Volatility and Adaptation Index (VAI) · Highest levels of volatility and adaptation in capital...

Monitor signals in large companies, anticipate structural changes

– and provide leaders the intelligence to drive agility

(Feb 1, 2013 - Jan 31, 2015) www.genpact.com/home/volatility-adaptation-index

Volatility and Adaptation Index (VAI)

DESIGN ∙ TRANSFORM ∙ RUN

http://www.genpact.com/home/volatility-adaptation-index





DESIGN • TRANSFORM • RUN 2 © 2015 Copyright Genpact. All Rights Reserved.

CONTENTS

Introduction: Genpact Volatility and Adaptation Index (VAI) 03

Why Volatility and Adaptation Index (VAI)? 03

Methodology 04

Section 1: Overall insights 06

Recurring themes for volatility and adaptation 09

Main drivers of VAI 10

Analysis of 3 months covering Nov ‘14-Jan’15

24 month historical trend from Feb’13 to Jan’15

Section 2: Industry specific analysis 14

Comparison across industries 15

24 month historical trend across industries

Comparison of VAI across industries in the last 3 months

Retail banking 21

Commercial banking 22

Capital markets 23

Insurance 24

Healthcare 25

Life sciences 26

Consumer goods 27

Manufacturing 28

High tech 29


Insight into global enterprises’ environment and structural moves facilitates strategy and organizational alignment

• Unprecedented economic volatility leads global

companies to adapt, often through transformed

business operations

• Events like profit warnings, cost-cutting initiatives,

M&A, change of senior leadership signal volatility,

and adaptation measures

• Genpact Volatility and Adaptation Index (VAI) is a

directional measure based on monitoring of large

data sets across a sample of 800 companies

• It provides senior leaders with the intelligence to

inform structural decisions and facilitate

organizational alignment

Why volatility and adaptation index (VAI)?


Volatility and Adaptation Index - sample

Methodology

Heathcare

Others

High tech

Manufacturing

Life sciences

Insurance

Consumer goods

Capital markets

Retail banking

Commercial banking

9%

5% 7%

10%

11%

21%

9%

12%

7%

9%

Europe Asia-Pacific and Japan

North America

63%

16% 21%

By Industry By Geography


Volatility and Adaptation Index (VAI) - methodology

800 global

companies

with sizeable

operations

63% North

America

21% Europe

16% Asia

Pacific and

Japan

Identified

“events” that

signal current

or future

volatility

correlated to

changes in

operating

strategy-

restructuring,

change in

leadership,

regulatory etc.

Monitoring of

online media,

newswires,

publications,

financial

statements,

databases and

social media to

screen content

Analytics to

filter the news,

attribute

relevance and

salience

Volatility and

Adaptation

Index =

[% of companies

displaying

events]

X

[average number

of volatility

events per

company]

• This release covers 24 months with data updated till January 31, 2015

• Events include both macro industry-wide events such as regulations and company

level events like financial underperformance or cost cutting

• Industries - Banking, Insurance, Capital Markets, Healthcare, Life Sciences,

Manufacturing, Consumer goods, etc.

Quarterly Index Analytics Definition

Methodology

Section 1

Overall insights


Executive Summary

Operating changes gain momentum as volatility stabilizes. Good time for CEO’s action

• Future still uncertain, and temporary

stability is a good time to prepare

• Heed agility imperative: Comparative speed

of adaptation might determine success against

competitors and has implications for

shareholders as performance is scrutinized

• Enhance ability to change enterprise-wide

direction fast: speed of strategy formation and

organizational alignment can be shortened by

• Observing practices adopted by early

movers-some monitored by VAI

• Creating a burning platform internally by

communicating those competitors’ moves

• Utilizing lean-management principles to:

Align strategy with execution; sustain the

pace of change by discovering better ways

of working and enabling people to

contribute fully; generate material impact by

delivering value efficiently to customers

• Total index flat at moderate levels in the

last 12 months* compared to highs of 2013;

45% companies manifest some volatility and

change

• Leadership changes, M&A and

restructuring/cost cutting accounted for

much of VAI; fewer companies reported

industry or regulatory changes

• Capital markets (leadership changes,

financial conditions most widespread),

followed by retail banking have highest VAI

in last 3 months

• Largest reduction in VAI for high tech

followed by insurance

• Results corroborated by Genpact’s own

operational measurements e.g. Mortgage

operations in banks; Consumer goods’ keen

interest in operations transformation services

* Feb 2014-Jan 2015

Insights Implications for C-suite


Overview ► Main themes ► Nov’14–Jan‘15

Recurring themes for volatility and adaptation*

*Data from Nov’1, 2014 to Jan’31, 2015

WORD CLOUD ANALYSIS ALL INDUSTRIES

Nov’14-Jan‘15 Word cloud illustrates frequency of text observed. Size of word corresponds to the

number of times the word was used across all data sources.


Overview ► Main drivers ► Last 3 months (Nov’14–Jan’15) vs. trailing 12 months

Leadership changes, M&A and financial pressures account for much of VAI in the last 3 months

Vo

latilit

y a

nd

Ad

ap

tatio

n In

de

x

M&A activity picked up

in last 3 months

compared to trailing 12

months

Leadership changes

reduced in last 3

months compared to

trailing 12 months

Industry, regulatory

changes dipped

considerably in the last

3 months compared to

trailing 12 months

ALL INDUSTRIES

Nov’14– Jan‘15

Ove

rall

Ind

us

try,

reg

ula

tory

or

geo

gra

ph

ic

ch

an

ge

Fin

an

cia

l

co

nd

itio

n

Re

str

uc

turi

ng

Lea

ders

hip

ch

an

ge

Ac

qu

isit

ion

or

ge

og

rap

hic

ex

pan

sio

n

Volatility events

Adaptation responses

+38%

Nov’14-

Jan’15

Trailing

12

Months

-17%

Nov’14-

Jan’15

Trailing

12

Months

-85%

Nov’14-

Jan’15

Trailing

12

Months


Overview ► Main drivers ► 2014 (Feb’14–Jan’15) vs. 2013 (Feb’13-Jan’14)

M&A and financial pressures’ share of VAI decreased in 2014 compared to 2013

Vo

latilit

y a

nd

Ad

ap

tatio

n In

de

x

M&A activity has

reduced in Feb’14–

Jan’15 compared to

Feb’13-Jan’15

Volatility due to

financial conditions

dipped in Feb’14–

Jan’15 compared to

Feb’13-Jan’15

Leadership changes

up in Feb’14–Jan’15

compared to Feb’13-

Jan’15

ALL INDUSTRIES

Feb’13 – Jan‘15

Re

str

uc

turi

ng

Ove

rall

Ac

qu

isit

ion

or

ge

og

rap

hic

ex

pan

sio

n

Lea

ders

hip

ch

an

ge

Ind

us

try,

reg

ula

tory

or

geo

gra

ph

ic

ch

an

ge

Fin

an

cia

l

co

nd

itio

n

Volatility events


Feb’13-

Jan’14

-27%

Feb’14-

Jan’15

Feb’14-

Jan’15

-33%

Feb’13-

Jan’14

Feb’13-

Jan’14

Feb’14-

Jan’15

+43%


Overview ► Main drivers ► Historical trend (Feb’13–Feb’15)

VAI flat compared to trailing 12 months average; more adaptation responses seen than volatility events

Vo

lati

lity

an

d A

dap

tati

on

In

dex

ALL INDUSTRIES

Feb’13–Jan‘15 Adaptation responses Volatility events

Feb’13–

Apr‘13

May’13–

Jul'13

Aug’13–

Oct‘13

Nov’13–

Jan‘14

Feb’14–

Apr‘14

May’14–

Jul’14

Trailing

12 months

average

39 19 25 25 21 22 22 43 34

Industry, regulatory or geography changes

Acquisition or geographical expansion

Restructuring

Leadership change

Financial condition

Aug’14–

Oct’14

Nov’14–

Jan’15


Overview ► Main drivers ► Historical trend (Feb’13–Feb’15)

VAI flat compared to trailing 12 months average; more adaptation responses seen than volatility events

Vo

lati

lity

an

d A

dap

tati

on

In

dex

ALL INDUSTRIES

Feb’13–Jan‘15 Adaptation responses Volatility events

Feb’13–

Apr‘13

May’13–

Jul'13

Aug’13–

Oct‘13

Nov’13–

Jan‘14

Feb’14–

Apr‘14

May’14–

Jul’14

Trailing

12 months

average

Aug’14–

Oct’14

Nov’14–

Jan’15

43

22 19

22 21

39

25 25

34

Financial condition

Acquisition or geographical expansion

Leadership change

Restructuring

Industry, regulatory or geography changes

Section 2

Industry specific analysis


Industry comparison ► Historical trends (Feb’13–Jan’15)

Sharp differences in trend across industries; volatility and adaptation picks ups in capital markets, healthcare and manufacturing

120

100

80

60

40

20

ALL INDUSTRIES

Feb’13–Jan‘15

Vo

lati

lity

an

d A

dap

tati

on

In

dex

Feb’13–Apr‘13 May’13–Jul'13 Aug’13–Oct‘13 Nov’13–Jan‘14 Feb’14–Apr‘14 May’14–Jul’14 Aug’14–Oct’14 Nov’14–Jan’15

Capital markets

Retail banking

Commercial banking

Healthcare

Consumer goods

Manufacturing

Life sciences

Insurance

High tech


Industry comparison ► Nov’14– Jan‘15

2525

610

14

25

3031

3737

52

Insu

rance

Vo

latilit

y a

nd

Ad

ap

tatio

n In

de

x

All

Ind

ustr

ies

Fe

b’1

4-J

an’1

5

All

Ind

ustr

ies

No

v’1

4–Ja

n’1

5

Ca

pita

l m

ark

ets

Life

scie

nce

s

Re

tail

ba

nkin

g

Ma

nu

factu

rin

g

Co

nsu

me

r g

oo

ds

Co

mm

erc

ial b

an

kin

g

He

alth

ca

re

Hig

h te

ch

Highest levels of volatility and adaptation in capital markets, closely followed by banking

Nov'14-Jan'15

Capital markets showed highest volatility and

adaptation index between Nov’14-Jan’15 (explained

by leadership change, financial conditions and

restructuring)


Capital Markets

Industry comparison ► Nov’14–Jan‘15

Capital markets and retail banking show most volatility and adaptation; leadership change main trigger across industries

Commercial

Banking

Retail Banking

Overall

Index

Number of

events

% of

companies

impacted Main volatility themes

1. Leadership change

2. Financial condition

3. Restructuring


2. Restructuring

3. Financial conditions


2. Acquisition or geographic

expansion

3. Financial conditions

Nov'14-Jan'14



Fewer events observed in high tech and insurance in the last quarter; more in capital markets and banking

% of

companies

impacted

Avg.

number of

volatility events

per company

Healthcare, Insurance

Retail Banking, Life sciences

Insurance, High tech

Life sciences, Retail Banking

Acquisition or expansion

Leadership changes, cost cutting/restructuring

Financial conditions

Vo

lati

lity

an

d A

dap

tati

on

In

de

x

% delta from last 12 months average

0

5

10

15

20

25

30

35

40

45

50

55

-100 -50 0 50 100

Manufacturing

Life sciences

Insurance

High tech

Healthcare

Capital markets

Consumer goods

Commercial banking Retail banking

Nov'14-Jan'15


Almost 50% of companies reported at least one volatility or adaptation events in the last quarter

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70

3.0

2.5

2.0

1.5

1.0

0.5

Trailing 12 months

Overall - Last 3 months

Avera

ge n

um

ber

of vola

tilit

y e

vents

per

com

pany

% of companies impacted

Capital markets

Manufacturing Healthcare

Consumer goods

High tech

Life sciences

Insurance

Commercial banking

Retail banking

Nov’14-Jan’15



Industry analysis summary ► Trailing 12 months (Feb’14–Jan’15)

Determinants of volatility and adaptation vary widely by industry

H L

H

# o

f ev

en

ts p

er

co

mp

an

y

% companies impacted

Retail banking Commercial banking Insurance Consumer goods Capital markets

Life sciences Manufacturing High tech


A R L Restructuring/

Cost cutting

Acquisitions or

geo expansion

Leadership

changes

Volatility events

F I Financial

pressures

Industry, regulatory or

geography changes

A

L

R

I

F

A

L

R

I

F

A L

R

I F A

L

R I

F A

L

R

I

F

A

L

R

I

F A

L R

I F A

L

R

I F

A

L R

I

F

Feb'14-Jan'15

Healthcare


Industry analysis ► Retail banking ► Nov’14–Jan‘15

Volatility and adaptation index - Retail banking Last 3 months (Nov’14-Jan’15) vs. trailing 12 months (Feb’14-Jan’15)

Increased restructuring/cost cutting

Last 3

months#

20%

Trailing 12

months*

.

18%

Decrease in leadership churn

0.30.4

Last 3

months#

Trailing 12

months*

% companies

impacted

Avg. no. of volatility

events reported per

quarter per company

17%

Trailing 12

months*

Last 3

months#

38% 0.4

0.8

Last 3

months#

Trailing 12

months*

% companies

impacted


events reported per

quarter per company

Ad

ap

tatio

n

Vo

latilit

y

Trailing 12

months*

Last 3 Months#

37.0 77.0

Financial Condition

Leadership Change

Industry, Regulatory or Geography Changes

Restructuring

Acquisition or Geographical Expansion

Vo

latilit

y a

nd

Ad

ap

tatio

n In

de

x

*Data covering Feb 1, 2014 to January 31, 2015 #Data covering Nov 1, 2014 to January 31, 2014


Industry analysis ► Commercial banking ► Nov’14–Jan‘15

Volatility and adaptation index - Commercial banking Last 3 months (Nov’14-Jan’15) vs. trailing 12 months (Feb’14-Jan’15)

Leadership churn increases

Last 3

months#

35%

Trailing 12

months*

28%

Financial stress decreases

0.40.6

Last 3

months#

Trailing 12

months*

% companies

impacted


events reported per

quarter per company

Trailing 12

months*

25%

Last 3

months#

16% 0.20.3

Last 3

months#

Trailing 12

months*

% companies

impacted


events reported per

quarter per company

Ad

ap

tatio

n

Vo

latilit

y

Last 3 Months#

36.9

Trailing 12

months*

48.1


Financial Condition


Leadership Change

Restructuring

Vo

latilit

y a

nd

Ad

ap

tatio

n In

de

x



Industry analysis ► Capital markets ► Nov’14–Jan‘15

Volatility and adaptation index - Capital markets Last 3 months (Nov’14-Jan’15) vs. trailing 12 months (Feb’14-Jan’15)

Increase in leadership churn

Last 3

months#

30%

Trailing 12

months*

32%

Financial stress increases

0.60.7

Last 3

months#

Trailing 12

months*

% companies

impacted


events reported per

quarter per company

Last 3

months#

28%

Trailing 12

months*

23% 0.40.4

Trailing 12

months*

Last 3

months#

% companies

impacted


events reported per

quarter per company

Ad

ap

tatio

n

Vo

latilit

y

61.2

Trailing 12

months*

52.4

Last 3 Months#

Restructuring

Leadership Change


Financial Condition


Vo

latilit

y a

nd

Ad

ap

tatio

n In

de

x



Industry analysis ► Insurance ► Nov’14–Jan‘15

Volatility and adaptation index – Insurance Last 3 months (Nov’14-Jan’15) vs. trailing 12 months (Feb’14-Jan’15)


Last 3

months#

13%

Trailing 12

months*

7%

M&A activity picks pace

0.20.1

Last 3

months#

Trailing 12

months*

% companies

impacted


events reported per

quarter per company

Last 3

months#

13%

Trailing 12

months*

9% 0.20.1

Last 3

months#

Trailing 12

months*

% companies

impacted


events reported per

quarter per company

Ad

ap

tatio

n

Vo

latilit

y

Last 3 Months#

9.5

Trailing 12

months*

4.2


Financial Condition


Leadership Change

Restructuring

Vo

latilit

y a

nd

Ad

ap

tatio

n In

de

x



Industry analysis ► Healthcare ► Nov’14–Jan‘15

Volatility and adaptation index - Healthcare Last 3 months (Nov’14-Jan’15) vs. trailing 12 months (Feb’14-Jan’15)

Financial stress eases

Last 3

months#

11%

Trailing 12

months*

13%


0.10.2

Last 3

months#

Trailing 12

months*

% companies

impacted


events reported per

quarter per company

Last 3

months#

36%

Trailing 12

months*

21% 0.10.1

Last 3

months#

Trailing 12

months*

% companies

impacted


events reported per

quarter per company

Ad

ap

tatio

n

Vo

latilit

y

Last 3 Months#

30.9

Trailing 12

months*

17.3


Financial Condition


Leadership Change

Restructuring

Vo

latilit

y a

nd

Ad

ap

tatio

n In

de

x



Industry analysis ► Life sciences ► Nov’14–Jan‘15

Volatility and adaptation index - Life sciences Last 3 months (Aug’14-Oct’14) vs. trailing 12 months (Nov’13-Oct’14)

Restructuring/cost cutting down

Last 3

months#

6%

Trailing 12

months*

9%

Financial stress decreases

0.10.2

Last 3

months#

Trailing 12

months*

% companies

impacted


events reported per

quarter per company

Last 3

months#

8%

Trailing 12

months*

13% 0.1

0.1

Last 3

months#

Trailing 12

months*

% companies

impacted


events reported per

quarter per company

Ad

ap

tatio

n

Vo

latilit

y

Last 3 Months#

14.5

Trailing 12

months*

21.5


Financial Condition


Leadership Change

Restructuring

Vo

latilit

y a

nd

Ad

ap

tatio

n In

de

x



Industry analysis ► Consumer Goods ► Nov’14–Jan‘15

Volatility and adaptation index – Consumer goods Last 3 months (Nov’14-Jan’15) vs. trailing 12 months (Feb’14-Jan’15)

M&A activity slows down

Last 3

months#

14%

Trailing 12

months*

19%

Financial stress increases

0.20.2

Last 3

months#

Trailing 12

months*

% companies

impacted


events reported per

quarter per company

Last 3

months#

20%

Trailing 12

months*

17% 0.30.2

Last 3

months#

Trailing 12

months*

% companies

impacted


events reported per

quarter per company

Ad

ap

tatio

n

Vo

latilit

y

Last 3 Months#

30.4

Trailing 12

months*

32.1

Restructuring

Leadership Change


Financial Condition


Vo

latilit

y a

nd

Ad

ap

tatio

n In

de

x



Industry analysis ► Manufacturing ► Nov’14–Jan‘14

Volatility and adaptation index - Manufacturing Last 3 months (Nov’14-Jan’14) vs. trailing 12 months (Feb’14-Jan’15)

M&A activity slightly up

Last 3

months#

19%

Trailing 12

months*

18%


0.50.4

Last 3

months#

Trailing 12

months*

% companies

impacted


events reported per

quarter per company

21%

Trailing 12

months*

23%

Last 3

months#

0.30.3

Trailing 12

months*

Last 3

months#

% companies

impacted


events reported per

quarter per company

Ad

ap

tatio

n

Vo

latilit

y

21.2

Trailing 12

months*

25.5

Last 3 Months#

Restructuring

Leadership Change


Financial Condition


Vo

latilit

y a

nd

Ad

ap

tatio

n In

de

x



Industry analysis ► High tech ► Nov’14–Jan‘15

Volatility and adaptation index - High tech Last 3 months (Nov’14-Jan’15) vs. trailing 12 months (Feb’14-Jan’15)

Leadership churn increases

8%

Trailing 12

months*

14%

Last 3

months#

M&A activity picks pace

0.20.1

Trailing 12

months*

Last 3

months#

% companies

impacted


events reported per

quarter per company

6%

Trailing 12

months*

9%

Last 3

months#

0.10.1

Trailing 12

months*

Last 3

months#

% companies

impacted


events reported per

quarter per company

Ad

ap

tatio

n

Vo

latilit

y

Vo

latilit

y a

nd

Ad

ap

tatio

n In

de

x 3.8

Trailing 12

months*

5.6

Last 3 Months#

Restructuring

Leadership Change


Financial Condition




About Genpact

Genpact (NYSE: G) stands for “generating business impact.” We design, transform, and run intelligent business operations including those that are complex

and specific to a set of chosen industries. The result is advanced operating models that foster growth and manage cost, risk, and compliance across a

range of functions such as finance and procurement, financial services account servicing, claims management, regulatory affairs, and industrial asset

optimization. Our Smart Enterprise Processes (SEPSM) proprietary framework helps companies reimagine how they operate by integrating effective

Systems of EngagementSM, core IT, and Data-to-Action AnalyticsSM. Our hundreds of long-term clients include more than one-fourth of the Fortune Global

500. We have grown to over 67,000 people in 25 countries with key management and a corporate office in New York City. Behind our passion for process

and operational excellence is the Lean and Six Sigma heritage of a former General Electric division that has served GE businesses for more than 16 years.

For more information, visit www.genpact.com.

Follow Genpact on Twitter, Facebook, LinkedIn, and YouTube.

© 2015 Copyright Genpact. All Rights Reserved.

Genpact Research Institute

The Genpact Research Institute is a

specialized think tank harnessing the

collective intelligence of Genpact – as

the leading business process service

provider worldwide - its ecosystem of

clients and partners, and thousands of

process operations experts. Its

mission is to advance the “art of the

possible” in our clients’ journey of

business transformation and adoption

of advanced operating models.

www.genpact.com/research-institute

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http://www.genpact.com/home/about-us/leading-edge-innovation/the-intelligent-enterprise/smart-enterprise-processes




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Volatility and Adaptation Index (VAI) · Highest levels of volatility and adaptation in capital...

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Transcript of Volatility and Adaptation Index (VAI) · Highest levels of volatility and adaptation in capital...