CEOs rewrite the rulebook in pursuit of growth

Two-thirds of CEOs say that agility is the new currency of business and that if they don't adapt, their business will become irrelevant

LONDON, June 13, 2019 /CNW/ - CEOs are faced with a stark choice. In the face of unparalleled environmental, economic and technological change, they are looking to grow their businesses by creating the organizational agility to disrupt existing business models and challenge long-held market orthodoxies.

According to the fifth KPMG International Global CEO Outlook, just over half of CEOs are confident they will succeed but are realistic, with 53 percent projecting cautious three-year growth of up to 2 percent (down from 55 percent in 2018). As with 2018, they are also maintaining a positive three-year growth outlook for the global economy, although this has slightly fallen from 67 to 62 percent over the last 12 months. This confidence is also shown by their commitment to hire, with 36 percent of CEOs projecting to add more than six percent to their workforce in the next three years.

"A successful CEO now needs to be an agile CEO," said Bill Thomas, Global Chairman, KPMG International. "Succeeding in a world of volatility and uncertainty requires different leadership skills, particularly in large, multi-national organizations. It's no longer a question of simply defending your position and using scale to maintain competitive advantage. Today, CEOs need to be comfortable disrupting their business models by forging new strategic partnerships, considering alternate M&A strategies and increasing the skills of their workforces."

Climate change driving a multi-risk operating environment
CEOs named climate change the biggest risk to their organization's growth, the first time in five years it was rated a top concern compared to technological, territorial, cyber and operational risks. But with only a small margin between each of them, it paints a picture of a complex and ever shifting risk landscape.

The innovation disconnect
A majority of CEOs (84 percent) believe a 'fail-fast' culture is required in today's marketplace, in which lessons from failures are learned quickly, yet only 56 percent say that kind of culture is in place in their organization. Eight out of ten CEOs (84 percent) are looking to change the makeup of their leadership teams to disrupt the status quo.

Cyber security to innovation
Cyber continues to be high on the CEO agenda, despite falling from the second highest risk last year to fourth this year. In 2019, a larger group of CEOs (69 percent vs 55 percent in 2018) say a robust cyber security strategy is critical to driving trust with key stakeholders and most (71 percent) view information security as a key factor in their broader innovation strategy.

Acquiring expertise through M&A
For many CEOs, M&A presents the best opportunity to upgrade digital capabilities with pace. A proactive M&A strategy is on the agenda for 84 percent of CEOs who have a moderate or high M&A appetite for the next three years. Driving this appetite is the ability of M&A to transform a business model faster than organic growth.

Capital investment
When asked to prioritize between buying new technology or developing their workforce to improve their organization's resilience, CEOs favored technology two to one (68 vs 32 percent).

AI experts take note
Artificial intelligence (AI) is on the minds of CEOs, yet only 16 percent have implemented AI and automation programs. A further 31 percent are still at the pilot stage, while 53 percent admit to undertaking a limited AI implementation. Yet 65 percent of CEOs believe the inclusion of AI and automation will create more jobs than it eliminates.

Continues Thomas, "All together, this year's survey is telling us that we've entered a new era of leadership. Agility comes from balancing a CEO's instinct with having confidence in what the data is telling you. Strategic decisions require data that has bias removed. It's no longer enough to seek "big" data, instead CEOs must use technology to uncover quality data. Only through this will they create the organizational resilience to drive growth."

To view additional information about the study please visit www.kpmg.com/CEOoutlook. You can also follow the conversation @KPMG on Twitter and Instagram using #CEOoutlook.

Notes to Editors:

About KPMG's CEO Outlook
Now in its fifth year, the KPMG CEO Outlook provides an in-depth three-year outlook from thousands of global executives on enterprise and economic growth. Each year the report builds upon answers from previous surveys to help ensure a consistent year-over-year view of the global economy. It also includes new and changing questions to capture CEOs' outlook on trending topics in the market.

The 2019 survey covers 1,300 CEOs in 11 key markets (Australia, China, France, Germany, India, Italy, Japan, Netherlands, Spain, UK and US) and 11 key industry sectors (asset management, automotive, banking, consumer and retail, energy, infrastructure, insurance, life sciences, manufacturing, technology, and telecommunications).

A third of the companies surveyed have more than US$10B in annual revenue, with no responses from companies under US$500M. The survey was conducted between 8 January and 20 February 2019. NOTE: some figures may not add up to 100 percent due to rounding.

About KPMG International
KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 153 countries and have 207,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

SOURCE KPMG International

For press requests, please contact: Amy Greenshields, KPMG International, [phone], [email protected]

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