Talent: the next high-tech innovation

By Gary Coleman - September 08, 2014

PRE-AMNC BLOGThe theme of the World Economic Forum’s Annual Meeting of the New Champions 2014 (AMNC), “Creating value through innovation,” brings to mind some of the amazing advances in technology that has allowed companies to minimize bureaucracy, tap new markets, and extend their supply chains the world over. But how has innovation had an impact on one of their most valuable resources—talent?

It may not be entirely clear that innovation has a role to play when recruiting and retaining employees. And no wonder: many companies are still struggling with just how advances in technology can be used to innovate in the talent space. More than 40 percent of executives surveyed in Deloitte’s 2014 Global Human Capital Trends report said their companies were “not ready” to address talent as it relates to technology. But with aging populations, an increasing demand for a more select set of skills, and knowledge growing out of date at an alarming rate, the pressure to use technology to innovate is more critical than ever.

Digital technology can play a powerful role in both attracting and keeping employees. The most significant impact, of course, has been through the rise of social media. In 2013, more than 67 percent of internet users around the world used a social network at least once per month. The figure will rise to more than three out of four internet users by 2016.  And worldwide, more than one-third of workers use social media for career and employment decisions. That jumps to 51 percent in the Asia Pacific region. 

This trend is particularly prominent among millennials. For this demographic, living with digital technology is not a new reality—it’s the only reality. In almost every country, people under age 30 (and those with a college education) are more likely to engage in social networking and use a smart phone, according to a Pew Research poll.  This access and connectedness has shaped millennials’ views of work. Nearly three-quarters, according to Deloitte’s millennial survey, see themselves working independently, rather than for a company. Forty-five percent will choose workplace flexibility over pay.

Companies need to adjust their recruiting and work models accordingly. Many are already using social media extensively—more than 60 percent of HR executives say they rely on social tools for sourcing and advertising positions . But social media can do much more. With blogs, targeted ads, stories, and word-of-mouth, social media can raise a company’s profile, building appeal before ever even advertising a position.

Keeping employees also requires an innovative approach; 60 percent of millennials will leave their companies in less than three years.  Open talent networks, in which companies tap the right talent as needed, allows workers the flexibility they are seeking. Open talent networks encourage work to be designed on a project basis—a model that appeals to many millennials. Work can also be broken down into discretionary parts that can be farmed out over the network—freeing up the time of employees for more productive and challenging work.

To be sure, digital technology is still making its mark when it comes to talent. But with so many of the AMNC’s participants comprising the employers and employees of the future, the value to be created by innovating in this space couldn’t be more relevant.


Dttl_garycoleman_56x56Gary Coleman is Managing Director, Global Industries, of Deloitte Touche Tohmatsu Limited. He will be moderating the panel “Got Talent” on 11 September at the World Economic Forum’s Annual Meeting of the New Champions 2014.

Farnborough Airshow showcases 100 years of aviation

By Tim Hanley - August 01, 2014

Ind_man_glb_ho_2033_300X200One of the best ways to see innovation in the manufacturing industry is to attend the Farnborough Airshow. This year, the public airshow, which rotates between Paris and Farnborough each year, showcased aircraft innovation and technology from every decade in the last century. I had the privilege to once again attend this premier event and met with many senior executives from leading Aerospace & Defense (A&D) sector companies. For the A&D industry, this airshow is where deals are made. The show organizers estimated $201 billion in contracts were committed during the week and media reported the top aircraft makers signed around $115 billion in jet deals.

During the airshow, Deloitte released a new thought leadership report, 2014 Global aerospace and defense sector financial performance study. The report indicates that the overall global A&D sector growth is slowing – the revenue growth rate declined from 5.9 percent in 2012 to 3.1 percent in 2013. While growth continues in the commercial aerospace segment, contraction in defense spending continues to be impacting the pace of revenue growth. I encourage you all to have a look at this report which is recognized by many as a scorecard for the industry.

As I listened to executives across the industry, I heard a sense of optimism at a higher level than in 2013. Many of the companies appear to be looking to grow through acquisition. For suppliers, this may be necessary; in part to gain scale to help them better manage the demand for pricing targets set by the original equipment manufacturers (OEMs). Interestingly this year, the defense companies seemed to have a much more positive view of the landscape, as they continue to navigate the realities of tight defense spending.

One of the high points of our week was a reception that Deloitte co-hosted with Skadden Arps, a leading law firm serving the A&D industry. General Wald, Federal Practice Senior Advisor with the Deloitte U.S. firm (Deloitte Services LP), shared a few of his insights on the growing importance of technology to the U.S. military today, and also offered a few examples from his distinguished years of service.

Finally, please read some of the perspectives shared with the media about developments in the industry by Tom Captain, Deloitte Touche Tohmatsu Limited Global A&D Sector Leader: Airbus Deliveries Rise but Trail Boeing; Company Delivered 303 Planes in First Half (Wall Street Journal) and Weapons-makers The case for defence (The Economist).

Have questions or comments? Share your thoughts with me @TimPHanley.


Tim HanleyTim Hanley is the Global Leader of the Manufacturing Industry group of Deloitte Touche Tohmatsu Limited (DTTL). In his global industry leadership role, he directs strategic initiatives and investments to grow Deloitte member firm market share within the manufacturing industry. During his distinguished 35-year career, Hanley has led teams serving all business aspects, including consulting with top management regarding organizational financial strategy development and execution, acquisitions, and market development.

Talent, urbanization, and energy underpin Asia Pacific dynamics

By Tim Hanley - July 07, 2014

Shanghai_300X200A few weeks ago, I had the privilege to host an Asia Pacific Regional Manufacturing Summit and could not have asked for a better venue than Shanghai, China – a vibrant and important marketplace for Deloitte member firm global manufacturing clients. The event focused on the evolving industry themes impacting the region.

Talent was one of the first themes discussed. A guest speaker from the US-China Business Council, highlighted the rising cost of talent in China, citing an average of eight to 10 percent increases in annual salaries compared to the average rate of three percent in markets like the United States. As Chinese manufacturers aim to move up the global value chain (read Deloitte China’s report “Transforming from world factory to smart manufacturing”), wage inflation will continue to be a challenge for both local and international manufacturers. However, it does not appear to have significantly dampened investment interest in China.

Urbanization was another theme highlighted and an important trend to watch. It is just one of the factors attracting investment into China. A speaker from The Economist Group provided the audience with fresh insights on the urbanization patterns occurring in China. Did you know that China’s urbanization rate is expected to increase to 61 percent of the country’s total population by 2020 (up from around 50 percent today), and to 67 percent by 2030? That translates to an urban population of around 940 million people by 2030 (up from 670 million in 2010) with most of the growth in mid-size cities like Guangdong, Henan, Hebei and Shandong. While significant due to the size of the population, China’s urbanization rate actually falls behind the average urbanization rate across OECD economies of just below 80 percent in 2010. Understanding this megatrend will likely be important for multinational and local manufacturers alike as they consider how and where to grow their business in China.

Harnessing alternative sources of energy was another theme highlighted at the event. The energy agenda, as an example, is a topic of interest to Japanese manufacturers as the country strives to find sustainable alternatives to nuclear power with a view to renewables including solar and hydrogen fuel. During the event, I also learned that Japanese manufacturers are driving increased investment in research and development in an effort to build technology leadership and grow its domestic market. Long recognized as leaders in globalization, Japanese companies are continuing to seek growth in emerging markets such as China and Southeast Asia.

As always, I am interested in exchanging perspectives on industry and market trends and developments, so please do not hesitate to leave your comments below or tweet me @TimPHanley


Tim HanleyTim Hanley is the Global Leader of the Manufacturing Industry group of Deloitte Touche Tohmatsu Limited (DTTL). In his global industry leadership role, he directs strategic initiatives and investments to grow Deloitte member firm market share within the manufacturing industry. During his distinguished 35-year career, Hanley has led teams serving all business aspects, including consulting with top management regarding organizational financial strategy development and execution, acquisitions, and market development.

Innovation in defense: Convergence and catching up

By Jack Midgley - June 24, 2014

Env_glb_ho_1333_hiNations invest in defense technologies to protect their citizens and also to drive economic growth and prosperity. In Deloitte’s latest Global Defense Outlook, we found that 50 nations spend more than $1.7 trillion every year on defense, and national leaders expect to gain strategic benefits from their investments.

Gaining military advantages from innovation in defense technology is getting harder and more expensive. Changing global economic realities are leading toward catch-up and convergence, reducing the relative advantages of investment in high-tech defense systems. These trends are becoming more evident worldwide.

Catch-up is driven by macroeconomic realities. Higher-income nations among the Top 50 defense spenders (the United States and most of the Eurozone) have led defense innovation for more than 70 years and are responsible for most of today’s advanced weapons, including stealth, unmanned systems, precision strike, naval aviation, and cyber-related systems. These nations reduced defense investment by about 8 percent between 2008 and 2013, confronted by high debt, slow economic growth, and competing demands for deficit reduction and social services.

The lower-income nations among the Top 50 (China, Russia, India, Brazil, Saudi Arabia, Iran, Pakistan, and others) have traditionally spent less and followed the technology lead of the high-income nations. Because these nations are growing faster than the higher-income nations and hold lower levels of debt, they are increasing defense spending. Russia is undertaking the most expensive buildup of its defense since the breakup of the Soviet Union, increasing defense spending by 16 percent between 2013 and 2016. China’s defense spending has doubled over the past 10 years and will increase by 12 percent in 2014.

Convergence is happening because it is cheaper to copy than to create. Innovation can provide competitive advantages in warfare just as in commercial markets, but innovators face high costs and risks. In the United States, defense innovation is concentrated in 80 major defense acquisition programs (MDAPs), including the F35, expendable launch vehicle, and other high-technology systems. These systems are loaded with cost and risk. In fact, the U.S. General Accounting Office reported that the MDAPs have overrun budget estimates by $448B and are an average of 28 months behind schedule – solid evidence that gaining a technology edge in defense is a risky and expensive undertaking.

Copying defense technology is much cheaper. For example, the Chinese Navy boosted its power projection capability by purchasing a used Russian aircraft carrier for $20M and towed it home. This low-cost investment establishes carrier-based aviation in China, an early step toward what Chinese officials call “the century of the sea.”

Lower-income nations are catching up in defense spending as they exploit economic growth and favorable debt positions. The result over the decades ahead is likely to be technological convergence, with advanced defense technologies increasingly available to state and nonstate actors. To learn more, read the Deloitte Global Defense Outlook 2014: Adapt, collaborate, and invest. Please share your thoughts or questions by commenting below!


JackJack Midgley is a director in Deloitte’s strategy practice, advising leaders in the defense and intelligence communities. He leads development of Deloitte’s annual Global Defense Outlook. Follow him on Twitter @jackmidgley.

East Asia: What engines of growth need

By Gary Coleman - June 12, 2014

WEF EA post blogIn his opening address at the World Economic Forum on East Asia, Vietnamese Prime Minster Nguyen Tan Dung said that efforts to boost the region’s engines of growth are needed to help reinvigorate slowing growth rates. And according to a number of other leaders at the event, there are a variety of ways to achieve this.

Chief among these is the growth-enhancing potential of ASEAN’s full economic integration in 2015. The ability to function as one industrial and production base was seen by leaders as critical to the region’s competitive advantage—putting it possibly on par with the regional power of the European Union. ASEAN’s ability to participate and negotiate as one region in a range of free-trade agreements—including the Trans Pacific Partnership and the bilateral ASEAN Plus One agreements—also provides considerable opportunity to attract foreign investment to its markets. With the burgeoning middle class of a country like Indonesia—where consumers are now more and more in a position to buy cars and electronics—the draw is strong.

Leaders at WEF East Asia also pointed to the importance of regulatory reform as a means to spur growth and competitiveness.  To this end, a minister from Cambodia touted his country’s receptivity to investment, noting that “every sector is open to FDI” and that there are no “alien investor” laws in his country. One Malaysian government official emphasized that his government is “pushing hard” for reforms to improve competitiveness. Already, ASEAN countries have made significant progress on lowering barriers in the trade in goods across the region—with tariffs on more than 99 percent of goods expected to be at zero by 2015. ASEAN is now working on liberalizing regulations pertaining to services to ease access across borders in such sectors as banking.

The focus on services and the difficulty of moving to this next stage, however, points to a continuing stumbling block in ASEAN’s ability to function as one region—the lack of connectivity. Not only do services like finance need a strong ICT network to facilitate transactions and connectivity among countries, businesses in both services and the manufacture of goods alike need well-developed physical transport to ease movement in this geographically dispersed area. The ASEAN Open Skies initiative, which will allow all airlines within ASEAN to compete on intra-ASEAN routes, is one initiative that aims to promote better connectivity among ASEAN nations and there is hope it will be implemented in 2015. But rail, roads, seaports, airports and broadband are all areas in need of investment. On the bright side, the scale of the transport infrastructure requirements—as a minister for transportation from Singapore noted—can represent a substantial opportunity for international financing institutions as well as for public-private partnerships.  

All of these efforts can accelerate the engines of growth and help rev up East Asian economies. But will they bring high-quality growth—that is, the kind that encourages innovation and stimulates quality job formation? There are indications that this may be the case. President Aquino in his opening address noted that the Philippines’ rates of employment for graduates in IT, business processing operations, and electronics exceed 70 percent, with some sectors exceeding 90 percent. And the greater competition that ASEAN economic integration brings is expected to spur businesses to become more innovative and compete more keenly for talent, according to the minister from Cambodia mentioned above.

However, there is one thing that all of these efforts to drive engines of growth need—and that’s stability. The prime minister from Vietnam made this clear in his remarks: “Development is not possible without peace and stability.” He pointed out that any disruption in the region’s shipping lanes—a distinct possibility given recent tensions with China—could mean major disruptions to East Asia’s economy and the world’s. So even if East Asia gets the engines of growth to again fire on all cylinders, the geo-political environment may turn out to be the most critical—and most challenging—factor holding the region back.


Dttl_garycoleman_56x56Gary Coleman is Managing Director, Global Industries, of Deloitte Touche Tohmatsu Limited. He is a member of Deloitte’s Global Markets Committee and is the lead partner in Deloitte’s strategic relationship with the World Economic Forum. Follow him on Twitter @gcoleman_gary.

Growth in a disruptive environment

By Tim Hanley - June 09, 2014

Ind_lsh_glb_ho_1958I heard some fascinating stories recently of how three European manufacturing companies are innovating and growing in the face of a disruptive environment. Senior executives from a growing commercial aircraft supplier, global process manufacturer, and leading consumer and industrial products company were featured speakers at a Deloitte manufacturing industry event. Despite the different sectors in which they compete, common threads emerged, including how the companies are embracing new technologies to innovate, how they are harnessing the power of collaboration in that effort, the new approaches they are taking to compete in growth markets, and a shared focus on developing talent.

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Is the next manufacturing revolution here?

By Tim Hanley - May 27, 2014

Thumb_ind_man_glb_ho_1929_resize_1024_0It is estimated that there were over 12,000 articles and media stories published over the last year on additive manufacturing, more popularly known as “3D printing”. This topic has been discussed at many of the industry events, client meetings, and strategy sessions that I attend across the globe. While additive manufacturing has recently been a topic of growing interest, the technology has evolved over the last three decades. I wanted to highlight additive manufacturing as it is likely that we are only just seeing the beginning of the potential that this and other advance manufacturing technologies can bring to manufacturers’ innovation and growth strategies.

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The Philippines: the next GVC success story?

By Gary Coleman - May 21, 2014

Manila, Philippines blog jpegAccording to the United Nations, economies with the fastest growing global value chain (GVC) participation “have GDP per capita growth rates some 2 percentage points above the average.”1 Much of the remarkable growth in Asia is attributable to this ability to participate in GVCs. The Philippines, where the World Economic Forum on East Asia is opening today, may very well be the next example of this success.

With a 7.2 percent growth rate in GDP in 20132, the Philippines possesses many of the traits needed to move up the global value chain. Not only does it have a stable macro-economic environment, but the country also has a emerging services sector, particularly in business process outsourcing (BPO)—services like call centers and IT that are often outsourced from developed economies. The BPO market in the Philippines now accounts for 9.5 percent of the worldwide market, with metro Manila the second-largest global outsourcing destination.3 And more than 50 percent of the Philippines’ overall GDP value-add is contributed by services.4

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Nigeria’s new numbers

By Gary Coleman - May 15, 2014

Nigerian flagRecently, the Nigerian government announced new GDP numbers that now make it the largest economy in Africa. Having overhauled economic data for the first time in two decades, the GDP figure rose by 89 percent from 2003 to 2010. It’s a number that caught the attention of the world and was much discussed at the World Economic Forum (WEF) on Africa, held last week in Nigeria’s capital city of Abuja.

But is GDP really the best measure of success? If you listened to the debate at WEF, the answer is, probably not. Because when you look behind a remarkable number like that, you can see there are many factors not addressed by this figure—factors that provide clues as to how the economy is really unfolding and how it is impacting quality of life.

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Cautiously optimistic: Innovation and Chinese FDI

By Gary Coleman - April 29, 2014

Aisa Society Image for blogA few months ago, after Summer Davos, I wrote and spoke about China’s new commitment to innovation. Chinese Premier Li Keqiang in his opening address had talked of holding the banner of innovation high and the reforms his government were proposing to achieve that goal. I stated at the time that I was cautiously optimistic about the potential these reforms held.

Just recently, I again had the chance to discuss China and innovation, this time on a panel hosted by the Asia Society in New York City. With the session focused on China’s growing investment in U.S. high-tech companies, inevitably the question of innovation came up—and if these Chinese companies were looking to U.S. acquisitions to help build a culture of innovation at home. Innovation remains a challenge in China, with issues from lax enforcement of intellectual property laws to the difficulty of starting a business contributing factors. Moreover, questions have been raised about whether China’s educational system encourages the kind of creative thinking that generates innovation.

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