CEO balancing act: Weathering the storm, growing for the future

Nearly 40% of CEOs think their organisation will not be economically viable a decade from now. That long-term view is one data point from a new survey that underscores the need for companies to focus on remaining relevant.

Chief executives are also pessimistic about the immediate growth of their business and the economy overall, according to the 26th edition of PwC's Global CEO Survey.

About three-fourths of CEOs believe global economic growth will decline over the next year. In response, most said their business must evolve, and they want to increase the amount of time they spend reinventing their company and its ability to meet future demands.

PwC surveyed 4,410 CEOs in 105 countries and territories in October and November 2022.

Among the subjects addressed by the CEOs in the survey, here are three focus areas:

• The life expectancy of their business;
• Their mood regarding the future; and
• Their investment in the future.

1. What is the half-life of your business?

Some CEOs are not optimistic. Almost 40% of them don't think their business will be viable a decade from now — if it continues in the same direction.

Almost 75% of CEOs in Japan don't believe their current business model will be viable beyond ten years. China was second with 67%. CEOs in the US (20%) and the UK (22%) are the most optimistic.

Telecommunications CEOs are the most pessimistic about the long-term success of their business model, with 46% expressing doubts about the future. Manufacturing, health care, banking and capital markets, metals and mining, and technology CEOs all surveyed at more than 40%.

Changing customer preferences, regulatory changes, and skills shortages were cited as the factors most likely to affect profitability in their industry over the next decade, according to the survey.

2. How much is your mood today affecting your view of tomorrow?

CEOs are pessimistic about global economic growth this year — a significant swing from last year's optimistic outlook, when 77% expected an increase in global growth.

Last year's optimism, the survey said, was hurt by events such as Europe's largest land war since World War II, knock-on effects that include surging energy and commodity prices, and accelerating general wage and price inflation.

Not everyone was negative. CEOs in Africa, Brazil, China, Japan, and the Middle East are about as confident in their growth prospects as they were last year.

3. How much time and money are you investing in the future?

CEOs want to spend more time reinventing their business. Right now, they spend 53% of their time driving current operating performance. Ideally, they would like to reduce that number by ten percentage points in favour of evolving their business and its strategy to meet future needs.

For many global CEOs, technology and reinvention-oriented investments are top concerns. About three-quarters of companies are focused on automation, upskilling, and deploying advanced technologies such as artificial intelligence. About 60% in each of those areas are focused on reinventing the business for the future, and 40% are concentrating on preserving the current business. "That 60/40 ratio was remarkably consistent across the spectrum of investments — another reflection of the balancing act that CEOs are striving to strike," the report said.

— To comment on this article or to suggest an idea for another article, contact Kevin Brewer at Kevin.Brewer@aicpa-cima.com.