2016 US CEO Survey top findings

US CEOs believe growth will flow to companies that are both better at reading the dangers and faster in responding to the opportunities.

Running a global business is poised to become even more complex during 2016. Last year, CEOs were concerned about increasing regulation, the rapid development of technology and its potential to disrupt, and whether they could attract the talent they need to continue to grow. While those concerns have not significantly abated, new concerns have arisen.

In 2016, US CEOs recognize that trade, economic models, and regulatory frameworks are splintering increasingly along regional or national lines. More than their peers globally, US CEOs see a threat to the open Internet that many businesses rely on. They worry about harnessing technology needed to unlock the possibilities presented by the increasing data available while safeguarding that data and other assets.  

How do they respond? They are going back to their core focus on customers, regulators and talent. They are working to make clear the connection between what their organizations can do better than any other with how they’re going to get it done.

CEOs expect that in the near future, many of their customers and prospective employees will seek to understand the “purpose” of business and the impact that operations have on the wider world. And where customers and talent go, investors will follow. As eBay Inc. President and CEO Devin Wenig puts it, with competition coming from every angle, “purpose doesn’t have to be a do-good mission. Purpose is, ‘What’s the hole in the universe if your company isn’t there?’ To me, that sits above your brand, above your strategy, above your operations.”

Ultimately the CEO must deal with matters of the head and the heart to secure the confidence of all their stakeholders to move ahead.

What US CEOs expect in 2016

1. US market prospects to outshine in low-growth world

While there are regional variations and pockets of deep industry disruptions, US CEOs see the American economy steadying in 2016. A healthier employment market and low energy costs are two important indicators flashing green, despite the weakness in oil and gas capital spending. The hope is that the US consumer and services demand follow through.

Confidence in global growth has weakened. Most US CEOs (59%) predict more of ‘the same’ in 2016—meaning an uneven-to-slowing pace of economic growth in key markets in Europe and China. Dislocations are more than economic. Geopolitical uncertainty, violent attacks and financial market volatility can deeply affect customers, employees and business partners.

As the year unfolds, CEOs foresee pressure on the topline in 2016. Fewer (33%) are ‘very confident’ in revenue growth during the next 12 months than they were at this time last year (46%). Just under half (47%) of US CEOs expect to expand headcount in their companies this year, which is down from 59% a year ago.

As for CEOs operating in the rest of the world: Hopes are high for the US market. For the second year in a row, more respondents globally rate the US a top overseas market than any other.

"We’re struggling with demand growth to drive things forward, and we’re in a period that’s going to be tough. One thing that has helped the US has been the strengthening of the dollar. Obviously, that’s been negative on the commodity side in the business we’re in, but around the world right now we’re searching for the big stimulus or the growth that’s going to help kick-start the overall economy."

John J. Christmann IV, CEO and President of Apache Corporation

"The US economy has experienced a couple of bumps, but we see it as relatively stable. We haven’t seen any indications of a slowdown. Our clients are still out there building their businesses, looking for new sources of revenue, and trying to cut costs."

Lisa A. Hook, President and CEO of Neustar, Incorporated

2. Over-regulation to continue to pose a threat to their business growth

Business leaders do not expect regulatory complexity to ease in 2016. Concern about further increases in regulation—and the impact regulation has on investment and innovation—is at its highest level in seven years of PwC Surveys of US CEOs. Understanding why regulation is there in the first place, rather than focusing only on interpretation and compliance can help ease the stand-off.

CEOs are including regulatory responsibilities in their technology and innovation planning with an eye toward efficiency, compliance, and possibly, a competitive advantage. As Quicken Loans Inc. CEO Bill Emerson puts it, “we build those regulations into our systems and processes, not leaving them for someone to figure out on a manual spreadsheet. Our technology will help people comply with what needs to be done, and because we can do it better, faster and more efficiently, that’s an advantage.”

“Whether it’s the Treasury or the Department of Justice or the SEC or the Federal Trade Commission, every one of these groups is looking at us in a more scrutinized fashion. For our part, we just have to make sure that we are following the letter of the law throughout, and, even with that, know that you’re going to get a lot more questions than you did before and accept that as the new way of doing business.”

Timothy P. Walbert, Chairman, President and CEO of Horizon Pharma plc

3. Regionalization in trade and divergence in economic models and regulatory frameworks, with threats to open Internet

The Trans-Pacific Partnership (TPP) trade agreement among the US, Japan and ten other Pacific Rim economies in 2015, while not yet ratified, delivered fresh momentum to regional trade projects. There are more in the works. Smaller economies are pooling their strengths; consider the ASEAN Economic Community (over 600 million people) and in Latin America, there is the Pacific Alliance (215 million people). The potential for access to customers at a scale that could begin to rival US or China market dominance is starting to take shape.

A downside to the growth of regional and bilateral pacts is an increased complexity in operating across borders. There are over 100 free trade projects in Asia Pacific alone. In addition, US CEOs sense the threat to an open Internet more acutely as access splinters over national assertions and privacy rights. They are having to unlock data possibilities, and safeguard that data and other assets at a critical juncture in the growth of digital economy in the US and globally.

“All of a sudden, the energy dynamic in the world has changed… I think the second big part that’s transforming the world economy is this emergence of regional and bilateral trading systems.”

Ajay Banga,  President and CEO of MasterCard

“Now you need a strategy for China, for Europe, for the US, for Latin America, in terms of where your growth is going to come from and how to deploy your resources.”

Mark Vergnano, President and CEO of The Chemours Company

“Today’s global volatility is caused by trends in both the business and political worlds, which are increasingly interconnected. Multinational corporations in the United States, Europe, and Asia derive a significant proportion of their business from overseas markets. That interconnectivity and reliance on certain geographies has led to different volatile effects in some countries. That situation is here to stay, because businesses continually want to grow domestically and overseas.”

Jaymin B. Patel, President and CEO of Brightstar Corporation

4. Customers and other stakeholders will expect business to demonstrate a higher purpose over the coming years

US CEOs believe that a fundamental change is afoot in how they manage their relationships with customers. Currently, 85% of US CEOs agree that customers make purchasing decisions based on a mix of cost, convenience and functionality. But they believe that over the next five years, a greater number of customers will seek out products and services from organizations that address wider stakeholder needs, like health focus or environmental responsibility or societal consequences.

Customers are expected to seek additional information about companies and their products and assess their trust in the accuracy of that information. CEOs are already thinking about what information customers—and other stakeholders—may require in the years ahead.

“Our role is to be a source of information, particularly as we move into population health and we work with people over longer periods of time. It will be to push out information through mobile apps, or through other technologies, to those we’re serving. We should be a resource for answering questions and even be a guide to direct them to other resources or connect them in the right places. By doing that, we can lower frustration levels.”

Robert J. Henkel, President and CEO of Ascension Health

5. Prospects improve for laying the groundwork for US tax reform

Frustration with the US corporate tax system has intensified interest on both sides of the aisle in the US Congress to make sweeping changes. CEOs believe there is room for improvement: Just 2% of US respondents say the US has achieved an effective tax system. For most (73%), creating a clearly understood and stable tax system is a top priority for government. Dave Camp, former chairman of the House Ways and Means Committee and PwC’s senior tax policy advisor, believes momentum for change will continue to build during 2016. He considers the proposals from both parties as serious. Camp says businesses ignore the tax reform work on Capitol Hill this year at their peril because there will be significant groundwork on reform.

PwC’s 2016 Tax Policy Outlook details the issues facing the Obama Administration and Congress in advance of the November 8 elections.

“One thing that is misunderstood is the structure and the margin of the restaurant industry, which probably has the lowest profit per employee. That limits the ability to absorb big hits to our cost structure. It’s difficult to understand the impact that taxes and regulations have on our margins, and we need to do a better job of educating people about that aspect of our industry.”

Elizabeth Smith, CEO of Bloomin' Brands, Inc.

“Industry in general needs to feel that we have a more level playing field so we can be competitive in the global marketplace. To do that, we need a better tax situation. The United States, for example, has one of the highest tax rates in the world, at 35 percent, and companies are starting to leave the United States, through corporate inversions, for countries with lower tax rates. The other situation is tax repatriation, where companies bring revenues earned overseas back to the United States without it being taxed. So tax reform is important.”

Denise Morrison, President and CEO of Campbell Soup Company

What US CEOs plan to do

6. Strengthen the technology foundation to set their business apart

US CEOs continue to invest in technology as the most direct path to meaningful innovation and operational efficiency. In 2016, they are thinking about what’s needed to establish a flexible and secure foundation for delivering the services and experiences that will set them apart. CEOs recognize that to move on the forefront of data-driven business, they must also tend to the less-glamorous plumbing—infrastructure, integration, and authentication.

With so many breakthroughs so tantalizingly close, from driverless rides to rapid drug discovery, drones, 3-D printing, artificial intelligence, and the next 2 billion on a mobile device, US CEOs are designing for a business where the touchpoints are poised to grow exponentially. As these technologies cross the threshold from immature to mainstream, CEOs are mindful of the need to build a cohesive digital infrastructure that positions them to really innovate.

Business leaders see the operational challenges. It’s hard work to embed intelligence throughout to make a system adaptive and agile, yet those with a direct line of sight are marking the growth.  

“The biggest [change] in our business is the amount of real time information we are getting from consumers and customers. They are much more connected on a real time basis to what our brands are doing in the markets where we operate. The challenge is to make sense of that information—to process all of the data to understand its implications—and to connect in a real time way with the consumers and customers. That’s probably the most volatile thing that we’re seeing in our markets.”

Mark Hunter, President and CEO of Molson Coors Brewing Company

“... we’ve learned that even with our low cost model, adopting best practices, standard operating procedures, technology that generates better data and insights, and improved analytics for decision making can have a profound impact on our business.”

Andrew Clyde, President and CEO of Murphy USA

“We need technology that’s actually going to animate a physical stay at a physical place with interaction with people. That means not just having the technology at the site up to snuff, but also integrating it all the way through that hotel experience, the point of sale systems, and all the rest of it. It becomes frustrating, because a lot of work has to be done on the infrastructure of that technology before you do the most exciting things.”

Arne M. Sorenson, President and CEO of Marriott International, Inc.

7. Do more deals, especially domestically

The record-setting M&A splurge of 2015 looks to carry over into 2016, as 46% of US CEOs say they’re planning to complete a domestic deal. The drive to actively manage portfolios is twofold—pressure from a new class of activist investors to unlock value and the need to invest in businesses that have the best prospects. Optimizing deals is an imperative.


PwC expects the 2016 deals market in technology, pharma and life sciences, and industrial products to remain active. Plummeting energy and commodities prices led LyondellBasell, the petrochemicals group, to expand existing facilities and build new ones in the US, along with strategic acquisitions in India. To take another example, Apache Corp., an oil and gas exploration company, sold off US$ billions in foreign assets among other difficult cost-cutting moves. “I don’t have a crystal ball on oil prices,” CEO and President John Christmann told PwC. “I try to control what we can control. The bottom line is, we’ve had to push the reset button and really attack the cost structure to gear for a lower-price environment.”

“The greatest enemy of M&A integration is timidity. You need to be bold. When you’re putting together two organizations, you are making something different and that can cause angst. But the consequences of being timid are far worse than those of taking action and pursuing the goals that prompted the merger in the first place.”

John Haley, CEO of Willis Towers Watson

8. Hold fast with China, while recognizing the bumps along the way

US CEOs continue to see opportunities in China despite recent volatility. Over half of CEOs surveyed (56%) ranked China as a top-three ‘most important’ international market for their business growth over the next 12 months. This is little changed from the previous year. Even as China’s industrial economy slows, US CEOs say the fundamentals of a growing middle class and burgeoning desire for related services remain.

“… we need to be in places like China and India, where not only are markets growing stronger and creating more opportunities, but the players are becoming more global, looking to gain volume in our traditional markets.”

Lawrence E. Dewey, Chairman, President and CEO of Allison Transmission, Inc.

“China is doing more innovation, broadly speaking, across the platform, mainly for its own market. Increasingly, companies that are successful in China are coming to the United States, either through investment or acquisition. That’s an area we didn’t expect.”

Greg Becker, President and Chief Executive Officer of Silicon Valley Bank

“When we think about the hotel business, in China we’re advantaged by the fact that numbers of travelers and consumption are growing quickly. Both those things help us, and we see our business in China actually perform reasonably well.”

Arne M. Sorenson, President and Chief Executive Officer of Marriott International, Inc.

9. Anticipate the needs of future customers and other stakeholders

Most US CEOs (74%) believe there are more threats to their business growth today than existed three years ago. At the same time, most also believe (69%) that there are more growth opportunities for their company today, too. With the band of uncertainties widening like this, CEOs want to get a better handle on the risks and prospects for their future growth. They believe growth will flow to companies that are faster at reading the dangers and responding to the opportunities, wherever they may be.

Thus CEOs want to improve how they measure the impact of risk and the value of their innovations. This is not a substitute for everything that is measured today, but it is a way to focus as much as possible on the greatest sources of uncertainty in their business. Next, they want to do more to communicate their values and strategies to reaffirm the core emotions and value of the business. With business changing fast, customers, partners, and employees are eager to understand and participate; CEOs see this changing in their stakeholders. Ultimately the CEO must deal with both of these matters, the head and the heart, to secure the confidence of all their stakeholders to move ahead.

"I don't think any CEO who’s been through the last five years would say they can look forward to the future and feel confident that they’ll be even better at adapting to volatility. I suspect that most CEOs would say they are going to create the most flexible organizations they can, organizations that recognize risks sooner and are more effective in making adjustments, such as changing production schedules, adjusting the number of employees, or taking advantage of new products or services or investment opportunities."

Peter Kraus, Chairman and CEO of AllianceBernstein (AB)

"Our company has been successful in moving from what I call a forecast-deploy-and-monitor approach, which we all grew up with, to a read-and-respond-fast approach, and that’s what allows us to adjust quickly. It used to take us a couple of years to adjust, now it takes just a few months."

Jeff M. Fettig, Chairman and CEO of Whirlpool Corporation

"Our job is to set a path or strategy and leave our business leaders alone to go after the markets they serve, allowing them to be able to read and react quickly. Speed is so important today. Being slow in making decisions is absolutely one of the worst failings of management."

Mark Mondello, CEO of Jabil

10. Ready Millennials for leadership roles

One major milestone of 2015 passed with relatively little fanfare: the Millennials grew up. The ‘digital first’ generation last year became the largest cohort in the US labor force, and the oldest among them are now in their 30s.

Not everyone thinks that this generation is entirely different than others before it, yet there is agreement that top talent want more from work than pay, and that they want to work for companies that reflect their values. Understanding what is motivating people to stay and help grow the business now and in the future is important, because it is changing, CEOs say.

The skills companies need are different, too. Most US CEOs (65%) say they are changing how they develop their leadership pipeline. The next generation of business leaders will have to be comfortable with many new technologies. They will also need to be able to operate in a world with multiple stakeholders and diverse attitudes toward legal systems and values. The definition of ‘global experience’ as a requirement for the C-suite is broadening beyond knowledge of overseas market demand and supply chain intricacies.

“There are great things about Millennials. One is that they have more of a sense of purpose and values than my generation had, and that’s really refreshing. That gives a note of optimism about business going forward.”

David Booth, Chairman and Co-CEO of Dimensional Fund Advisors

“This new world of analytics requires the collaboration of people with very diverse skill sets. For instance, in creating our Science group, our chief science officer has recruited about 100 very diverse people from different scientific backgrounds, coupled with the existing engineers and actuaries. Working together in cross functional teams is what’s needed to be able to solve problems where no single background is going to get you the best answers.”

Peter D. Hancock, President and CEO of AIG

“Even with all the new technology, people skills are actually more important now. Whether it’s providing day-to-day services in our bank branches or managing our data analytics: it’s all about people. So the risk is, can we hire, retain, and develop the top talent and, frankly, will they be happy working here?”

Brian Moynihan, CEO of Bank of America Corporation


©2015 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.

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