Operating Models for the Future of Consumption

Insight Report Operating Models for the Future of Consumption A Report by the World Economic Forum’s System Initiative on Shaping the Future of Consumption prepared in collaboration with Accenture January 2018

Contents 3. Preface 4. Executive Summary 6. Why Do Organizations Need to Change? 8. What Will Operating Models Look Like in the Future? 19. How Can Society Achieve a Brighter Future? 24. Conclusion 25. Appendices 27. Research & Acknowledgements 29. Endnotes World Economic Forum® © 2018 – All rights reserved. No part of this publication may be reproduced or Transmitted in any form or by any means, including Photocopying and recording, or by any information Storage and retrieval system. REF 310517

Preface The Fourth Industrial Revolution is transforming entire systems of production, distribution and consumption, providing opportunities for value creation through game-changing technologies and challenges to ensure inclusivity. To ensure success in the midst of digital disruption, there will be a premium placed on innovation, a willingness of organizations to disrupt themselves, a quest for active collaboration and a commitment to advance inclusive growth strategies. In the context of this seismic change, the World Economic Forum System Initiative on Shaping the Future of Consumption envisions a future where technology is firmly Sarita Nayyar, embedded in people’s lives, making their daily experiences simpler, highly personal Chief Operating Officer, and more enjoyable as well as imbued with trust and harmonious with nature. World Economic It takes a holistic view by addressing the question, “How can technological Forum LLC disruption drive enhanced models of consumption with sustainable benefits for business and society?” Introduced in June 2016, this System Initiative features a portfolio of projects designed to create forward-looking scenarios with corresponding roadmaps as the consumption landscape rapidly evolves. Its inaugural project, Shaping the Future of Retail, deepened the understanding of how the world of retail, the largest private employer in the world, will continue to evolve over the next decade, fuelled by hyperconnected consumers and a multitude of technology-enabled business models. In 2017, the Operating Models of the Future project explored how organizations must transform to support innovative business models and integrate Zara Ingilizian, disruptive technologies and data analytics into the DNA of their businesses to Head of Future of realize benefits across the enterprise. Consumption System Initiative, Member The Forum is pleased to present this insight report developed in partnership with of the Executive Accenture to global leaders as they manage disruption on multiple fronts. Extensive Committee, World Economic Forum LLC qualitative and quantitative research was conducted to understand the current environment and develop a vision of the future. The future-oriented insights along with the commensurate challenges in the report can be applied to a broad range of businesses that are preparing to navigate the uncharted waters of the Fourth Industrial Revolution. It is important to highlight that the transformation of operating models will impact employees by altering roles, requiring new skills and changing how work is done. To mitigate employment risk, the private and public sectors have the opportunity to leverage the perspectives in this report and proactively advance workforce transition strategies to meet the demands of the digital age while also ensuring economic equality. It is only through collective effort that a pathway to realizing a prosperous future with substantial benefits for both business and society can gain momentum. On behalf of the Forum’s Future of Consumption System Initiative team, our profound appreciation and gratitude are extended to all parties that played a key role in the development of this insight report: the Accenture team led by Oliver Wright, the project Steering Committee and all participants who contributed via interviews and workshops. Operating Models for the Future of Consumption 3

Executive Summary Introduction The Outlook: Consumer-Centric Enterprises of the Future The Fourth Industrial Revolution will accelerate the introduction of game-changing technologies that will Consumer landscapes will change more in the next 10 years further empower consumers and enable once-impossible than they have in the past 40. Wholesale disruption will business models. The ability to respond to changing redefine every element of business. Industry boundaries will needs of the marketplace will be key to future success fade as technology and consumer-centric industries fuse. and implies material changes to the way companies To deliver optimal consumer experiences, companies will operate. Businesses must re-invent themselves by be compelled to leverage extensive ecosystems, doing far establishing an agile and enduring enterprise in a highly less in-house than ever before. Co-opetition will multiply as disruptive world while also ensuring inclusive societies. companies that were previously competitors work together to deliver value that they cannot deliver on their own. At This insight report presents a perspective on the future the extreme, small groups of individuals will create virtual of consumer-centric enterprises, identifies essential organizations to orchestrate full ecosystems that design, characteristics that companies of the digital age must make, market and distribute products and services. embrace and integrate into their operating models, and illuminates the significant societal challenges that are At its core, each digitally-enabled company will be underway and the commensurate call to action. “consumer-obsessed” with a relentless focus on creating growth through holistic consumer value, delivered across the lifecycle of consumer engagement. As consumer needs and The Imperative: Making the Case for Change demands shift, so will the company by developing and scaling new opportunities that disrupt and ultimately cannibalize As explored in the 2017 Shaping the Future of Retail existing businesses. insight report, over the next decade consumers will have more choices and control than ever before. They will be Large organizations will have fewer layers and use contingent presented with a growing array of products and services workers as market needs change. Small management teams customized for their specific preferences. Over this at the center will use data to direct the activities of front line period, new innovative approaches to meet consumer employees more precisely than ever before. Productivity expectations will proliferate, particularly with eCommerce improvements will be created through the concurrent arrival penetration growing from 10% to more than 40%. As and scaling of two massive disruptions: the comprehensive these shifts catapult the importance of how data is utilized automation of repetitive tasks across the front and back and shared to new heights, consumers’ fears regarding office; and the use of analytics to drive decision-making down privacy, security and transparency will only elevate. to the front line. Despite these consumer and market opportunities, The workforce will transform to consist of internal employees, evidence suggests that business transformation is freelancers and even consumers. Continuous learning will not occurring at the pace and scale required. 41% of be the norm, with workers seeking ongoing enhancement Consumer Industry companies in the S&P 500 have of “soft” skills and “hard” skills. With a focus on self-directed either been acquired or gone out of business since project work, workers will take unprecedented accountability 2000. Moreover, half of current S&P 500 companies are for their own careers and personal development. predicted to face the same fate within the next ten years. To survive disruption and thrive in the future, companies must move to the modern and find their purpose. This unequivocally demands a comprehensive change in each component of the operating model including how it is governed, how it deploys processes and technologies, how it organizes its people to get work done, as well as the ecosystems it creates. The reinvention must not only deliver efficiencies for the business but also be orchestrated with a profound sense of responsibility for all stakeholders of the enterprise - consumers, the workforce, shareholders, communities and the environment. 4 Operating Models for the Future of Consumption

The Transformation: Essential Characteristics The Implications: Addressing Societal of Future Operating Models Challenges to Achieve a Brighter Future Incremental changes will not suffice. To support the The reinvention of future operating models will require aforementioned view of the future, each component of significant effort, impacting all of society. Implications range the operating model must embrace seven transformative from the ability of workers to engage in digitally-enabled characteristics that will establish new mindsets and organizations, security to protect individuals in fluid labor structures, ensuring economic viability in a disrupted world. markets and measures to both democratize and protect information. Public-private partnerships across these key – Mindset: A profound shift in culture and ways of working areas are vital to minimize risks and optimize the potential for 1. Human: Purpose is deeply embedded in the value creation. organization of the future to empower employees – Worker Enablement in the Digital Age to deliver consumer outcomes, while also being authentically engaging and partnering with employees The technology-driven reinvention of the operating model to foster intrapreneurial, life-long learning will create new digital skills requirements for jobs, in 2. Living: Businesses operate in a highly agile addition to rapidly impacting existing roles. Today, 54% of organization that continually re-shapes and adapts by the activities currently performed by Consumer Packaged using self-organising teams, prioritizing progress over Goods (CPG) workers and 40% of those performed by perfection and acting at a vastly accelerated pace Retail workers could potentially be automated. Therefore, the workforce must be supported to master new 3. Enhanced: The use of technology and analytics technological, analytical and interpersonal skills, while transforms each function and, ultimately each worker’s embracing new ways of working to be effectively prepared role for jobs in the digital age. – Structure: Fundamental changes in the shape and – Flexicurity execution As consumer-centric industries transition to more 4. Ecosystem: A network of relationships enables each flexible operating models, workers that engage in participating company to accomplish far more than non-traditional career paths deserve access to similar it can alone; ecosystems form to deliver consumer safety nets historically afforded them in more traditional solutions, capabilities, or data sharing where each employment models. New contracts for employment, with company has a clear understanding of its core transparency and transferable benefits, will be needed capabilities and relies on others for the rest to support worker flexibility. Governments, industry 5. Modular: Businesses within the business monetize and individuals must collaborate to establish these new internal capabilities by establishing a “plug-and-play” contracts, which will be vital to promote a liquid workforce, structure to efficiently accelerate the development foster radical reskilling, support job mobility and ultimately and integration of new business ideas, start-ups, ensure worker welfare. acquisitions and outside capabilities – Consumer Data Principles 6. Liquid: Companies source and manage their The success of consumer-centric industries will be workforces by accessing the best talent at the right predicated on the exponentially increasing use of consumer time to meet demand through employment models data. Recent surveys find that 57% of consumers are that include permanent employees, company affiliates, concerned with how businesses use their information, with partners, publicly available talent and consumers 41% of consumers feeling they need greater transparency into companies to have confidence in their products/ – Economic Viability: Responsibility to generate lasting services. To build long term trust, the industry must carefully performance and sustainable impact protect the privacy and security of consumers’ data and be 7. Enduring: The holistic application of the other six transparent about how they are utilizing it. characteristics and focus on achieving sustainable, In conclusion, the decade ahead will fuel the acceleration profitable growth that is aligned to societal values and of technology-driven change which can lead to the creation establishing lasting trust and transparency of significant value for consumers, workers and the enterprise. As operating models transform to enable these new opportunities for growth, there is the potential for both positive and negative impacts on society. To ensure an inclusive society, key stakeholders must work together in focused collaboration to proactively manage this disruption to achieve a brighter future. Operating Models for the Future of Consumption 5

Why Do Organizations Need to Change? Disruptive technologies, new business models and the empowered consumer are accelerating industry change. Companies must transform to survive. For decades, the largest CPG and retail companies For consumer-centric industries, this Fourth Industrial dominated by exploiting economies of scale across a Revolution has three driving forces: linear value chain. Big-format shops offered wide ranges of products at competitive prices and – as long as those 1. Disruptive Technologies products delivered on expectations – consumer loyalty was The impact of technology is exponentially greater because assured. individual innovations increasingly work together. These Owning and selling big, global brands no longer guarantees “combinatorial technologies” have enabled new entrants survival. This trend is further challenging the long-standing to offer novel methods of consumer engagement that symbiotic relationship between CPG and retail. Manufacturers create, deliver and capture value. Barriers to entry have are selling directly to the consumer. Innovation has emerged fallen as visibility and brand presence no longer depend from unexpected sources, with small CPG companies on expensive television advertising. Combinatorial generating more than half of industry growth in many technologies are also transforming company operations. categories. Extrapolated across the industry, analysis Last year’s Future of Retail insight report outlined the indicates that half of future value will come from new sources impact of eight technologies on the value chain of 1 consumer industries. In the past 12 months, this impact of growth. Retailers and e-commerce players alike are has shifted and deepened at a faster rate than previously aggressively pursuing private labels. Five of the largest anticipated. For example, consider how 3D printing e-commerce players who dominate the global e-retail market companies have truncated R&D, scale production present the most compelling examples of value creation and distribution. Historically, rapid prototyping was through ecosystems. the core use-case in 3D printing; today, technological Percentage of S&P 500 Consumer Industry advancements have reframed these organizations as 41% companies that have gone bankrupt, been active scale manufacturers (that is, those that can actively, 2 in an agile way, scale operations up or down to meet acquired or ceased to exist since 2000. demand). These changes have long-reaching impacts, Percentage of today’s S&P 500 that are including the potential repatriation of manufacturing as 50% expected to face the same fate within the companies bring production closer to end consumers. next ten years.3 (For more on these changes, see Appendix A.) Percentage of global e-commerce market 2. Proliferating New Business Models 49% held by the top five largest retailers.4 Rapid growth in the number of new business models makes it much easier for companies to micro-target Percentage of US food and beverage offerings that meet precise consumer needs. Instead of industry growth captured by small companies employing a discrete business model, industry players will 53% in 2016 compared to 2% growth captured operate flexibly across a portfolio of models. No company by incumbents.5 will be able to do everything in-house. Firms that were previously standalone will need to become “ecosystem Companies must shift their strategies and make the related enablers”, where success is measured, in part, by adjustments in how they operate, or risk obsolescence. the overall impacts the system produces. This ability For incumbents, those existing companies currently at the will be dynamic, with the most successful companies forefront, this reality will compel them to undertake the largest continuously evolving what they do while making changes in operating models since the Second World War. conscious choices about how they generate economic value. 3. Empowered Consumers Ever-connected consumers have higher expectations than ever before as combinatorial technology and new business models provide many ways for them to discover, purchase and engage. Not only are consumers dictating exactly what they want, but they are embedding themselves at all stages of the value chain – acting as developers, marketers, salespeople and even employees. This is a fundamental change in the consumer value equation, amplifying historic drivers – cost, choice and convenience – and adding both control and end-to-end experience. 6 Operating Models for the Future of Consumption

In many cases, a tailored experience outweighs cost the “cheapest”; this trend holds true for both high-touch 6 considerations. Analysis of Google search data shows products, such as make-up, as well as utilitarian products that consumers are increasingly seeking the “best” versus such as paper towels. Figure 1: Consumer Search Analysis 100 Search for 75 “Best Make-up” 50 Search for 25 “Cheap Make-up” Average 1 Feb 2007 1 Oct 2010 1Jun 2014 100 Search for 75 “Best Paper Towels” 50 Search for 25 “Cheap Paper Towels” Average 1 Feb 2007 1 Oct 2010 1Jun 2014 This means that companies are no longer just selling products To ensure continued success, firms will need to craft an to consumers, but are instead anticipating and meeting operating model that recognizes these significant changes in consumers’ needs as part of deeper, more enduring, and in profit pools —the sources and distribution of profit within the many cases increasingly interactive, relationships. This implies industry— across consumer-centric industries, and design a shift in focus from maximizing market share and revenue to both organizations and ecosystems to unlock opportunities. creating material consumer value. Profit pools of the future will focus on the consumer. Companies will need to seek revenue opportunities that Consider, for example, that a food company may move from increase consumer value and balance cost savings with simply selling food items to participating in a healthy-eating consumer outcomes. ecosystem. This network might provide a range of offerings, including healthy packaged foods, personalized nutrition subscriptions, and physical and emotional coaching. In this scenario, rather than maximizing individual profits, participants will strive to maximize the value of the entire system, while realizing sustainable value for each stakeholder – consumers, partners and self. Operating Models for the Future of Consumption 7

What Will Operating Models Look Like in the Future? Operating models of consumer-centric businesses must embody three core principles, enabled by seven essential characteristics, to transform for the future and ensure their continued existence in a disruptive world. Characteristics of Future Mindset outlines the substantial cultural change that needs Operating Models to occur in an organization’s vision, objectives and ways of working. Structure describes the integration within ecosystems and the internal platform that facilitates liquid Operating models of the future – tightly focused on talent and capabilities. Economic viability combines lasting consumers – will be built on characteristics that define the and renewable business impact with the licence to operate mindset, structure and economic viability of the company. through sustainable practices. Figure 2: The Three Core Tenets of Future Operating Models MINDSET Human, Ecosystem, Living, ECONOMIC Modular, Enhanced VIABILITY Liquid Cultural shift in Enduring Fundamental approach and Responsibility to generate changes in shape ways of working lasting performance and and execution sustainable impact STRUCTURE Mindset: The Cultural Shift in Approach company and direct their own skill development through and Ways of Working continuous learning. By creating clear decision-making criteria and managing outcomes, rather than activities, employees at all levels will be “masters of their own fate”. These workers will Human be able to act as “intrapreneurs”, who use an entrepreneurial mindset within a larger organization. In the future, companies will be more human – driven by an organizational purpose and focused on consumer-centric outcomes. In a world where technology is embedded into all consumer interactions, this purpose will connect employees We have a saying at Andela – ‘YOYO Learning – to consumers and consumers to the company or brand. You Own Your Own Learning’. The people who Authenticity and personalization will be woven throughout do this are the ones who will succeed. the culture, as well as the consumer experience. Purposeful organizations will drive personal accountability, with individual employees able to define their unique contribution to the Jeremy Johnson – Chief Executive Officer of Andela company’s purpose, while also maximizing their potential. Employees will now be able to chart their own course at a 8 Operating Models for the Future of Consumption

Case Study: Picnic – Empowerment Through Purpose Case Study: Instacart – Rapid Experimentation Picnic is a Dutch online grocery organization that uses a Instacart serves a large network of physical locations, carrying “milkman” model, where the same “runners” deliver to the out millions of shopping occurrences. This allows for rapid, same homes at regular times. Customers trust and enjoy statistically significant experimentation in real-life situations. seeing their favourite runners, who are selected for both their The San Francisco-based grocery delivery company runs people skills and their problem-solving abilities. Importantly, hundreds of experiments at any point in time, ranging from and unusually, individual runners are able to determine the two to four weeks in length. Chief Business Officer Nilam best way to solve customer service issues. If a product is Ganenthiran describes Instacart’s “culture of experimentation” missing, the runner can decide to purchase it in a local outlet as one where individuals must be comfortable with fast failure or deliver it at another time. The company also shares its as only 10–20% of experiments succeed. data with runners so that runners can proactively address situations. Most people who started shopping at Picnic two years ago are loyal customers, making an average of 40 purchases per year. With very low customer acquisition Case Study: Graze – Unleashing Agility costs – 75% of customers join Picnic via word-of-mouth – and the efficiency of the last mile (that is, delivering locally, all London-based Graze is a natural-food company that delivers the way to the consumer’s doorstep), every customer adds directly to the consumer, sells to retailers in the UK and US, considerably to the contribution margin of the operation. and has a subscription model business with personalized, monthly snack boxes. Explicit objectives, well-defined Human organizations will, thus, be characterized by a guardrail metrics (which help to guard against potential fundamental change in how leaders lead. Critical leadership negative outcomes by covering additional dimensions on skills will include the ability to focus on mobilizing the right which the primary objective is not necessary focused) and resources, regardless of tenure, and an understanding of independent initiatives enable unusual agility through a series how best to act on the opportunities that will truly make a of sprints. Just seven weeks after entering Sainsbury’s, Graze difference. This is a shift that P&G Europe President Gary created an alternate full line of products with simultaneous Coombe calls “servant leadership”. To support this objective, packaging development, manufacturing and marketing. Once P&G leaders employ “upward” mentorship by looking to junior in market, teams took a test-and-learn approach, making members for insight into areas such as technology and social immediate adjustments based on signals within days of media. products being placed on shelf. Future leaders in consumer-centric industries will need to Enhanced embrace this mentality and augment their approach into “student leadership” – seeking mentors and learning from Operating models of the future will see the creation of both non-traditional disruptors to maintain a high level of external turbocharged capabilities and new ways of working through awareness. Leaders must adopt a new continuous-learning technological innovation, continually enhanced by data that mindset that contrasts with the “command and control” improves decisions and resulting activities. Digitalization will behaviours that persist in many organizations today. permeate every functional area; intelligent automation and artificial intelligence will be incorporated into operations to Living increase efficiency and accuracy, freeing human workers to drive market growth and efficiency. A hallmark of operating models of the future will be their agility. Only 15% of today’s industry leaders believe their Recent press articles have focused on a dystopian scenario operating models can respond sufficiently quickly to sometimes called the “Terminator” future, one in which robots changing market conditions, while more than 62% of replace humans. Research and in market examples, however, 7 suggest an “Iron Man” future, with technology instead digital disruptors believe their operating models can do so. Living organizations will continually evaluate the external enhancing human abilities, creating “super workers” capable 8 environment and nimbly adjust to changing conditions. They of delivering twice as much as non-augmented peers. will be self-organizing, and their work will be project-based, This will involve a significant shift in mindset and the ongoing with new initiatives forming organically. Teams will act with discovery and use of technology. Technology will no longer resolve and resiliency, prioritizing progress over perfection – a be defined as the provenance of IT. Instead, it will be the “corporate garage” model enabling rapid experimentation responsibility of each business unit and individual employee and the development of “minimum viable products” that they to understand the new opportunities that technology unlocks, test quickly, learning from successes and failures. Teams will and integrate those technologies into their day-to-day also respond to changing market dynamics and innovate activities – an ability that only 33% of current companies claim at a rapid pace, having the will to experiment and the ability 9 to do so. The end goal will be value creation across all to have. At the same time, the role of IT will expand, with a stakeholders. focus on identifying and exercising disruptive technologies, to unlock combinatorial technology that opens new strategic options. As a result, each worker across the organization will embrace technology and every company will become a technology-powered company. Operating Models for the Future of Consumption 9

Percentage of processes digitalized by – Obvious, rapid decisions based on a single version of the 27% incumbent consumer industry companies. truth, driven by undisputed facts; time to action is reduced by a factor of ten. Percentage of processes digitalized by 10 50% consumer industry disruptors. Case Study: StitchFix – Enhancing Style with Data Science Case Study: Voodoo Manufacturing – The Power of This San Francisco-based on-demand styling service and Combinatorial Technology apparel subscription company marries predictive data science with human skills to create a virtuous cycle that achieves and sustains consumer relevance by unifying sales, marketing, To borrow a software development term, the R&D and supply chain. The 80+ data scientists link every future of manufacturing is agile, not waterfall. aspect of operations. Algorithms guide human stylists to the clothing choices that clients are most likely to enjoy and purchase. Simultaneously, data science informs the supply chain, determining the logistical flow that optimizes delivery to Jonathan Schwartz – Co-founder of Voodoo Manufacturing the client’s door. Finally, live feedback from clients generates Voodoo Manufacturing, the New York-based 3D printing a vast amount of consumer preference data by clothing start-up, uses combinatorial technology to continually characteristic, which the company uses to predictively design 11 improve production efficiency on a manufacturing floor that its private label line. seamlessly melds human technicians, robots, 3D printers, AI and other technology. In-house design software manages and coordinates the process from order to shipping. Machine Case Study: Farmers Business Network – Unlocking learning increasingly streamlines processes. Voodoo is adding Agribusiness Value through Data Sharing robotics to automate tasks currently performed by technical staff (for instance, robots “harvest” completed printing plates Farmers Business Network (FBN) is a US-based analytics and and put clean ones in the printer). In the future, they believe commerce platform that crowd-sources data from farmers to robots will clean parts, ensure quality and automate packing help farmers make better decisions. Participants contribute and shipping, while human technical support troubleshoots their individual data, which is consolidated into a significant and continually enhances the effectiveness of the line. and powerful base of knowledge. This collaboration allows Next to technology adoption, a data mindset and all participants to benefit from the shared insights across analytical capabilities will be the most significant factors the platform. FBN farmers generate 9% higher corn yields in determining future success: these are the building blocks and 11% higher soy bean yields than average, illustrating for enabling technology and understanding customers and how good data and information enable this community to consumers. While few companies dispute the importance of make better decisions to increase output. Additionally, FBN data, most have not yet gone through the dramatic change offers the first national e-commerce buying system for farm necessary to become truly data-driven organizations. Future inputs, premiums for speciality crops, and access to credit operating models will view and incorporate data as DNA, the programmes. While some farmers are at first hesitant to share fundamental ingredients for the entire organization, governed information with competitors, FBN has expanded primarily by a top-down mandate and actively supported by every through word-of-mouth as farmers realize the benefits to be employee. Serving the core, consumer-obsessed purpose had in terms of profits of the digital farm economy and gain of the company will require significant increases in individual strength in numbers during big agriculture’s era of mega- consumer insight. As the pace of change accelerates, consolidation. dramatically expanded and continually renewed data becomes vital to survival. Data will be the vital factor enabling leaders and Structure: The Fundamental Change in Shape individual employees to make the best decisions at the optimal and Execution within the Operating Model speed. Imperatives for the data-driven organization include: Ecosystem – Top-down mandate, with leadership themselves actively Operating models of the future will be transformed using data, driving its improvement and extending data as structurally, bringing ecosystems to the core of companies’ DNA to every member and structural component of the strategies. Extending far beyond the existing supplier/ organization customer value chain relationships, an ecosystem is the – Exponential insights aided by data science and a real-time network of cross-industry players who work together to data system across every function and role within the company define, build and execute market-creating customer and consumer solutions. An ecosystem is defined by the depth – Centrally facilitated and seamless flow of data across and breadth of potential collaboration among a set of business models, functions and project teams players: each can deliver a piece of the consumer solution, or contribute a necessary capability. 10 Operating Models for the Future of Consumption

Figure 3: Components of the Data-Driven Organization Data Sources Data Exchange* Basic: No data Best Basic: Individuals hold data Good: Internal quantitative data Good: Data shared within Better: Diversity and depth functions of real-time internal/external Better Better: Cross-functional quantitative and qualitative data data sharing Best: Ecosystem of partners Best: Cross-business with two-way data sourcing Good model data sharing Basic Data Engagement Decision-Making Basic: Sporadic usage of data Basic: Asymmetric decisions Good: Standalone loop; no “right” answer analytics team Good: Clear enterprise financial Better: Analytics are targets; tactical targets by team embedded in each function Better: Teams independently Best: Every individual actively empowered to drive targets and directly uses data, from Best: Individual empowerment – leadership on down clear guardrails allow employees to make rapid and independent decisions Representative Representative Disruptor Incumbent * For example, the corporate centre takes in data from across business models and facilitates the continuous flow of data between them – thus, what one business model learns about a consumer is immediately known to and affects the activities of other business models touching that consumer. The power of the ecosystem lies in the fact that no single Case Study: Alibaba – Ecosystems Expanding Market player need own or operate all components of the solution, and Industry Reach and the value the ecosystem generates is larger than the combined value each of the players could contribute Alibaba, the Chinese internet giant, manages a complex web individually. Company strategies will assess which capabilities of business models, capabilities and other investments. This and assets are truly “core” and vital to control – either ecosystem allows them to access capabilities from best-in- because they are vital to the business value proposition class providers, expand new businesses quickly and extend 12 or because there are winning economies of scale/scope. into adjacent industries: Ecosystems accelerate the development of new markets as – E-commerce Platforms: Alibaba manages many business- potential solutions and capabilities can be quickly exploited to-consumer and business-to-business marketplaces as an idea is born. This requires executive management and (e.g. Taobao, Tmall and Alibaba.com), online-to-offline strategists to collaborate to acquire these capabilities and businesses (e.g. Koubei) and investments in other have an agile, innovative mindset. marketplaces (e.g. Lazada) Companies will need to create ways to engage with start- – Capabilities: In support of its diverse businesses, up and accelerator communities by hosting competitions, Alibaba has built and invested in alternative payments setting up collaborative working spaces and creating large (e.g. Ant Financial, Paytm), logistics (e.g. Cai Niao, Didi, open-sourced innovation networks, often involving up to a Lyft), marketing analysis (e.g. Alimama) and supporting thousand different companies. Today, internet players have technology (e.g. Alibaba Cloud) some of the most sophisticated models, a complex web of – Extra-Industry Ventures: The company is building its capabilities and relationships representing what ecosystems consumer health offerings through AliHealth. will look like in the coming years. Operating Models for the Future of Consumption 11

Figure 4: The Alibaba Ecosystem Data Core Commerce Mobile Media & Entertainment Local Services Data Driven Refuel Payment & Financial Services Logistics Marketing Services & Data Management Platform Cloud Computing Case Study: Royal Philips – Creating an Ecosystem to Currently, companies’ reluctance to share data for fear Deliver Consumer Solutions of losing competitive advantage is often a key inhibitor to ecosystem engagement. This attitude severely constrains the As digitalization reshapes healthcare, Philips is adapting value that players can gain from a more open approach. Best from a transactional, product-focused technology company practices for open data sharing include: to a solutions provider with customer needs at its centre. – Define data-sharing agreements that recognize Established in 2013 and now 20 people strong, Philips comparative advantage, and optimize total ecosystem HealthWorks runs 90-day programmes that have worked value, while protecting individual interests with over 50 start-ups this past year to help build, test, de-risk and expand new businesses in health technology. For each – Outline data governance for appropriate use, including cohort, Philips looks externally to select seven companies out compliance with local regulations of around 400 to provide mentoring, access to the expertise – Build integrated technology platforms that support data in the Philips network, and connections to help grow these interoperability, as well as protect data security. small businesses. Each cohort is selected based on a singular theme (e.g. cardiology or neonatal care) and matched to be non-competitive, allowing them to work easily together on Ecosystems or Platforms? solutions. Companies are chosen without commitment to future ownership. Platforms are one type of ecosystem. While every company will be part of an ecosystem, some may have only peripheral To extend the ecosystem, Philips started the HealthTech involvement in platforms. Research has identified three types Ventures investment organization in 2017 to formalize of platforms: partnerships with select companies in the HealthWorks 1. Marketplace Platforms hosting buyers and sellers programmes and other early-stage companies. From seed funding, indirect investing in fund-to-funds, and minority 2. Internal Company Platforms that support multiple business stakes in select companies, Philips exchanges capital and models expertise for access to products and exposure to companies 3. Business-to-Business Platforms on which ecosystem in the direct fund that are agile, flexible and have specific skill partners trade capabilities (e.g. borrowing or monetizing sets not currently found in the larger Philips organization. another’s existing capabilities and assets, such as The four-person team starts by assessing 2,000 companies, manufacturing or regulatory management) then vetting 300 of those to identify 12–15 companies While conventional definitions focus on the first type of in which to invest. By investing in innovation, creating an platform, all three will play significant roles in the future. What ecosystem within the healthcare space, and learning from differentiates platforms from the types of exchanges seen in small companies, this global health-technology player is the past is that platforms are enabled by technology and data, strengthening its impact in the hospital and the home. and based on network effects that enhance the value of the platform as the number of participants increases. 12 Operating Models for the Future of Consumption

Modular Case Study: Louis Vuitton Moet Hennessy – Multi-brand Luxury Platform To meet market demands in the future, organizations will employ modular capabilities to support various business Louis Vuitton Moet Hennessy (LVMH), the French luxury goods models. “Modular” is a characteristic that is defined as the company, has launched 24 Sèvres, an eCommerce luxury ability to develop and deploy a business capability that can be platform that carries not only LVMH’s in-house brands, but utilized in a flexible, repeatable way across multiple business also those of other prestigious fashion houses. Brands on models with minimal re-design. This is a deliberate, “plug- the platform leverage the platform’s overall features, including and-play” approach that is distinctly different from previous chatbots, on-demand stylists, stunning graphics, efficient eras in business that were focused on driving efficiencies checkout and fast delivery. In addition, the company gathers through linear process design for a single business use case and analyses cross-brand consumer insights across the (e.g. business process re-engineering). Modular capabilities platform.14 enable the organization to adapt quickly to market changes and more easily pivot their strategies and business models. A lean corporate centre will orchestrate the entire entity, managing multiple, autonomous business models. The application of a “plug-and-play” approach allows for internal Case Study: GLAMSQUAD – Building A Modular Business usage across business models as well as external usage by ecosystem partners, who will seamlessly integrate and utilize GLAMSQUAD is a New York-based multi-business model the organization’s assets and capabilities. Consumer insights, platform supporting beauty services and products. The new innovations and technologies will flow from each of these company’s portfolio of business models includes: on-demand businesses back into the corporate center to be leveraged for beauty services, retail partnerships to provide salon services new value creation as relevant. in stores, beauty services for fashion designers’ runway shows, sales of partners’ products and beauty tools, and Liquid their own private label products leveraging alliances with established manufacturers. GLAMSQUAD leverages a level of Liquid organizations unlock value through ecosystems by trust established with the consumer across business models seamlessly accessing the best talent to meet demand and to create an end-to-end consumer experience. respond to changing market conditions, whether inside or outside traditional company boundaries. Through a liquid A modular design is also a key building block and facilitator workforce, companies will source and manage talent via of ecosystem strategies, tapping into the $1.5T potential internal and external employment models. 13 value from increased collaboration between companies. Modular capabilities can be used to support external partners or provide core capabilities to deliver an ecosystem-driven consumer solution. Figure 5: The Five Employment Models of the Future Core Workforce Publicly Available Talent (Permanent Employees) Specialized expert talent sourced and/or managed via service provider Organization’s talent filling adaptive roles as incremental gigs beyond day-to-day work and meeting Core Workforce needs across multiple teams, enabling scalability and flexibility (Permanent Employees) Company Affiliates External workers who have strong associations and Company Affiliates existing understanding and relationships (e.g. organization’s alumni with known capabilities and Partners relationships) Publicly Available Consumers Talent Crowdsourced talent to solve Partners problems, get ideas, gather Talent provided by outsourcing/ information/data, complete managed service providers Consumers “on-the-ground” tasks Operating Models for the Future of Consumption 13

Case Study: Quri — Using Consumer as Employees Stakeholders will consider the company’s corporate citizenship when determining whether to do business with the enterprise – Quri is an American retail intelligence company that employs as consumers, employees or partners. Enduring companies will consumers to collect data, which provides real-time develop strong relationships with their stakeholders through the visibility into products and promotion performance in-store. development of mutual trust and by displaying behaviour that is Used by roughly half of the top 25 CPG companies, Quri consistent with the expectations of society and stakeholders. allows companies to convert consumers into employees by completing “on-the-ground” tasks. For example, Quri Succeeding in an increasingly difficult environment takes collected promotion compliance and execution data for a a combination of skill and will: companies must have the beer and wine manufacturer, which then created an incentive capabilities for a wholesale transformation, as well as the programme that increased display execution performance by desire and willingness to execute it. The challenges of survival 8% and annual revenue by $45 million.15 are clear. In the 1920s, the average lifespan of an S&P 500 18 company was 67 years; today it is 15. This underscores the need for companies to design their operating models in a flexible manner to allow for sustained business performance Case Study: Pluralsight – Expanding with New and ensure long-term economic viability. Employment Models Pluralsight is a Utah-based training platform that creates The Path Forward and delivers educational content for software developers, IT administrators and creative professionals. All of the Organizing to Drive Operating Model Transformation courses are taught by experts in their respective fields. To maximize scalability and “fresh” content, Pluralsight uses new Activating the three core principles, and the seven essential employment models with more than 800 core employees, characteristics, will require significant changes to enterprises’ 5,000 affiliated freelance “mentors” and several thousand organization, processes and ways of working. Today, 80% experts who help author the 6,000-plus courses offered. of executives believe that company goals will increasingly Pluralsight has thoughtfully designed its employment structure be completed in collaborative teams, with less emphasis on to keep pace with technology and enable its customers to do 19 the same. functional roles. In the future, organizations will move from traditional functional groups to end-to-end integration. This will lead to a blending of skills across jobs (e.g. supply chain experts While only 16% of the consumer industries’ workforce is will also need to understand marketing, as these activities currently comprised of freelancers, the CPG industry is the directly link to one another, and procurement experts will need to most active user of the full range of employment models of collaborate with HR teams to efficiently manage non-traditional 16 any industry globally. Some 79% of executives believe a talent). Instead of being organized by role, cross-functional liquid workforce provides a competitive advantage and 81% teams will work together to achieve holistic outcomes. believe freelancers will be a seamless part of the workforce 17 within three years. Historically, human resources (HR) has owned traditional employment while contractors have typically fallen under the purview of procurement. This separation can Case Study: Hepsiburada – Organizing to be a Truly limit an organization’s ability to effectively source and engage Consumer-Centric the best talent. By contrast, Upwork CEO Stephane Kasriel advocates “total talent management” – merging procurement Hepsiburada, the Turkish e-commerce leader, is organizing its and HR activities to oversee a fluid base of external workers. business around defined consumer “personae” (e.g. “Working To exploit the full potential of liquid workforce strategies, the Mothers”, “Techies”, “Sports Man”), bringing them physically industry should take a leadership role in defining how best to to life within the working environment. The new persona support the movement to a more fluid way of working that teams focus on providing an end-to-end experience across supports the best outcomes for society. traditional functional roles, tailoring each aspect of consumer engagement to the specific persona. Economic Viability: The Responsibility to As companies move from single to multiple business models, Generate Lasting Performance and Sustainable go-to-market functions will need to change accordingly – from Impact standardized central functions to flexible functional support organized around, and simultaneously managing, each Enduring business model’s distinct objectives, activities and metrics. Functions will become porous, with a rapidly expanding Operating models of the future will be defined by their ability to ecosystem changing players’ roles, responsibilities and subsist in a disrupted world. Enduring organizations will establish activities, and with companies borrowing or lending entire the necessary mindsets (human, living, enhanced) and structures capabilities to other partners. “Co-boting”, the collaboration (ecosystem, modular, liquid) to ensure that the company has between people and machines, will be commonplace in the long-term economic viability. Companies will drive financial automation of simple tasks and more so as artificial intelligence value through sustainable practices and by enabling trust and amplifies truly human capabilities. Technology will help create transparency, as well as by reflecting stakeholder values. the functions of the future by integrating and redesigning activities to drive efficiency and create greater consumer value. 14 Operating Models for the Future of Consumption

Case Study: Carbon – Technology Blurs Functional Lines As traditional “back-office” functions change focus by linking into the extended ecosystem, they will achieve scale and Carbon, the San Francisco-based 3D technology flexibility with partnerships providing on-demand capabilities. manufacturer, enables design-to-manufacturing at The nature of these functions will need to shift from astonishing speed. With ongoing prototyping and iterative, supporting services to actively driving business outcomes. parallel processes, Carbon reduces design, prototyping and HR will manage both a liquid workforce and fluid processes. manufacturing processes that usually take 8–12 months to Finance will evolve from a compiler of historic financials to a matter of days. The company sees opportunities to merge a true strategic partner by exploiting predictive analytics. manufacturing and distribution and is in discussions with Procurement will enable liquid capabilities, working with both shipping carriers to house 3D printers in their distribution project teams and central functional areas to identify, secure centres, which would enable carriers to receive orders, print and integrate external capabilities. products and ship directly. Figure 6: Operating Model Framework of the Future Intent provides direction on what the company is trying to achieve, and what will enable it to be successful in its chosen strategy and business model What’s Changed? Purposeful exploration of ecosystems to unlock the power of intra- and cross-industry external networks across new business models, capabilities and data Governance Process Organization refers to the organizational defines how work will get done & Workforce accountabilities, the critical within the organization and includes the structure of decisions that need to be taken, between partners, outlining the the organization and its and the forum in which they will key activity steps, roles and approach to accessing be decided responsibilities and managing talent What’s Changed? What’s Changed? What’s Changed? Agile; decentralized; Integrated, Flatter, liquid and accelerated outcome-focused; intrapreneurial; decision-making ongoing innovation converging teams Technology Culture Metrics & Incentives outlines the underpinning reflects the core values addresses the KPIs measured technology, digital and analytical of the organization and the by the company, their usage, requirements to support behaviours they drive and their ability to drive business capabilities and behaviours processes What’s Changed? What’s Changed? What’s Changed? Continually renewing disruption; Bias towards action; Forward-focused; technology awareness across incorporation of new real-time data the company stakeholders’/society’s values and analysis Operating Models for the Future of Consumption 15

Operating Model Design Learning from Disruptors The sheer complexity of operations now requires a more refined operating model execution framework. That is, Much is made of the “advantages” of disruptors. They benefit as companies look to make changes, a more detailed naturally from different market expectations and performance framework is needed to account for the key components in metrics, as well as a lack of legacy (historic) operations. the executional complexity of today’s operating models. This has allowed them to develop a series of “disruptive behaviours” from which incumbents can learn: Developing an operating model for the future will involve every – Risk-embracing behaviour operating model building block – but not in the same way for each company. While these operating model components – Intense focus on chosen core competencies while are common to all companies, one thing remains certain in divesting the rest consumer-centric industries: incumbents must become more – Data as DNA at every level of the organization like disruptors in their approach to operating models. – Willingness to disrupt market and self The differentiating features of each component exhibited – Viewing failure as a learning opportunity by disruptors can be adopted by incumbents. While – Persistently seeking the one “yes” (rather than being understandably more difficult, given the significant derailed by the one “no”). transformation required and sea-change implications to governance, culture, and metrics and incentives, it can be done, and the impact will be extremely powerful. Figure 7: Operating Model Design – Incumbents versus Disruptors Component Traditional Operating Models Disruptive Operating Models Top-down decision-making, guided Data-driven decisions, individual empowerment by experience with clear decision guardrails all the way to the Governance front line Functional groups, managing dependent but Functions merge to deliver outcomes, enabled separate activities by combinatorial technology Process Porous organization with plug-and-play platform Defined as an independent, individual company; supporting self-organizing project teams focused Organization maximizing company financial value on driving outcomes; multiple internal/external & Workforce employment models Technology roadmap developed with Enterprise IT, with focus on standardization; intentionality continually renews – scan and shadow IT addresses specific business needs integrate new technologies, creating business Technology opportunities; AI and automation simplify activities Tradition and excellence; valuing experience and “Disrupt thyself” and learn by doing; risk tolerant; historical knowledge; focus on preserving and prizes individual intrapreneurship; student building on legacy; value of leaders is determined leadership; value of leaders is determined by Culture by size of team and book of business managed impact to the business Premium placed on stability, longevity, Consumer value and forward-looking metrics; predictable growth and profitability; different metrics for different business models Metrics & standardization across businesses Incentives 16 Operating Models for the Future of Consumption

Future Jobs and Skills Figure 8: ‘Soft’ and ‘Hard’ Skills for the Future New Jobs Within Future Operating Models Soft Skills Hard Skills As the market refocuses on living services and the delivery of holistic consumer experiences, individual roles will change. Interpersonal & Digital In 2016, OECD analysis showed that 65% of children would Human Intelligence • Digital Fluency 20 • Collaboration • Interaction & work in jobs that do not yet exist, underscoring the need for Connectedness a highly adaptive workforce, career-long continuous learning • Communication • Digital Design and educational reform. In consumer-centric industries, roles • Creativity • Critical Thinking such as retail sales associates or manufacturing machine • Empathy operators will be redefined around human activities – for instance, providing a creative, personalized in-store consumer experience or applying complex problem-solving to optimize Growth Data robotic production. • Data Literacy • Adaptability • Resilience • Data Science • Global Mindset • Insights to Action Case Study: Amazon – The Evolution of Warehouse Jobs • Learning Agility Seattle-based online retail giant Amazon has been at the forefront of automation, with more than 100,000 robots working in its facilities around the world. In addition to efficiency gains, the company intends to have machines perform monotonous or physically strenuous tasks, refocusing humans on more engaging roles such as managing a group Between now and 2020, the World Economic Forum of robots and troubleshooting issues. To aid this transition, the anticipates growth in demand for cognitive abilities (52%), company provides courses in robot operation. Making workers systems skills (42%) and complex problem-solving skills more efficient through the use of technology ultimately boosts 23 employee productivity, generating almost $400,000 in revenue (40%). Looking ahead, organizations will need to seek out per employee in 2016 – nearly twice that of leading traditional individuals with strengths in learning agility and adaptability. 24 With the half-life of a learned skill at five years and the half- retailers.21 25 life of a developer’s skillset at two years, the accelerating pace of change requires constant reskilling, putting a New Skills for Employment premium on individuals who drive their own development paths and embrace continual learning, as well as a premium Future operating models will require a broad range of new on organizations that encourage this type of learning. roles, significantly altering the composition and structure of Incumbent companies face an additional challenge, with the workforce. The nature of the skills in these new roles workforces designed for a different market. These workers will be significantly more multidisciplinary. This will open frequently lack the critical skills for the digital age – as many as up a broad range of career paths for workers. Rather than 20% of adults in developed countries are considered “digitally following linear career paths, workers will increasingly move illiterate”.26 For example, in a recent digital skills analysis, New fluidly across organizations. York-based education technology company General Assembly Historically, companies targeted individuals with specific found that “digital-native marketers” (e.g.-marketers working at experience and knowledge. In recent years, the balance has companies that were founded during the digital age) outscored tipped to demand for “hard skills” such as coding or data “corporate marketers” (e.g. marketers at traditional companies, science. Looking ahead to an era of continuous change and CPG brand managers) by 72%. The distinctions were even flexible careers, human skills will be an increasingly important more profound when examining the very top performers who 27 complement. For a company to remain viable, it must enable were clustered in digital-native companies. Because of the its employees to build both soft and hard skills. speed with which skill needs will change, organizations must continually assess the digital skills of employees and address development gaps. This will require HR to fundamentally rethink the role of the hiring function within the company. Case Study: Digital Skills Create Job Opportunities In 2017, a global study exploring the current and future landscape of jobs conducted by Boston-based labour market analytics company Burning Glass Technologies found that 82% of jobs that pay a living wage and do not require a bachelor’s degree, currently also known as middle-skill jobs, require digital skills. The share of these jobs is increasing rapidly, providing improved economic opportunities for workers, commanding 17% higher salaries than non-digital roles.22 Operating Models for the Future of Consumption 17

Figure 9: Example – Digital Skills Assessment within Marketing Function Digital-Native Marketers at younger companies born in the digital age (e.g. Email Marketing % Manager at VC-backed start-up) 76 Corporate Marketers at long-standing corporations that are transforming in the digital % age (e.g. Brand Manager at CPG) 44 Non-Marketers work in functions outside Marketing (e.g. Sales, IT, HR, % Legal, Creative) 38 In addition to sourcing talent across several internal and Figure 10: Cost Reduction of Radical Reskilling vs external workforces, companies need to consider reskilling Traditional Hiring for Software Engineers over Three rather than expensive recruitment of in-demand talent. Years General Assembly found that “radical reskilling” is 63% more 28 cost-effective than recruiting external software engineers. >$20,000 Massive Open Online Courses (MOOCs) and virtual learning are tools that scale and flex quickly to enable radical reskilling and meet changing market conditions. $5,000 – It is neither through ‘cheap labour’ nor through attracting $10,000 a narrow set of the ‘best and the brightest’ and winning a ‘war for talent’ that countries can optimize their long- term human capital potential, but through building up deep, diverse and resilient talent pools and skills ecosystems in their economies that allow for inclusive participation in good-quality, skilled jobs by the largest possible number of people. Traditional Radical Hiring Reskilling World Economic Forum – Human Capital Report, 2017 18 Operating Models for the Future of Consumption

How Can Society Achieve a Brighter Future? The advances in digital technologies and shifts in consumer behaviour have profound potential impacts on society. Public-private cooperation can accelerate positive changes, enable inclusive innovation, and mitigate adverse effects – if purposeful efforts begin now. In the future, successful companies will be consumer- Worker Enablement in the obsessed, and their operating models will reflect this. The Digital Age scale and scope of the transformation required to operate in this new way are significant, and will have a commensurate impact on workers and consumers. For workers, the Technology can provide value across every aspect of the change implies navigating a more fluid career journey rather industry. Artificial intelligence alone has the potential to double than following a linear career progression. For consumers, annual economic growth rates and boost labour productivity the change involves becoming much more proactive in 29 by up to 40 percent by 2035. As this change progresses, understanding how providers are collecting, using and the need for employees to work alongside technologies will protecting their information. grow increasingly urgent as many employees lack the digital skills required to undertake this journey. The implications are widespread and complicated. Public- private partnerships can help businesses and consumers This is a massive challenge – consumer industries employ alike by minimizing risks and realizing the potential benefits of 30 19% of the workforce across the OECD. As transformations the changes. Such partnerships must include a diverse array of operating models of consumer-centric industries creates of stakeholders beyond industry and government, including new opportunities for workers, it may also cause widespread individuals and academic institutions, and they must enable displacement for millions of people. disruptors such as education technology companies and freelance platforms. These partnerships need to focus on In this US alone, consumer industries employ 30.5 million three areas: people.31 Analysis indicates that 54% of the activities currently performed by CPG workers and 40% of those performed – Worker Enablement in the Digital Age: Helping by retail workers can, in fact, be automated (for details workers acquire and apply new skills 32 on methodology, see Appendix B). If these tasks were – Flexicurity: Supporting fluid career flexibility with automated today and no new roles were found for workers, this transparency, social safety nets and transferable benefits displacement could effectively double the US unemployment rate.33 Workers are feeling this pressure directly as well: 43% – Consumer Data Principles: Managing and protecting of individuals believe that their job is likely to be automated in consumer data while unlocking value 34 the next 10 years. Similar patterns are expected to play out in other markets. Figure 11: Estimated Impact of Automation on CPG and Retail Industries Workforce in the United States CPG INDUSTRY RETAIL INDUSTRY 9% 4% 4% 2% 2% 4% 4% 20% 14% 10% 34% 30% 28% 17% 13% 48% 44% 43% 39% 39% 41% 44% s 23% 26% s 34% 15% 81% 82% 53% 58% 69% 51% e of job37% 43% 45% 47% e of job46% 47% 48% Shar Shar Time Time 2015 2020 2025 2030 2035 2015 2020 2025 2030 2035 2040 2045 2050 Role-Eliminating Automation Partial Automation “Running with the Machine” Role-Eliminating Automation: More than 75% of activities can be automated Partial Automation: Between 25% and 75% of activities can be automated “Running with the Machine” : Less than 25% of activities can be automated; Running with the Machine considers that workers will reallocate time to more “human-like tasks” and work in a collaborative, fully integrated manner alongside machines Operating Models for the Future of Consumption 19

A closer analysis of those tasks that can be completely or – Continual Evolution: Reinforcing and advancing partially automated reveals that while low-skill workers are workers’ capabilities as the business evolves; supporting often considered the most vulnerable, most of the activities, continuous learning as employees increasingly chart highly and jobs, at risk actually correspond to middle-skill workers. varied courses throughout the organization Middle-skill jobs are those occupations that require more education and training than a high school diploma but less – Radical Reskilling: Retraining workers for new than a four-year college degree, and where repetition is high opportunities as existing roles are displaced, offering a so the need for critical thinking is low once the skill is learned, path to employment in new skill areas. such as health technicians, sales personnel, back office 35 Figure 12: Continuous Learning Cycle administrators, etc. By contrast, low-skill jobs require less training or education and involve frequent manual tasks, such as house cleaners or restaurant waiters. Given the nature of D tasks in middle-skill jobs, automation has led to a significant n ig o it si Skill a u l I decline in the availability of work at that level. In fact, the share cl n n Building c of workers in middle-skill jobs fell by almost 10% from 1995 l I lu a s t io to 2015, while share of workers in high-skill jobs increased gi n Di | and in low-skill jobs remained relatively stable. As the middle- | D skill jobs lost are replaced – 80% by high-skilled work and n ig o i i t 36 s a 20% by low-skilled work -- the potential for occupational l u polarization risks becoming a reality as technological changes ncl Future of Inc I lu yield primarily high-skill jobs. l a is t igi Learning no D People [with] low and middle incomes have seen their Radical Continual wages stagnate and the share of middle-skilled jobs Reskilling Evolution has fallen, contributing to rising inequality and concerns that top earners are getting a disproportionate share of the gains from economic growth. noi giD s ulc I lati nI latigiD | noisulcn – OECD Employment Outlook 2017 As new jobs form across the industry, stakeholders will Case Study: SkillsFuture Singapore – Offering Incentives need to support this growth in an inclusive way. CPG to Participate in Reskilling Programmes manufacturers and Retailers must invest in reskilling their workforces through targeted learning and skill development to Through the national Work Trial skill-building programme, ensure that all employees can succeed in the digital age. Singaporean employers offer short-term trials in which jobseekers can work between 16 hours and 3 months, with Continuous Learning 30% of wages subsidized by the government. Participants learn skills “on the job” while employers test candidates The ever-increasing pace of technology will require all workers for fit and capability. The Ministry of Education has also to commit to ongoing learning. Today, the process and set up SkillsFuture Singapore to strengthen the country’s culture of learning is sequential – from primary and secondary adult training infrastructure and provide access to quality education, through vocational training and higher education programming and educational institutions. Some 126,000 to job-specific training. The underlying assumption is that Singaporeans – 2% of the population – enrolled in the 37 the resulting formal education will serve individuals for their programme’s first year in 2016. entire career. This is no longer the case. Digital inclusion, developing an overarching digital and technology literacy to According to the World Economic Forum’s Future of Jobs support market changes, provides access to digital technology report, 30% of consumer industry core skills will change by for all workers at all stages – not just the few. It must be 2020, accelerated by new business models and technology. accomplished. Workers are not ready. Almost one in three individuals is concerned they will not be able to develop the skills The future of learning involves a continuous cycle in which necessary to succeed in the field they wish to pursue in digital inclusion is achieved through: 38 ten years. The objective of learning needs to shift from formal certification to ongoing skill development. Educational – Skill Building: Preparing individuals for the workforce with providers also need to shift their approach from helping new skill training, practical courses that combine academic students earn a static diploma to enabling workers to and real-world experience, and active job placement continually evolve their capabilities both within their current roles and as they transition to new ones. 20 Operating Models for the Future of Consumption

Case Study: Skillful by the Markle Foundation – Creating Case Study: Andela – Upskilling Non-traditional Platforms to Bring Stakeholders Together Candidates Skillful connects people to middle-skill jobs by supporting Andela is a technical talent company that trains software employers to shift from certification-dependent to skills-based developers from the African continent and places them as full- hiring practices. The organization provides access to local time distributed team members with Fortune 500 companies talent pools, encourages the teaching of in-demand skills ranging from Viacom and Mastercard to dozens of high- and prepares workers for new jobs with the help of their growth disruptors such as GitHub and Gusto. Currently career coaches. Skillful has defined and piloted, and is now working with 500 developers, Andela has invested in an promoting, tools and practices to accelerate the shift to a advanced training infrastructure and offers support services to skills-based labour market, working across the network of help its developers achieve success in their careers. employers, educators, government and non-profit support organizations. Launched in 2016 by the State of Colorado, Microsoft, LinkedIn and local partners, 375 businesses have engaged with Skillful’s network, and 20 companies are now Case Study: Chattanooga – Providing Universal Access working to fully embrace skills-based hiring practices. As of to Stimulate New Growth June 2017, more than 60,000 people have engaged with Skillful, and more than 1,400 people have actively engaged The City of Chattanooga built a government-owned, with Skillful’s career coaches. fibre-optic cable network to provide a high-speed internet service, while simultaneously increasing electricity reliability Workers do not only need to acquire job-specific skills, they in rural parts of the city. Based on an independent study must also have the ability to navigate career changes through conducted by the University of Tennessee, the Electric Power transitional education. These programmes help people Board (EPB) of Chattanooga’s network has directly created better identify their skills, develop and use networks, and use 2,800–5,200 new jobs for the city and generated $1 billion in 40 support services effectively. More broadly, such efforts will economic benefit over the past five years. help unlock the potential of underused talent. Global human 39 capital is developed to 62% of its potential, which indicates Securing employment in the digital age will require that the world is wasting or neglecting 38% of its talent. stakeholder groups to collaborate to support professionals mastering new skills, embracing new ways of working and 40 Figure 13: Gap in Human Development building both intrapreneurial and entrepreneurial capabilities. North America 26% Flexicurity Western Europe 29% Eastern Europe and Central Asia 33% Given how important it is to develop agility, along with the responsibility to ensure economic inclusivity, the market is East Asia and the Pacific 34% shifting to a more “liquid” workforce. In a recent Accenture survey, 52% of individuals say they are likely to work in the Global Average 38% gig economy and 53% would prefer to work as a freelancer Latin America and the Caribbean 40% rather than as a formal, full-time employee. However, 72% expressed worry about a freelancer’s lack of employee Middle East and North Africa 44% 43 benefits. Legacy support structures for labour markets South Asia 46% have not kept pace with the development of new workforce models. As such, these legacy structures threaten the welfare Sub-Saharan Africa 47% of workers, who stand to lose the benefits of permanent employment, and will restrict the willingness of many workers to find new roles that could be more lucrative and fulfilling. All too often, however, human potential is not realized, A new contract for employment is vital not only for worker held back either by inequality or an unrealistic and welfare but to promote a liquid workforce and support job outdated faith on the part of policy-makers that mobility. Flexicurity ties benefits (e.g. pensions and healthcare) investment in small subsections of highly skilled to the individual and enables talent mobility with portable labour alone can drive sustainable, inclusive growth. skills transcripts, helping workers maximize their long-term economic opportunity. This support structure reduces friction in the labour market, enabling optimal matching of supply and demand of talent. 41 Klaus Schwab – Executive Chairman of the World Economic Forum In this digital age, skill development requires continuous learning on a global scale. This creates opportunities to develop hard technical skills, provides basic digital literacy to populations who lack it and enables individuals through infrastructure to achieve digital inclusion. Operating Models for the Future of Consumption 21

Case Study: Learning Machine – Blockchain-verified Transcripts Our policy-makers need social innovations to Chris Jagers, CEO of Learning Machine, has been working fully embrace the idea of flexibility and social with the MIT Media Lab to use blockchain technology to protection – ‘flexicurity’ – by giving all workers enable individual students to hold and share their verified the same rights and benefits, regardless of official records with others in a safe, tamper-proof manner. what contract they have. This approach allows students to “act as their own lifelong registrar”, holding records not only for traditional education, 49 but also for corporate training and alternative schools. Alain Dehaze – CEO, Adecco Group44 While public discourse has focused on minimum guaranteed Flexicurity is vital for workers and employers alike, enabling wages, other benefits to consider include health insurance, agility and access to vastly expanded pools of talent. unemployment insurance and pensions. In addition to Companies have their own part to play in helping employees traditional benefits, stakeholders will need to consider navigate a non-linear career path. To do this, businesses alternatives for filling skills gaps, with easily accessible training need to shift their focus towards radical reskilling – especially and learning opportunities. A small number of governments when it comes to helping steer workers through periods of have introduced individual learning accounts, which give digital disruption. Some business leaders have even raised employees the financial assistance to invest in their own the idea of a “carbon tax” model whereby companies that are 45 more effective at skilling workers would lower their required continuous training, independent of employers. contribution to state-administered unemployment benefits. Flexicurity provides highly skilled workers with the portability to meet professional needs, a safety net for those low-skilled Case Study: The Portable Benefits for Independent workers most vulnerable to market disruption, and freedom Workers Pilot Program Act (Proposed) for employers to use the best available talent. In 2017, US Senator Mark Warner and US Representative Consumer Data Principles Suzan DelBene proposed legislation to pilot, test and evaluate portable benefit programmes. Eligible models include a variety Lastly, there is a significant opportunity – and risk – of benefits such as healthcare, training and educational associated with consumer data. Recent reports have framed assistance, workers compensation and retirement savings. data as the “new oil” – the most valuable resource in the Senator Warner is the co-chairperson of the Aspen Institute’s world. This idea should be expanded to include data as the Future of Work Initiative, whose 2016 paper highlighted “new soil” – the basis on which consumer and market value existing programmes that could serve as models: multi- can grow. employer benefit plans in construction and entertainment, pooled workers’ compensation in New York livery, and health Given that the fundamental driver towards future operating 46 insurance in San Francisco. models is a reorganization to address consumer needs, copious amounts of personal data are required to establish Finally, there are some less obvious enablers of a fluid career. consumer intimacy. This ongoing data collection gives rise As employment velocity increases, networks become more to concerns about the privacy and security of personal important. Deviating from a formal career path impedes information and how companies are using it. Recent surveys workers’ ability to communicate skills and accomplishments find that 57% of consumers are concerned with how to new employers. Workers will increasingly be in situations 50 businesses use their information, with 41% of consumers where they are an unknown quantity; as learning increasingly stating they need companies to have greater transparency if shifts beyond traditional credentials such as the four-year 51 they are to have confidence in their products/services. university degree, a traditional curriculum vitae will no longer communicate the majority of an individual’s capabilities – nor Consumer data is critical for technology to function. It serves will there be a universal taxonomy and language to describe as the primary input and building block for technologies such 47 competencies. Fortunately, both industry disruptors and as artificial intelligence and connected devices. Industry and emerging technologies are targeting these challenges. society need to collaborate to establish and protect consumer trust, while increasing the value created for consumers. To do so requires alignment on the following principles: Case Study: Portfolium – Enabling Digital Portfolios – Communicating consumer data collection and usage procedures in a simple, understandable way As employers increasingly value competencies that extend – Outlining consumer data ownership and acceptable beyond the standard skills and experience reported on a sharing practices traditional curriculum vitae, Portfolium provides individuals with the opportunity to build their own digital portfolio, – Agreeing on data monetization protocols capturing and curating examples of their academic and – Understanding the necessary infrastructure and activities extracurricular work. Portfolium also serves as a social required to support consumer data security. network, linking potential workers with academic institutions and employers.48 22 Operating Models for the Future of Consumption

Realization of these principles will require both protocols If Not Now, When? and potential constructs or platforms – (for example, a “data passport”) in which consumers can securely store the data As technology-driven change continues to accelerate, that they explicitly agreed to share with companies across the long-term viability of the economic system depends multiple marketplaces. on thoughtful, collaborative, purposeful and immediate stakeholder action. These specific societal implications are intrinsically linked by a common purpose to drive societies towards digital inclusivity. Stakeholder groups can, and should, actively explore ways to mitigate these societal impacts through both individual and collaborative actions. Figure 14: Calls to Action – Stakeholder Involvement to Achieve a Better Future STAKEHOLDERS THEME CALL TO ACTION Individual Academic Enabling Workers Industry Government Institutions Disruptors Transform academic curricula and culture from focus on X X X X X knowledge and four-year degree to lifelong learning Use data to drive right-skilling that recurrently identifies and X X builds newly required skills; measure the ROI of programmes Address the affordability hurdle X X X Worker of alternative learning Enablement in Couple education/skills the Digital Age programmes with career X X opportunities Enable the “digitally underprivileged” with digital X literacy and infrastructure Reform to tie benefits to the employee rather than company; X X broad-based benefits, including learning accounts Invest in platforms and technology that enable workers Flexicurity to provide a transparent X X X and verified record of their competencies Create comprehensible overview of consumer data collection and X X X usage Deploy control mechanisms, X X X X (e.g. consumer data passport) Consumer Data Principles Define data security requirements X X X and infrastructure Operating Models for the Future of Consumption 23

Conclusion Disruptive technologies will continue to accelerate the pace of change. In light of this, this report paints a vision of the future for consumer-centric industries, provides a rich perspective on why organizations need to transform rapidly, and explains the seven essential characteristics of operating models that businesses should adopt. Furthermore, it provides a holistic view of the potential implications for business and society. In summary, the goal of this report is to inspire responsive and responsible action – for industry leaders to change how they lead and transform their enterprises, while ensuring inclusive growth for the workforces they employ and the consumers they serve. Enabling this journey will require the full range of stakeholders – individual workers, industry, government, academic institutions and enabling disruptors – to collaborate in support of a prosperous future for all. The time to act is now. 24 Operating Models for the Future of Consumption

Appendices Appendix A: Eight Disruptive Technologies – Value Chain Applications The use of disruptive technologies across the entire value chain is driving high-impact benefits through a range of applications and has become a key source of value creation. Consumer Industries Value Chain – Technology and Use-Cases Disruptive Recent Design & Manufacture, Distribute Sell After Sales Technology Development Innovation Plan & Buy & Move IOT is enabling data • Foundational use-cases: quality management; storage conditions control; fleet sharing within the management; digital stores; real-time omnichannel marketing; electronic shelf labels; beacons & geolocation; wearables Internet of ecosystem across the • Emerging use-cases: automated replenishment; remote diagnostics;predictive Things (IoT) entire value chain maintenance • Pioneering use-cases: living services; real-time engagement feedback Advancing technology • Foundational use-cases: Self-driving commercial trucks; Last mile delivery; continues to open Self-driving drones possibilities in • Emerging use-cases: Self-driving personal automobiles; Self-driving public Autonomous distribution efficiency transportation (buses, etc..) Vehicles/Drones • Pioneering use-cases: Drone consumer intelligence; Dronevertising New models for • Foundational use-cases: Trend and volume forecasting; Descriptive analytics; ‘Human+Machine’ Chatbots; After-sales service; Robotics Process Automation; Development augmentation are Operations Automation Artificial emerging, extending • Emerging use-cases: Predictive recommendations; Smart Search from supply chain Assistance; Intelligent S&OP planning; Stock allocation forecasting; AI-assisted Intelligence/ operations to customer- merchandising; Dynamic pricing Machine Learning • Pioneering use-cases: Scenario-driven prescriptive analytics; Brain-simulation facing applications ideation; DNA workforce profiling Robotic-enabled manufacturing lowers • Foundational use-cases: Robotics-enabled prototyping; Robotic manufacturing; operational costs, Robotic picking enabling repatriation of • Emerging use-cases: Automated warehouse; Automated sales assistants; manufacturing to bring Automated customer support Robotics production closer to the • Pioneering use-cases: Co-bots; Cognitive robotics; Dark manufacturing; Robotic shopping carts end-consumer Consumer demand for • Foundational use-cases: Product source tracking; inventory replenishment; trust and transparency Supply chain product traceability; Merchandise tracking; Product authenticity Digital Traceability continue to increase mapping; Product warranty The convergence of • Foundational use-cases: Prototyping; In-store product printing; R&D with prototyping Real-time manufacturing and manufacturing is • Emerging use-cases: In-store ‘point-of-sale marketing’ printing; effectively shrinking the In-store customization 3D Printing supply chain • Pioneering use-cases: Real-time inventory production; 3D printed fashion; Custom promotional material; Custom workplace solutions Application of AR/ VR growing to include • Foundational use-cases: Virtual planogramming; Product design; training the workforce Virtual retail locations; AR/VR engagement and facilitating • Emerging use-cases: Virtual changing rooms; Immersive campaigns; Augmented Reality/ Human+Machine Virtual training environments Virtual Reality collaboration in • Pioneering use-cases: Virtual market research, Virtual sourcing; Virtual customer service; Virtual hiring manufacturing New applications • Foundational use-cases: Authenticity verification; Supply-chain verification; emphasize trusted Online wallet; Transaction verification verification of • Emerging use-cases: Employee data verification; Education transcript Blockchain individually held verification; Professional credentials (e.g. legal) verification information • Pioneering use-cases: Smart contracts; Warranty tracking; Shared ledgers Operating Models for the Future of Consumption 25

Appendix B: Future Workforce of Consumer Modelling Approach: Packaged Goods and Retail Industries in the 1. Constructed consistent data that links automation US: Econometric Model, 2017 probabilities, skills, job activities, job descriptions and The model is used to identify the portion of employment employment data subject to automation under different assumptions of the 2. Defined those job activities that require strong human- “state of skills” in the workforce. It employs an estimated like skills (that are not automatable) through regression inverse relationship between the importance of skills that run analysis with the machine and time allocation to “human-like” tasks 3. Computed the share of employment in each country within occupations, on the one hand, and the probability of that is subject to total automation (= more than 75% automation, on the other. The analysis takes a task-based probability), based on econometrics to estimate how the approach that accounts for human versus machine-like skills automation probability depends on PIACC activities of and tasks in occupations, in a similar way to the OECD’s employees 52 research by Arntz, Gregory and Zierahn (2016), to address an important gap in occupation-based estimations (e.g. Frey 4. Computed the average automation probability of each 53 task grouping to calculate the total amount of tasks that and Osborne, 2013), which assumes that occupations as a whole, rather than single tasks, can be automated by can be automated across all jobs technology. This leads to an overestimation of automation – in reality, most occupations contain a substantial share of tasks that are hard to automate. This analysis is based on the state of technologies today and accounts for future technological improvement (advancement/adoption) in a constant (linear) fashion. It considers the fact that the adoption of new technologies is often a slow process and workers are able to adjust by learning skills and switching tasks, preventing unemployment. The share of workforce subject to automation must not be equated to its current “as of today” possibilities. Assumptions were made about the pace of reskilling the workforce in the future in terms of “run with the machine” skills, the reallocation of working time to human-like tasks and the reduction in learning years needed by the workforce in the United States to be ready to “run with the machine”. Methodology: – Country-specific analysis for CPG and retail industries in the United States – Data basis: O*NET database, OECD PIACC survey, the work of C.B. Frey and M.A. Osborne (Oxford University), combined with the work supply demographics of the individual countries derived from the respective national account statistics on employment 26 Operating Models for the Future of Consumption

Research & Acknowledgements This insight report leveraged extensive quantitative and The World Economic Forum would like to acknowledge qualitative primary research to arrive at key findings, and extend its sincere gratitude to, first and foremost, the contributing to the perspective presented. From a project steering committee. We also wish to thank the qualitative perspective, over 75 individuals across the broad community of contributors across partner companies, globe, including industry leaders, disruptors, educators, technology start-ups, academicians and experts. and policymakers, were interviewed to understand their views on future operating models. Quantitative research included the use of five global surveys -- four Project Steering Committee executive surveys and one consumer survey -- and a comprehensive econometric model to assess the impact – Wouter Kolk, Chief Executive Officer of Albert Heijn, Ahold of automation (See appendix B). Secondary research Delhaize, Netherlands was also performed to gather additional data and analyse – Henk Mahieu, Head of International Relations and perspectives written in other reports issued by academic Economic Policy, Office of the Deputy Prime Minister of institutions, governments, private businesses, and other Belgium, Belgium global organizations. – Brian Kean, Chief International Officer, CJSC Ulmart, Russia – Jamie Murray Wells, Industry Head of Retail, Google, United Kingdom – Blanca Juti, Chief Corporate Relations Officer, Heineken NV, Netherlands – Mutlu Erturan, Chief Business Officer, Hepsiburada, Turkey – Carrie Ask, Global Head of Retail, Levi Strauss & Company, United States – Joe Abi Akl, Head of Strategy and Business Development, Majid Al Futtaim, United Arab Emirates – Mara Swan, Executive Vice-President of Global Strategy and Talent, Manpower, United States – Chris Johnson, Executive Vice-President- Head of Business Excellence, Nestle SA, Switzerland – Arun Sundararajan, Head of Social Cities Initiative, New York University Stern School of Business, United States – Lars Olav Olaussen, Senior Vice-President of Global Strategy and Talent, Orkla ASA, Norway – Gary Coombe, President of Europe, Procter & Gamble, Switzerland – Stefan Pryor, Secretary of Commerce, State of Rhode Island, United States – Philippe Gillet, Chief Innovation Officer, SICPA SA, Switzerland – Vincent Ambrosino, Chief Operating Officer, Global Business Development, Suntory Holdings Limited, Japan – Sean Flaherty, Senior Director of Global Retail Strategy, UPS, United States – Jack Forestell, Global Head of Product, Visa, United States – Lori Flees, Senior Vice-President of Corporate Strategy, Walmart Stores Inc., United States Operating Models for the Future of Consumption 27

Research Contributors Project Team – Andela – Boston University World Economic Forum – Carbon – Carlsberg – Zara Ingilizian, Head of Future of Consumption System – Carnegie Mellon University Initiative – Catalant – Andrew Moose, Head of Retail, Consumer Goods and – Colgate-Palmolive Lifestyle Industries – Columbia University – Mayuri Ghosh, Project Lead, Future of Consumption – Da Vinci Institute System Initiative – DoorDash – Farmers Business Network – Sarah Shellaby, Community Lead of Retail, Consumer and – FEMSA Lifestyle Industries – Future Workplace – Julien Lederman, Community Lead of Future of – General Assembly Consumption System Initiative – GLAMSQUAD – Godrej Accenture – Graze.com – Grupo Bimbo – Oliver Wright, Managing Director, Global Lead for – Instacart Consumer Goods & Services, Accenture Strategy – Koc Holdings – Christopher Donnelly, Senior Managing Director, – LinkedIn Accenture Consulting – London Business School – Jim Scully, Managing Director, Accenture Strategy – MakeTime – Massachusetts Institute of Technology – Karen Fang Grant, Senior Principal, Global Lead for – Organisation for Economic Co-operation and Products and Consumer Goods, Accenture Research Development (OECD) – Delmary Salcedo, Manager, Accenture Strategy and World – Patanjali Ayurved Economic Forum Secondee – Peerspace – Picnic – Sydney Lapeyrolerie, Senior Consultant, Accenture – Pluralsight Strategy and World Economic Forum Secondee – Progressive Policy Institute – REMA 1000 – Royal Philips – Sainsbury’s Argos – Skillful at the Markle Foundation – Swedish Trade Union Federation – TaskRabbit – Tophatter – Tsinghua University – United Kingdom Office of Digital Government Services – University of Washington – Upskill – Upwork – Vivint Smart Home – Voodoo Manufacturing – WayUp – Wesfarmers Coles – The Wharton School – W.R. Berkely Innovation Labs – Xiaoi Robot Technology – Yoox Net-A-Porter 28 Operating Models for the Future of Consumption

Endnotes 1. Accenture Analysis of Nielsen, 2017. 27. General Assembly, 2017 Digital Marketing Skills Report, 2017. 2. Accenture Analysis of Bloomberg Market Data, 2017. 28. General Assembly, Benefits and ROI of Talent Pipeline-as-a-Service, 2017. 3. Anthony, Scott D., S. Patrick Viguerie and Andrew Waldeck, Corporate 29. Accenture, Why Artificial Intelligence Is the Future of Growth, 2016. Longevity: Turbulence Ahead for Large Organizations, Innosight, 2016, 30. United States Bureau of Labor Statistics, Employment by Major Industry https://www.innosight.com/wp-content/uploads/2016/08/Corporate- Sector 2006–2016, 2017. https://www.bls.gov/emp/ep_table_201.htm; Longevity-2016-Final.pdf. Euromonitor, Global Employment Data, Total Value RSP, Constant 2016 4. Top 500 Database, Global 1000 Spotlight: The Top 10 e-Retail Players Prices and Fixed 2016 Exchange Rates, June 2017. Dominate, 5 August 2016, http://www.top500guide.com/global-1000- 31. US Bureau of Labor Statistics, Industry Employment, 2016. spotlight-top-10-e-retail-players-dominate/. 5. Nielsen Retail Measurement Services, “Amid the FMCG Downturn Small 32. Accenture, Econometric Analysis on Impact of Automation on Consumer Manufacturers Are Tapping Big Growth”, 2017, http://www.nielsen.com/us/ Industries in the US, 2017. en/insights/news/2017/amid-the-fmcg-downturn-small-manufacturers-are- 33. Ibid. tapping-big-growth.html. 34. Accenture, Global Consumer Pulse Research Survey, 2017. 6. Google, World Economic Forum: The FMCG Consumer – Utilitarian or 35. Accenture, Burning Glass Technologies, Harvard Business School, Bridge Experiential?, 2017. the Gap: Rebuilding America’s Middle Skills, 2016. 7. Accenture Strategy, Global Operating Model Research, 2016. 36. OECD Employment Outlook 2017. 8. Sandeep, Raut, “Terminator or Iron Man – What Will AI Bring in the 37. Singapore Ministry of Manpower, SkillsFuture, SkillsFuture Singapore, Future”, The Innovation Enterprise, 9 May 2017, https://channels. 2017, http://www.mom.gov.sg/employment-practices/skills-training-and- theinnovationenterprise.com/articles/terminator-or-iron-man-what-will-ai- development/skillsfuture. bring-in-future. 9. Accenture Digital Operating Model Survey, 2016. 38. Accenture, Global Consumer Pulse Research Survey, 2017. 10. Ibid. 39. World Economic Forum, The Global Human Capital Report, 2017, https:// www.weforum.org/reports/the-global-human-capital-report-2017. 11. Larsen, Kim, “Data Science at StitchFix”, Multithreaded by StitchFix, 31 40. Ibid. March 2016, http://multithreaded.stitchfix.com/blog/2016/03/31/data- science-at-stitch-fix/. 41. Ibid. 12. Accenture Analysis of Alibaba Group Financials, 2017. 42. Koebler, Jason, “The City that Was Saved by the Internet”, Motherboard, 13. Accenture: Harnessing the Power of Entrepreneurs to Open Innovation, 27 October 2016, https://motherboard.vice.com/en_us/article/ezpk77/ 2015. chattanooga-gigabit-fiber-network; Lobo, Bento J., The Realized Value of Fiber Infrastructure in Hamilton County, Tennessee, The University of 14. “Launch of 24 Sèvres, the New Online Shopping Experience”, Louis Vuitton Tennessee at Chattanooga, 18 June 2015, http://ftpcontent2.worldnow. Moet Hennessy, 6 June 2017, https://www.lvmh.com/news-documents/ com/wrcb/pdf/091515EPBFiberStudy.pdf. news/launch-of-24-sevres-the-new-online-shopping-experience/. 43. Accenture, Global Consumer Pulse Research, 2017. 15. Perez, Sarah, “Quri, a Retail Intelligence Platform Using Mobile 44. Dehaze, Alain, Chief Executive Officer of the Adecco Group, 2017. https:// Crowdworkers, Scores $10 Million from Matrix & Others”, Techcrunch, 2 www.weforum.org/agenda/2017/10/future-of-work-can-be-fair-and-flexible/. October 2013, https://techcrunch.com/2013/10/02/quri-a-retail-intelligence- platform-using-mobile-crowdworkers-scores-10-million-from-matrix- 45. Information provided by Stefano Scarpetta, Director of Employment, Labour others/; “A Refreshing Approach to Improving Retail Field Execution”, Quri, and Social Affairs of the OECD. http://quri.com/field-labor-optimization-beer-wine/. 46. Office of Senator Mark Warner, “Legislation to Test-Drive Portable Benefits 16. Information provided by Stephane Kasriel, CEO of Upwork. Model Introduced in the House and Senate”, 25 May 2017, https://www. 17. Accenture, Technology Vision 2017. warner.senate.gov/public/index.cfm/pressreleases?ContentRecord_ id=73DA2EF1-FD4E-4397-9B7C-D24B1843A29A; Foster, Natalie, Greg 18. Anthony, Scott D., S. Patrick Viguerie and Andrew Waldeck, Corporate Nelson and Libby Reder, Portable Benefits Resource Guide. The Aspen Longevity: Turbulence Ahead for Large Organizations, Innosight, 2016, Institute Future of Work Initiative, 2016, http://src.bna.com/hbo. https://www.innosight.com/wp-content/uploads/2016/08/Corporate- 47. Interview with Michelle Weise, SVP of Workforce Strategies and Chief Longevity-2016-Final.pdf. Innovation Officer at Strada Education Network, 22 August 2017. 19. Accenture, Humanizing Work through Digital, 2016. 48. What Is Portfolium?, Portfolium, 2017, https://portfolium.com/. 20. Organisation for Economic Co-operation and Development. Forum 2016 49. Jagers, Chris, Why the Blockchain Will Revolutionize Academic Issues: The Future of Education, 2016, http://www.oecd.org/forum/issues/ Credentialing, 28 October 2016, Educause at the Anaheim Convention forum-2016-issues-the-future-of-education.htm. Center, California, https://medium.com/learning-machine-blog/why-the- 21. Wingfield, Nick, “As Amazon Pushes Forward with Robots, Workers Find blockchain-will-revolutionize-academic-credentialing-9950c9c4928d. New Roles”, The New York Times, 10 September 2017; Amazon 10-K 50. Chartered Institute of Marketing, “Whose Data is it Anyway?”, 2016, https:// report issued 10 February 2017, https://www.sec.gov/Archives/edgar/ www.cim.co.uk/newsroom/whose-data-is-it-anyway/. data/1018724/000101872417000011/amzn-20161231x10k.htm. 22. Bradley, Ben, and Dan Restuccia with Chris Rudnicki and Scott Biddle, The 51. Accenture, Global Consumer Pulse Research, 2017. Digital Edge: Middle-Skill Workers and Careers, 2017, http://burning-glass. 52. Arntz, Melanie, Terry Gregory and Ulrich Zierahn (2016), “The Risk of com/wp-content/uploads/Digital_Edge_report_2017_final.pdf. Automation for Jobs in OECD Countries: A Comparative Analysis”, OECD 23. World Economic Forum, The Future of Jobs Report, 2016. Social, Employment and Migration Working Papers, No. 189, OECD Publishing, Paris, http://dx.doi.org/10.1787/5jlz9h56dvq7-en. 24. Brown, John Seely, and Douglas Thomas, “A New Culture of Learning”, 53. Carl Frey and Michael Osborne, “The Future of Employment: How CreateSpace Independent Publishing Platform, 2011. Susceptible Are Jobs to Computerisation?”, 17 September 2013, https:// 25. Bloom, Eric, “Your Technology Skills have a Two Year Half-Life and Six www.oxfordmartin.ox.ac.uk/downloads/academic/The_Future_of_ Ways to Stay Current”, Manager Mechanics, 24 October 2011, https://www. Employment.pdf. itworld.com/article/2735945/careers/your-technology-skills-have-a-two- year-half-life-and-6-ways-to-stay-current.html. 26. Wingfield, “As Amazon Pushes Forward with Robots, Workers Find New Roles”. Operating Models for the Future of Consumption 29

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