Amid reduced levels of optimism about the overall outlook for the global economy, chief executive officers (CEOs) are saying they are very confident about economic growth.
These CEO represents eight in every 10 or 83 percent of those profiled in a new KPMG survey, describe themselves as confident in their company’s growth prospects for the next three years, and around half (47%).
Interestingly, over the last 12 months, new waves of uncertainty compelled CEOs to think in fresh ways about the disruptive forces impacting their businesses.
The CEOs optimism and other interesting findings were presented in the third annual KPMG Global CEO Outlook, following a survey conducted by KPMG through research partner, Forbes magazine.
Nigeria’s Aliko Dangote, president/CEO, Dangote Industries, was one of the CEOs that were specially profiled in the global report where KPMG surveyed over 1,200 CEOs of companies with greater than $500 million in revenues.
Kunle Elebute, national senior partner for KPMG in Nigeria, said, “CEOs are ambitious about disrupting their own businesses and the market broadly. This paints an optimistic picture of the resilience and resourcefulness of today’s leading businesses, and the CEOs leading them”.
The survey focused on eleven key industry sectors (Automotive, Banking, Energy, Infrastructure, Insurance, Investment Management, Life Sciences, Manufacturing, Consumer & Retail, Technology and Telecom) in 10 key markets (Australia, China, France, Germany, India, Italy, Japan, Spain, UK and US) with noteworthy highlights of survey results in 42 additional countries.
CEOs expect the global economy to have the single biggest impact on their company’s growth in the coming years. Though, there has been a drop in the number of CEOs that are confident in their business’ 3-year prospects (from 89 percent in 2016 to 83 percent today), the majority of CEOs that were engaged in this year’s study are still optimistic about their company and its prospects, as well as the national and global economy they operate within, although less so than in the previous two years.
They also say they are taking the necessary steps for their business to be a disruptor, rather than the disrupted.
Three in four (74%) say their business is aiming to be the disruptor in their sector. Driving disruption in their own business is welcomed by CEOs; six in 10 (65%) of whom consider technological disruption to be an opportunity, not a threat, for their organisation. Innovation ranked as the second highest strategic initiative for growth in the next three years (picked by 47%) and the second highest strategic priority overall (out of 20 priorities) for the CEOs.
An interesting trend to keep an eye on is that of reputational risk, which appears to be climbing on the agenda. Reputational risk featured as one of the biggest threats that organisations face today, primarily due to the transparency created by the digital world.
The survey revealed that reputational and brand risk has risen in importance for CEOs during the last year to become one of the top three most important risks they face today (out of 16 in total), after not featuring at all in the top 10 in 2016. They (CEOs) believe that reputational damage has the second highest potential impact on growth over the next 3 years.
On the evolution of the CEO, the survey indicated that CEOs are rethinking their own skills and personal qualities. 70 percent of CEOs say they are now more open to new influences and collaborations than at any other point in their career, with almost seven in 10 (68 percent) saying that they are evolving their skills and personal qualities to better lead the business.
Other trends revealed in the 2017 KPMG CEO Outlook are that in the space of a year, the world has become a more complicated place – economically, geopolitically and technologically; in 2017, less than two in three CEOs (65 percent) feel confident about global economic growth during the next 3 years – down from 80 percent in 2016. CEOs are also notably less confident in their own industry’s prospects for growth.
One in two (52 percent) CEOs believes the uncertainty of the political landscape has had a greater impact on their business than they have seen for many years. Three in four are ramping up their scenario planning to plot a course through uncertain waters.
And 69 percent say they are recruiting new skills/specialists into their management team to better understand geopolitical risk. Trust in a time of disruption: A long-term focus on building a respectful and transparent culture is key.
Around three quarters of CEOs (74 percent) say their organization is placing greater importance on trust, values and culture in order to sustain its long-term future. Six in ten (61 percent) believe that becoming more socially responsible is incompatible with short-term performance objectives.
More than seven in ten (72 percent) of CEOs in this year’s survey correlate being a more empathetic organization with higher earnings. Most CEOs (64 percent) say they are effective at sensing market signals. Yet ongoing success relies on good quality data and close to half (45 percent) say their customer insight is hindered by a lack of quality and 56 percent are concerned about the data they are basing decisions on.
A perception of improved cyber resilience: CEOs are finding the positives associated with cyber security. Getting it right will be an essential part of protecting the business’ reputation in the years ahead. CEOs believe they are making progress in their management of cyber, which has dropped to number five in the list of top risk concerns this year.
Four in ten (42 percent) believe they are fully prepared for a cyber event – up from 25 percent in 2016. Seven in ten (71 percent) CEOs see investment in cyber security as an opportunity to find new revenue streams and innovate, rather than as an overhead cost. 47 percent believe human capital is the biggest challenge in tackling cyber security for their organization (14 percent strongly agree with this).
Battle for talent in cognitive revolution: CEOs are more confident in their understanding of new technologies than they were in 2016, though competition for expert talent is fierce. CEOs expect cognitive technologies in the short term, to lead to increase, rather than decrease, in headcount. As they embed cognitive technologies, businesses are expecting short-term headcount growth. Across 10 key roles, 58 percent are expecting a slight or significant growth in numbers.
60 percent expect increasing investment in cognitive tech over the next 3 years, with three in ten indicating significant investment here. Australian and Japanese CEOs are most inclined to be investing in cognitive tech over the next 3 years. Perhaps not surprisingly, integrating cognitive tech was second only to attracting new talent as the biggest tech-related challenge to the organization.
Headcount still growing but weaker than last year: However, CEOs are planning to boost their investment in recruitment in the near future. In 2016, 73 percent expected their number of employees to increase by more than 6 percent in the next 3 years. In 2017, less than half (47%) expect this level of growth. In the last 12 months, 52 percent say they have increased spending on recruitment. Over the next 3 years, the proportion who are increasing investment in recruitment rises to 75 percent.
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