From: Your Global CEOs—Here’s What Really Keeps Us Up at Night

From: Your Global CEOs—Here’s What Really Keeps Us Up at Night

This year PwC released their 20th Global CEO Survey. They share insights from 1,379 CEOs from 79 countries revealing issues such as competing in the age of divergence, managing man and machine, gaining connectivity without losing trust, and making globalization work for all.

Admittedly, I’m a bit of a nerd and get rather excited for the report each year. The second the New Year comes around, I think, “The PwC survey will be out soon!” I play a game with myself, reflecting on the previous year and trying to predict what will be in the survey this year and what this means for my business. There is always a lot I never expected and some I do expect. This year, I predicted leadership challenges, the skills gap/shortage, and cybersecurity would be top of mind for global CEOs in 2016. After Brexit and the US election results, I thought nationalism and the threat to globalization would keep global CEOs awake at night. My predictions were correct on all fronts. But, the nuances under these issues are a bit different than I anticipated.

For example, 44% of global CEOs surveyed thought one of the core attributes that would be needed by future CEOs is the ability to give and receive feedback. Also, future CEOs will need to embrace more decentralized decision making by expanding the C-suite and building diverse teams. One common myth is that strategic decisions are made in the boardroom. They are not. They are made offline, during one-on-one meetings and subgroups. Big decisions occur because of many small decisions at various levels of the organization. Various “experts” make them at every level of the organization. The boardroom meetings are the formal meetings needed to ratify decisions that have already been made outside of the boardroom. Building a diverse workforce and leadership team will enhance corporate strategic decision-making.
The skills shortage is the third-greatest concern for global CEOs, only behind uncertain economic growth and over-regulation! They do not have and cannot recruit for the skills needed. They need people with soft skills such as problem solving, adaptability, leadership, creativity, and innovation, as well as emotional intelligence. They need skills that cannot be replicated by machines. CEOs (77%) are concerned that skills shortages could impair their company’s growth.

Of course, cybersecurity is a threat to growth for 61% of the CEOs surveyed. But it was behind greater threats, such as uncertain economic growth (82%), over-regulation (80%), the skills shortage (77%), geopolitical uncertainty (74%), speed of technological change (70%), exchange rate volatility (70%), increasing tax burden (68%), social instability (68%), and the changing consumer behavior (65%). And, 64% agreed that how they manage people’s data would differentiate them.

Regarding globalization, CEOs believe it has helped free up flows of money, people, goods, and information (95%); facilitate universal connectivity (95%); and create a skilled workforce (90%). However, many believe it has not helped avert climate change (28%), enhance the fairness and integrity of global tax systems (35%), and close the gap between the rich and poor (44%). To me these lists should be reversed. We need to find a way for globalization to avert climate change or none of us will be around to enjoy the benefits of universal connectivity. The majority of CEOs stated, “The best way for business to help spread the benefits of globalization more widely is to have more and better collaboration with government.” A collaborative move can benefit us all, but only with a keen undertone of transparency. I would throw in a three-way collaboration with academia. Imagine a real collaboration among business, government, and academia.

The issues that I didn’t expect to be top of mind for 2016 global CEOs were the deep concern and focus on corporate trust and purpose, the very real struggle with strategic planning, and the changing mix of countries CEOs target for growth.

It was revealed that corporate strategy must be built upon a long-term vision of growth, access, equality, innovation, and human endeavor. Human endeavor is a new strategic concept. Corporate purpose must be built on trust and that is accomplished through transparency. Transparency has become a corporate mission and a driving force in stakeholder engagement. CEOs, now more than ever, think about the ethical implications of their decisions and actions. Over 90% of CEOs surveyed agreed, “It’s more important to have a strong corporate purpose that’s reflected in our values, culture, and behaviors.” Without transparency, corporations will lose stakeholder trust. PwC stated that:

“Competitive advantage will go to those with the greatest capacity to build relationships built on trust, which comes from sharing deep, sustainable values and purpose.”

and

“Businesses that ignore the power of the people will jeopardize the growth they seek, and those that articulate their purpose and demonstrate the value they profess will thrive.”

One CEO stated, “...to make a ten-year plan would currently be a utopian endeavor.” Given the threats of uncertain economic growth, over-regulation, skills shortage, geopolitical uncertainty, and the speed of technical change, long-term planning is next to impossible. PwC noted that a single event could trigger a need for wholesale strategic changes. Thus, there are very real struggles with short- and long-term strategic planning. Maybe next year’s survey will show a movement toward building multiple micro-strategies based on “what-if” scenarios.

Finally, in 2011 the CEOs stated that their growth prospects were China, U.S., Brazil, India, Germany, Russia, and the U.K., respectively. I remember a few years ago there was a lot of focus and strategy on the growth in the BRIC countries—Brazil, Russia, India, and China. But, for 2017, global CEO prospects are the U.S., China, Germany, U.K., Japan, India, and Brazil. The U.S. is at the top of the list for growth prospects because of its economic growth. China dropped due to concerns about a debt bubble. Surprisingly, the U.K. is more popular than last year, but there are deep concerns over how it will negotiate Brexit. CEOs now have less enthusiasm about India, possibly due to slow structural reforms. Brazil has fallen toward the bottom of growth prospects because it is in a deep recession, and Russia is out of the top 10 due to depressed oil prices. Obviously, growth prospects can change quickly, and it’s more challenging for CEOs to plan and determine their growth mix.

Overall, this year there was less discussion about big data, analytics, workforce training, and talent management than in previous years. No way does this mean these are not still issues of focus for global CEOs, but they got trumped this year by more immediate political and social issues. However, PwC noted that as HR departments slowly but surely increase their use of data analytics, talent management is turning from an inexact art into a science. That’s good news for those of us who are social scientists.

On a very positive note, PwC stated that the twin forces of globalization and technical progress have helped to boost living standards and lessen inequality between countries. This achievement has lifted a billion of people out of extreme poverty! I would say that should be something that helps global CEOs sleep at night. I know it helps me.

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