Big 4: PwC’s Bob Moritz

Bob Moritz talking to Delano and Paperjam at PwC’s Luxembourg headquarters on Wednesday 22 May. Matic Zorman

Bob Moritz talking to Delano and Paperjam at PwC’s Luxembourg headquarters on Wednesday 22 May. Matic Zorman

The chairman of PwC International, Bob Moritz, speaks about the challenges for business in a fast-changing world.

In Luxembourg this week as part of an extended tour of PwC offices around the world--he says he will not see home in New York again for 3 to 4 weeks--Robert Moritz proves to be an amiable and forthright interview subject. His visit to the grand duchy involves a speaking engagement at ICT Spring but is also a major part of being successful in leading a large network like PwC. “You have to have a set of eyes and ears that are feeding you information. You cannot do the job from the desk, and I travel probably 85 percent of my time.”

He talks about the global economic outlook--an issue addressed by PwC’s own CEO survey published earlier this year, which indicated an unusual level of pessimism among business leaders. However, Moritz has a more positive spin. “The mindset right now is even in a slowing economy there's definitely opportunities for those that can execute extremely well,” he says.

Listen to stakeholders

Looking ahead to the European Parliament elections and the possibility of a wave of populists gaining ground, Moritz cites the recent Australian election as another example and warns against making any political predictions based on opinion polls. He does, however, acknowledge the rise in nationalism and populism as a sign that people are disgruntled that the system has not served them well.  “What companies need to do, just like elected politicians need to do, is to listen very carefully to stakeholder expectations. And they need to do a better job of articulating their contributions and of explaining why they are doing what they’re doing.”

In the wake of this, I ask what Moritz thinks of calls in the UK--particularly from Labour leader Jeremy Corbyn--for the operational break -up of the big 4. A break-up of the big firm would not improve quality, Moritz argues. “From my perspective, we improve quality by sustained investments, by having better accountability, making training more available and having standardisation.” Breaking the firms, the way some would like, would reduce the sustained portfolio mix that allows the firm to move through economic cycles, he says.

Mandatory rotation, for example, requires PwC to find tremendous resources and make investments at any given time. But down the line that expertise can wither away if the company does not have a diversified service offering. “I would love for the regulators to really be more focused on the root causes and issues, not the easier answers--having a much stronger regulator, holding the member firms more accountable, and making sure we’re making the right investments to minimise the risk of quality problems going forward.”

He also doesn’t see any likelihood of any of the big 4 merging in the future. “If anything, I think there is a desire for the next tier of firms to continue to make the investments necessary to get the scale and expertise and capital base to be able to be fit to serve more so than they are today. And that’s the challenge. You can’t force a challenger firm to scale that big that quickly.”

Challengers in cyber

PwC, for example, is spending hundreds of millions of dollars to protect itself against cyber risks, and a next tier firm would have to spend just as much.

But most competition comes from smaller players who ae bringing in specific expertise in niche areas, such as cybersecurity, Moritz says. Technology companies, too, pose competition in the field of simplifying data transfer, performing analytics and “making sure organisations can be faster and cleaner in terms of the data they use to make decisions.” However, Moritz is adamant that PwC can't worry too much about the competition. “You set your own agenda and try to bring a different deliverable and different expertise and make sure you’re valid relevant and valuable and you’re differentiated from your competition.”

And reacting quickly to change and being agile is a key to future success. “That's why we ourselves are disrupting ourselves. That's why we're investing hundreds of millions of dollars now in the upskilling of our own people, because the old ways we used to do things is not going to be the way we do things going forward. So, we have to disrupt our own thinking and our own processes, both in terms of what's expected of us externally but also the skill sets that we need internally to make sure this happens.”

Full of praise for PwC Luxembourg CEO John Parkhouse, Moritz says that what the Luxembourg office has done in the area of skilling “is actually one of the lead examples around the world that others are looking to right now, from a leverage ability perspective.”

Luxembourg one of fastest growing

The evolution PwC Luxembourg has enjoyed over the last 5 to 8 years probably makes it one of the fastest growing proportionately compared to the rest of the world, he adds.

Despite the fact that PwC is the largest or second largest of the big 4 in most countries, Moritz says that size doesn’t really matter when it comes to competition. “The world is moving so fast…it doesn't mean the biggest is going to be the one that's going to survive. It's going to be the ones that can move the fastest and be the most agile to react to the opportunities and minimize the threats.”

On the other hand, being a company of significant size does mean that “you have to make sure that you're doing all you can to give back in terms of the issues that those communities face,” says Moritz. PwC is helping bring fresh water to rural areas of India and is building charter schools in some African countries to help with the education system. “in Luxembourg we're already doing that in the area of education and skilling,” and PwC has also taken action in areas of corporate social responsibility.

Watch India

As for future trends, Moritz says we should be watching what is happening in Indonesia and Malaysia. But he also points to India, where he says Narendra Modi has “set the stage for the country to move very quickly if they can get better alignment between the federal government and state governments.” India can end up enjoying the same exponential growth as China over the next 20 years, he argues. “If, in fact, they pull a couple of levers quickly over the next term and with [Modi] going through re-election I think it has the opportunity to do that right now.”