CEOs pursuing growth amid concerns about competition

In an environment of modest economic growth and fast change, US CEOs are worried about staying relevant and maintaining their edge, according to a new survey report.

Almost three-fourths (72%) of the 400 respondents to KPMG’s CEO survey said they are worried that their products or services won’t be relevant three years from now. An overwhelming majority (90%) are concerned about competitors taking business away.

And with new technology advancing at a dizzying pace, 59% of respondents are concerned about new entrants disrupting their business model.

“While confidence is growing in the fundamental strength of the economy and business prospects, CEOs face mounting concerns over managing risks and regulatory burdens and ensuring the continued relevance of their products,” KPMG Global Chairman John Veihmeyer said in a news release.

Despite their worries about relevance and competition, a majority of CEOs project optimism. Sixty-two per cent are more confident about their company’s growth prospects for the next three years than they were a year ago.
 
More than half (55%) have more confidence in the economy for the next three years than they did a year ago. And 72% say a focus on growth is more important to their companies’ wellbeing than a focus on operational efficiencies.

That focus on growth includes a number of strategies CEOs are using in an effort to improve their companies:

• Formal innovation processes. Although just 17% of CEOs said their companies have developed and implemented a formal, companywide process for innovation, more than half are moving to create such a process. Twenty-five per cent have started implementation of a formal innovation process; 11% are developing such a process; and 20% have plans to develop one.
• Acquisition. More CEOs plan to be focused on mergers and acquisitions in the future than they are today. Currently, 67% of CEOs are focused mostly on organic growth, while 32% are evenly split in their focus between organic growth and M&A/joint ventures. In three years, 53% plan to be pursuing mostly organic growth, while 42% will be evenly split between organic growth and M&A/joint ventures.
• Risk management. Determining what risks a company is willing to take is part of a strategic growth process. Almost all CEOs (89%) said they have a strong voice in risk planning discussions.
• Transforming operating models. Many CEOs are at least considering changing the way their businesses operate. More than one-fourth (29%) are planning a transformation initiative; 16% have started implementation in the last two years; and 15% are assessing the need for a business transformation.
• Increasing focus on customers. More than half (55%) of respondents are training junior staff at an earlier age to enable interaction with clients and customers. Nearly half (44%) have charged senior leadership to invest more time personally with clients and customers, and 19% are spending significantly more time in person with clients and customers themselves.

“Driving efficient growth is a key priority, and [CEOs] see great possibilities leveraging new technology to enhance client services and streamline processes,” Veihmeyer said. “They will also be devoting significant time to image building and increasing client touch points.”

—Ken Tysiac (ktysiac@aicpa.org) is a CGMA Magazine editorial director.