Trends Identified
Creating value in totally new ways
The world has benefited from the development of more general-purpose technologies in the past century than in the previous four combined. Consumers are embracing these advances ever more rapidly. The telephone took 76 years to reach half of all US households. The smartphone reached the same level of penetration in less than a decade.
2014
17th Annual global CEO Survey
PWC
Developing tomorrow’s workforce
Demographic trends are having profound implications for the workplace. The global population is expanding; it will hit 8 billion in 2025. But this growth won’t be uniform, since declining fertility rates will hit some countries much harder than others. By 2020, the median age will be 43 in Europe, 38 in China and just 20 in Africa. The working-age population is, as a result, undergoing major geographic shifts. It’s still growing rapidly in countries like India, where nearly a million workers will swell the labour force every month for the next 20 years. But it’s already peaked in China and South Korea, and has been falling for more than a decade in Germany (see Figure 7). Urbanisation is causing further upheavals, with the number of city dwellers projected to rise by 72% over the next four decades. The concentration of people and resources in a compact area is a powerful combination. Cities currently generate about 80% of global economic output. 16 But uncontrolled urbanisation can also result in overcrowding, poverty and poor schooling – conditions that neither attract nor nurture talent. And it’s talent that’s the main engine of business growth. So one of the biggest issues CEOs face, as these huge demographic changes occur, is finding and securing the workforce of tomorrow – particularly the skilled labour they need to take their organisations forward.
2014
17th Annual global CEO Survey
PWC
The disruptive decade
The global economic outlook is certainly enough to test even the strongest enterprises. The eurozone is still mired in recession and the US economy is forecast to expand by just 2.2% this year.1The situation in some of the growth markets is also getting harder, as the slowdown in the BRIC economies demonstrates. While market conditions in many countries are still very difficult, CEOs are more positive about the prognosis than they were last year: 52% think the global economy will stay the same for the next 12 months and only 28% believe it will shrink. In 2012, by contrast, 48% were convinced the global economy would contract.But economic plateaux aren’t exactly grounds for cheer. That’s why short-term confidence about the prospects for revenue growth has continued falling (see Figure 1). CEOs in Western Europe are especially nervous. Only 22% feel very confident they can increase their company’s revenues in the coming 12 months, compared with 53% of CEOs in the Middle East and Latin America.
2013
16th Annual global CEO Survey
PWC
What worries CEOs most?
Today’s CEOs are concerned about a wide range of potential and ongoing threats to their business growth prospects. These include catastrophic events, economic and policy threats and commercial threats.We asked CEOs about their organisation’s ability to cope with the potential impact of various disruptive scenarios. The majority thought their organisations would be negatively affected, with major social unrest being cause for the greatest concern (see Figure 3). Indeed, CEOs are far more concerned about this than they are about a slowdown in China, possibly because they’ve already factored the latter into their calculations.
2013
16th Annual global CEO Survey
PWC
A three-pronged approach
So what are CEOs doing to make their organisations more resilient in this era of ‘stable instability’? Our survey shows that they’re taking three specific approaches:A) Targeting pockets of opportunity: CEOs are focusing on a few well-chosen initiatives, primarily in their existing markets, to stimulate organic growth. They’re more wary about entering new markets or engaging in mergers and acquisitions (M&As), and diluting their resources too much. B) Concentrating on the customer:CEOs are looking for new ways to stimulate demand and foster customer loyalty, such as capitalising on digital marketing platforms and involving customers in product/service development. But they’re also aiming to keep their R&D costs down and make the innovation process more efficient. C) Improving operational effectiveness:CEOs are balancing efficiency with agility. They’re trying to cut costs without cutting value or leaving their organisations exposed to external upheavals. They’re also delegating power more widely and collaborating with organisations to share resources and develop new offerings.
2013
16th Annual global CEO Survey
PWC
It’s a question of trust
We’ve discussed what CEOs are doing to make their organisations more agile, more appealing and more profitable. To succeed in, and align, these three goals, CEOs know they’ll have to repair the bridges between business and society. CEOs also recognise the important role that business can play in addressing social challenges and improving national outcomes.
2013
16th Annual global CEO Survey
PWC
Confidence disrupted
The year 2012 unfolds with wide disparities in potential outcomes in many economies, and little prospect of a coordinated turnaround. Just 15% of CEOs believe that the global economy will improve this year (see Figure 2). Incremental improvements in business optimism seen in the PwC 15th Annual Global CEO Survey over the past two years are reversing. In a sign of converging economic fortunes, confidence declined in parallel among CEOs across all regions, except for the Middle East and Africa.
2012
15th Annual global CEO Survey
PWC
Balancing global capabilities and local opportunities
A sensible strategy for globalisation today means far more than building cheaply in one location and selling in another. What has changed is the way operations are configured. India’s Tata is now the largest manufacturer in the UK. Taiwan’s HTC pioneered the use of Google’s Android software. New operational strategies are required to compete successfully in such markets.
2012
15th Annual global CEO Survey
PWC
Resilience to global disruptions and regional risks
CEOs report that they are less likely this year to focus on changing approaches to risk management than on other areas of priority, from strategies for talent to organisational structure. Significant defensive steps have already been taken: balance sheets have improved and cash reserves have been built. Enterprise risk is now more frequently discussed in boardrooms.
2012
15th Annual global CEO Survey
PWC
The talent challenge
Theoretically, finding a good candidate to fill a position should now be a very straightforward exercise. There have never been as many educated people in the world, nor has it ever been as simple for employers to tap this vast pool online. Highly skilled talent is also highly mobile; but just in case, networking advances also mean that many more tasks can be handled remotely or outsourced.
2012
15th Annual global CEO Survey
PWC