omincore 9 Adobe Digital Index 14 Neil Patel
5 Retaildive 10 99 firms Source: Kearney analysisAt our FMCG retailer, online ordering was The solution: six steps to sustained success too often leads to failure. Instead, we start
rolled out rapidly to adjust to market chang- With misalignment between the strate- by identifying the major phases along the
es; however, due to a decentralized and leg- gic north star and the enabling technolo- consumer journey. We translate this con-
acy IT infrastructure that was not adapted gy architecture causing many companies sumer knowledge into what we call strate-
in response, the new system was not imple- to stumble as they pursue the e-commerce gic domains, which we typically group into
mented consistently across regions. With dream, our unique model helps companies marketing and engagement, sales fulfilment,
store systems varying, each one had to be overcome the pitfalls and deliver a superior service and customer experience, data and
connected individually, which led to prob- consumer experience. We conduct a com- analytics, and platform. We build an under-
lems in the dataflow, meaning some orders prehensive review of the current architec- standing of each domain’s role in addressing
were lost or couldn’t be fulfilled because of consumers’ needs (see figure 3). This serves
incorrect inventory levels. It’s no wonder re- “The temptation for compa- as the perfect point of departure for a tech-
views were poor. nies to jump straight in with nology architecture that is consumer first.
Our interiors business example also suffered a prototype or start buying
from a poor fit between the decision to move external services all too 2. Define the required capabilities
to a B2C strategy and the technology setup. often leads to failure.” The next step is to define the technical ca-
One crucial flaw was the poor integration pabilities needed. For example, if the over-
with the existing B2B online shop. The com- ture using a six-step framework, which starts all business strategy is to move from a pure
pany missed out on potential technology syn- with the organization’s strategic priorities B2B to a B2C or D2C model, one implication
ergies—such as a merged customer database and translates these into a workable technol- for the marketing and engagement domain,
for improved data analytics in the form of a ogy strategy, plan, and set of action-oriented for example, would be the need to raise con-
consistent consumer data platform—by not activities (see figure 2). sumer awareness of the brand.
integrating the two store systems. As a result, We then map the implications and priorities
the consumer store lacked data on inventory 1. Identify strategic domains for each business domain against the cli-
and delivery times, which means customers The temptation for companies to jump ent’s current IT landscape to determine which
don’t have a fully functioning service portal straight in with a prototype or start buying technical capabilities are already in place and
and the overall experience is poor. external services can be hard to resist but all only need minor enhancements and which
Figure 2
The Kearney architecture framework
Source: Kearney analysis
1 What are the consumer-centric strategic
business priorities translating into the
S T R AT E G I C
DOMAINS strategic north star?
2 TECHNICAL
C A PA B I L I T I E S
What are technical capabilities needed
to enable the strategic north star?
3 ARCHITECTURE
N O R T H S TA R 4 CRITICAL
INTERVENTIONS
How do technical capabilities translate
into the TARGET architecture?
5 A P P L I C AT I O N
SELECTION
What are the crucial steps
to get there?
6
What is the required operating model
O R G A N I Z AT I O N
AND PROCESSES to enable the strategic north star and
target architecture?technical capabilities have to be introduced common idea derived from this principle. 4. Identify crucial interventions
while existing ones are being decoupled. Ex- Secondly, the architecture should be de- Next, we look at everything needed to en-
amples could include social media analytics signed to empower users. It should create sure a smooth implementation. As anyone
to improve customer profiles, or a forum to technical possibilities for the end-user to who has gone through a digital transfor-
engage and understand their opinions. modify and customize the application under mation knows, unless the entire business is
a centralized governance. Some companies ready for the changes ahead, the chance of
3. Set the architectural target apply a strategy of multiple e-commerce in- failure is high and, in turn, budget and time
We apply a set of architectural principles to stances based on markets or brands and can be wasted. Therefore, we work with
ensure each client is able to define the target share the reusable technical components business and IT stakeholders throughout to
architecture based on the right strategic in- among the instances. Others employ the identify pain points and any gaps that need
tent. That translates the capability map into a content management systems (CMS) and closing, then create crucial interventions to
set of base components combined with cru- digital asset management (DAM) to support address these. The result is a fit-for-purpose
cial add-ons such as API solutions and data- a configurable front end and put the resourc- architecture that meets both the organiza-
base technologies. es under centralized governance. tion’s strategic priorities and required tech-
The first principle for the architectural design The technical architecture should align nical capabilities.
is modularity and flexibility, namely the archi- with emerging new ways of working, al-
tectural components should be designed in lowing for collaboration approaches be- 5. Select relevant technologies
a way that they can be added and removed tween business and IT in separate domains. and applications
without impacting the entire system. There The linkage to legacy should also be grant- At this point we start to evaluate specific
are existing design patterns that can sup- ed but enable a decoupling to avoid “bag- technologies and applications in line with
port this principle, including adding a secure gage.” A typical approach is to integrate the the business’s overall direction of travel. In
application interface (API) gateway that acts on-premises systems such as ERP via run addition to each solution’s core functionality,
as a central communication hub among ap- time APIs. Some companies even shift their fit with the architecture, and alignment with
plications (for example, using GraphQL and working mode from the classic IT-business the overall strategy, we also include criteria
Rest APIs). Having a containerized runtime split to a product-oriented structure to em- such as user experi ence and dependence
environment to support a modular micros- power rapid and continuous delivery and on third-party services in our assessment.
ervice approach and scalability is another end-to-end ownership. We bundle services into transitioning blocks,
Figure 3
Five typical strategic domains along the consumer journey
Low relevance High relevance Source: Kearney analysis
C O N S U M E R D ATA J O U R N E Y
Awareness Consideration Purchase Service Loyalty Advocacy
Marketing and Increase brand awareness, visibility,
engagement and customer engagement.
S T R AT E G I C D O M A I N S
Sales Increase revenue generation
fulfillment through e-commerce.
Service
Increase loyalty through
and customer
customer satisfaction and value.
experience
Data and Gather actionable insights
analytics using data and analytics.
Build capabilities for scalability,
Platform performance, agility, and speed
to market.which allow for prioritization and the defini-
tion of a crucial path to achieve the organi-
zation’s goals.
6. Build the right operating model
and teaming
As with all crucial tasks, it's vital to get the
right people on board; expertise in strategy,
operations, and IT service delivery are en-
try-level requirements. The team will need to
interact and collaborate with multiple parties
inside and outside the organization to fac-
tor in cross-functional needs and shape the
overall requirements throughout the entire
initiative. They will also be required to take
the e-commerce solution beyond launch and
continue to grow and continuously evolve it.
(see figure 4).
At an operational level, the team will have
end-to-end responsibility for the design, de-
livery, and quality of the new architecture.
We recommend an agile team setup with
members from a variety of backgrounds
for the best results. In some cases, building
the architecture team could trigger a reor-
ganization to ensure the team, the IT func-
tion, and the rest of the business can oper-
Figure 4 ate as quickly and flexibly as needed.
In today's environment, having an e-com-
merce capability isn't really an option; it's an
Digital technology organizational setup imperative. But there's much more to creat-
ing an online business than choosing appli-
cations or technology partners. To make it
Does the organization have the work, and deliver an excellent experience,
O P E R AT I N G
structure and governance to you must go back to basics and build a tech-
MODEL
operationalize cross-functional squads?
nology architecture that really delivers on
your business strategy.
C A PA B I L I T I E S Does business and IT have the The authors would like to thank René Ceipek,
right skill set, tools, and experience?
Julius Appelhagen, Fabienne Koester, and
Yutong Su for their valuable contributions to
GET PROCESSES
How codified is agile product management,
governance, risk management, incident
this article.
R E A DY ! management, and release management?
To read the full article visit the
Kearney website
How synergic and streamlined
DEVELOPMENT
is devops across development,
O P E R AT I O N S
testing, and deployment
CORE How adaptable, robust, interoperable,
SYST E M S and scalable are the core systems?
Connect with Sebastian
Connect with Miroslav
Note: devops is development operations Connect with Tim
Source: Kearney analysis Connect with MaxINTERNATIONAL WOMEN’S DAY
The equality dilemma:
if we can’t get it right now, what
does the future hold?
TEXT BY SARAH HELM, JULIANA
MUIR, AND BETH SEHGAL
I
t shouldn’t have taken a crisis to realize the value of female lead-
ership. But when the world was reeling from the initial outbreak
of COVID-19, women were at the forefront of some of the most
successful strategies. New Zealand’s Jacinda Ardern, Taiwan’s Tsai
Ing-wen, and Finland’s Sanna Marin have confidently and efficient-
ly steered their respective nations through the global crisis, emerg-
ing far less scathed than most countries. “When the world was reeling from the
It’s been an unparalleled 12 months, and mostly for the wrong rea- initial outbreak of COVID-19, women
sons. But this year, we get to celebrate these women and their were at the forefront of some of the
steadfast leadership—in the same year that Kamala Harris became
most successful strategies.”
America’s first female, first African American, and first Asian Amer-
ican vice president.
But beyond these inspiring exceptions, this year’s report—which
scrutinizes the equality gap in the public and private sectors in ninecountries—shows that we are a long way from gender-diverse lead- Figure 1
ership (see figure 1).
Of the countries included in the study,
• Across all countries, in both public and private institutions, rep-
South Africa’s public sector South
Of Africa and
the countries Francein
included rank
the #1 for
study,
resentation of women stands at an average of 32 percent.
is the most
• South gender
Africa has the mostdiverse
gender-diverse parliament with 44 per- representation
South Africaof women
and inrank
France the p#1
ublic
of cent
theofcountries
seats held by in the study
women. for representation of women in
and private sector respectively the
• France’s corporate sector is the most gender diverse, with women public and private sector respectively
holding Source: of
% value 44 percent Kearney
boardAnalysis
positions in the top 40 companies.
• France is the most gender-diverse nation when taking an average Female MPs (or equivalents) Sources:
in public sector Government websites,
across both its public and private institutions. Female board members Factset;
• The finance sector is the most gender diverse in five of the nine in public sector Kearney analysis
44
% value
countries.
South Africa
Today’s corporate leadership—spurred by quotas, stakeholders ap-
38
plying much-needed pressure, increasing awareness of biases, and
leaders’ eagerness to correct the balance—has resulted in progress, Australia
yet if this is the status quo in a more stable environment, how gen-
34
42
der diverse will tomorrow’s leadership be after the impact of the pan-
demic Spain
has truly been seen? Are we headed into a “she-cession”?
Act now to prevent a COVID-induced equality regression
Diverse leadership can have a trickle-down effect. It can lead to more UK
34
diverse innovation and a more diverse workforce. When combined, 36
38
all of this can have a positive effect on financial performance. How-
Australia
ever, even this isn’t enough to advance the gender-diversity agenda,
so some countries have implemented legislation, forcing their larg-
est companies toward gender parity. The advancement of women
US
27
30
in the corporate world is as urgent now as it has ever been since
the pandemic has ravaged sectors where women are over-represent-
ed. France
37
In fact, some estimates suggest that 40 percent of all employed
women work in the four most affected sectors. Unlike previous re-
14
cessions where male-dominated sectors such as construction have
felt the brunt of the downturn, the pandemic has negatively affected
India
female-dominated sectors, such as hospitality. And it’s even worse
for women of color. A recent US report found that women of color 17
disproportionately
UK
vice-sector positions.
34
make up the total workforce in vulnerable ser-
South Africa
44
29
Germany
33
Singapore
30
17
Singapore
30
France
37
44
US
27
Spain
42
30
India
14
Germany
33
33Figure 2
Across
Acrossall
allprivate
privatecompanies
companiesincluded
includedininthe
thestudy,
study,
Across
French all
and private
Indian companies
companies are included
outliers
French and Indian companies are outliers when in the study,
when it comes
French itand
comes totrepresentation
Indian companies of of
o representation women
are outliers
women
# of
companies
when it comes to representation of women
40% Sources:
Factset;
Kearney analysis
120
Sources:
# of100 % of females on board Factset;
2
companies 19 29 40% Kearney analysis
37 20
120 80
43
49 50
60
100 2
19 29 42 10
5
40
37 20 3 22
31 3
80 15 2 5 13
43 15 6
20 18 23
49 5015 11
16 9 14
4
9 4 10
60 7 4 2 1 2 2 1
Australia UK US42 India South Germany France Singapore Spain
Africa
40
31 3 22
3
15 2 5 13
15 6
20 18 23
15 16 9 14
9 4 11 4
7 10 1
4 2 1 2 2
Australia UK US India South Germany France Singapore Spain
Africa
Representation is lagging at the top
France is setting the pace for gender diversity, with an average 43
percent of women on the boards of CAC 40 companies (see figure 2).
However, the country lags when it comes to female board members
who hold C-suite positions and are on the board, with just six com-
pared with the FTSE’s 43 and Australia’s 22. This shows that while leg-
islation has been a key driver for representation of women in French
corporate life, laws do not necessarily lead to a rise in women in the
most senior decision-making roles. Encouragingly, the UK has shown
the most progress, with 36 percent of board seats in the FTSE 100
held by women now—a 10 percent improvement from last year’s data.
While nations lower down in our study lag the progress made in the
leading developed markets, there are some promising signs. Al-
though South Africa ranks seventh in terms of its percentage of fe-
male board members, it has the highest percentage of women in top
“While legislation has been a key driver board positions (see figure 3).
for representation of women in French In India, there has been virtually no rise in the percentage of fe-
corporate life, laws do not necessarily male board members since our previous study despite the number
lead to a rise in women in the most of board seats across the BSE 100 dropping from 1,094 in February
senior decision-making roles.” 2020 to 1,017. The nation has demonstrated steady rises since 2012,
when less than 9 percent of board seats were held by women. But in
spite of India’s 2013 Companies Act mandating one woman on the
boards of listed companies, three businesses on the BSE 100 still
have no women board members, while more than two-fifths of firms
have just one woman, something that has led to claims of tokenism.
Politicians have the power to make change
Politicians are responsible for setting the agenda on issues such as
gender diversity and so ideally need to be leading by example. Some
of the nations with the worst levels of gender diversity in their parlia-
ments have been setting records, which is an encouraging sign even
though significant advancements must be made (see figure 5).
In the most recent US elections, America—ranked eighth—votedFigure 3
Female C-suite board members are Sources: Factset;
Kearney analysis
under-represented across all countries surveyed
Females at the top board
Total female Total female board members
Country positions as a % of total
board members at top board positions
female board members
Australia 274 22 8%
UK 369 43 12%
US 368 16 4%
India 174 17 10%
South Africa 140 19 14%
Singapore 53 6 11%
France 250 6 2%
Spain 134 7 5%
Germany 155 11 7%
Total 1,917 147
Figure 4
Finance and consumer are the most gender-diverse Source:
Kearney analysis
sectors across all countries included in the survey
Top sectors
Country 1 2 3
ASX – Australia Finance Non-energy materials Consumer
BSE – India Consumer Finance Non-energy materials
CAC – France Consumer Industrials Finance
Technology and
DAX – Germany Consumer Finance telecommunications
FTSE – UK Finance Consumer Non-energy materials
IBEX – Spain Finance Energy Industrials
JSE – South Africa Non-energy materials Finance Consumer
Technology and
S&P – US Finance Consumer telecommunications
STI – Singapore Finance Industrials Consumerin a record number of women: 318 female candidates ran for the Figure 5
House of Representatives and the Senate, and 144 were elected—a
50 percent increase from the 96 female politicians who were serv-
ing a decade ago. South Africa’s public sector is
South Africa’s public sector
Tellingly, the nation with the highest percentage of female MPs is one
the most gender diverse of the
with formal rules about improving the gender balance. A total of 44 is the most gender diverse
percent of South Africa’s MPs are women. The country was closely
countries
of the in the
countries study
in the study
followed by Spain, where the 2019 election led to it electing the larg-
est share of women for any European legislature. Australia is third in % value Source: Kearney Analysis
terms of representation of women in parliament. The other European
nations were fairly closely matched, with France taking fourth place,
the UK taking fifth, and Germany coming in sixth.
Finance is the most gender-diverse sector
Finance is the most gender-diverse sector in Australia, the UK, Spain,
South Africa
44
the United States, and Singapore, while it is the second most gender
diverse in India, Germany, and South Africa. This could be because of
the heightened focus on so-called ethical investing, which puts pres-
sure on investment companies to be more diverse and to focus their
investment capital toward firms that achieve better gender equality.
Spain
42
Elsewhere, the consumer sector features in the top three most gen-
der-diverse sectors of every country studied, except for Spain, and
ranks highest in India, France, and Germany (see figure 4).
In spite of the consumer sector often possessing diverse boards,
there are still examples globally of large firms with all-male boards.
While in the UK all-male boards have been wiped out of the FTSE
Australia
38
350, the same cannot be said for the third most progressive country
analyzed, Australia, which still has all-male boards in its ASX 200 in-
dex. But Australia’s larger companies in the ASX 100 have the second
highest number of women in senior board positions at 22, behind the
UK’s 43 and just ahead of South Africa’s 19.
Singapore and France rank the lowest with just six of their 53 and 250
France
37
female board members in senior positions respectively.
It’s slow, but it’s progress—for now
Quotas for gender parity do establish a momentum for change: of
the 23 countries that have reached or surpassed 40 percent of wom-
en in parliament, this has, in more than two-thirds of cases, been
UK
34
achieved with gender quotas. But more widespread and further en-
trenched success may be difficult to achieve with an “all stick, no car-
rot” approach.
While emblematic women are helping air the plight of gender equal-
ity, we’re still a galaxy away from our governments and businesses
representing our communities; as UN Women states, at the current
Germany
33
rate, it will take 130 years to achieve gender parity in the heads of
government.
COVID-19 has radically changed how we work and how we raise our
30
families and has removed what little boundary still remained be-
tween the two. The pandemic has exposed and brought to the fore Singapore
so many aspects of social inequality. It could become the breaking
point needed to expose and finally address gender imbalance, or it
could be the single-biggest setback in living history.
Today’s leaders will be the ones who decide. Let’s hope it’s enough.
Connect with Beth
Connect with Sarah
US
27
Connect with Juliana
To read the full report summary, as well as discover
insights and video content from our 2021 International
India
14
Women’s Day Forum, visit the Kearney website.PROCUREMENT
New podcast series: TEXT BY
NIKLAS HERBRING
Fast Track Transformation
If there's one thing we've learned from the pandemic, it's that sup-
ply chains need to be smarter, more resilient, and possibly more
local. The major vulnerabilities recently exposed have undoubted-
ly moved the procurement function even higher up on the C-suite
agenda. A strong procurement practice has proved vital in miti-
gating risks, identifying opportunities, and accelerating business
growth during the crisis.
Kearney’s Fast Track Transformation podcast is hosted by Lon-
don-based partner Jim Pearce, along with a number of colleagues
from across the globe. Over the course of this first season, they
have invited procurement experts from across industry to shine a
To view the complete episode list and download
light on how the purchasing function has evolved and changed to
the latest podcasts please visit: https://www.kearney.com/
meet the demands of an increasingly disrupted world.
procurement/fast-track-transformation-podcast
Our guests in season one include Rob Hemsley (Director Global
Procurement, BP Castrol), Jamila Belabidi (Purchases Director,
Global Women Economic Empowerment and Global Innovation New episodes will be released in the coming weeks.
at Procter & Gamble), Alex Jennings (Chief Procurement Officer,
DS Smith), Phoenix Wei (VP Purchasing at ThyssenKrupp Elevator Connect with Jim
China), and James Fazzino (Non-Executive Director at APA Group). Connect with NiklasABOUT US As a global consulting partnership in more than 40 countries, our people make us who we are. We’re individuals who take as much joy from those we work with as the work itself. Driven to be the difference be- tween a big idea and making it happen, we help our clients break through. kearney.com CREDITS Concept, editing, design SZ Scala GmbH, Munich Dominik Wüchner, Moritz Gaudlitz, Ellen Verick, Iryna Baumbach Photos and illustrations All images by Kearney This is a publication of A.T. Kearney, Inc. For more information, permission to reprint or translate this work, and all other correspond- ence, please email insight@kearney.com. A.T. Kearney Korea LLC is a separate and independent legal entity operating under the Kearney name in Korea. A.T. Kearney operates in India as A.T. Kearney Limited (Branch Office), a branch office of A.T. Kearney Limited, a company organized under the laws of England and Wales. © 2021, A.T. Kearney, Inc. All rights reserved.
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