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Even as their views on the economy improve, a growing share of executives are responding to external pressures by changing the way they do business.
For CEOs, reinvention momentum is building
How much pressure are CEOs feeling to reinvent their business? A lot, according to a key finding from PwC’s 27th Annual Global CEO Survey, which polled more than 4,700 executives in 105 countries and territories. Even though optimism about the overall economy is up in this year’s survey—the share of respondents who believe global economic growth will improve over the next 12 months has more than doubled—that optimism has not translated into a consensus to stay the course. On the contrary, 45% of CEOs say their business won’t survive more than ten years on its current trajectory (up six percentage points from last year). What’s more, as the chart above shows, CEOs say that disruptive megatrends—particularly ones that spur business-model change, such as technological advancements—are considerably more likely to affect the fundamentals of their business in the next three years than they have in the past five.
As more CEOs respond to these pressures by making big moves to support reinvention, they’ll have to overcome three major hurdles:
- Strategic inertia. Nearly two-thirds of CEOs reported reallocating 20% or less of their company’s resources from year to year, and almost 30% of CEOs cited resource reallocation of 10% or less. Those findings represent potential missed opportunities, as higher levels of annual reallocation in the survey were associated with both greater levels of reinvention and higher profit margins. Add to this the fact that nimble resource reallocation—from strategic decisions around portfolio renewal to day-to-day, project-level moves—is an acknowledged attribute of high-performing companies. CEOs should lend critical attention to resource reallocation decisions to boost their organisation’s reinvention-readiness.
- Accelerated tech change. CEOs see the blistering pace of AI adoption as a mixed bag. Roughly 60% of respondents expect generative AI to improve the quality of their company’s products or services. Nearly 70% say it will increase competition, drive changes to their business models and require new workforce skills. More than half believe it will probably increase the spread of misinformation in their organisation. Executives need to set clear priorities to focus on the biggest risks, and create rigorous internal controls around data privacy, paying special attention to how vendors and other third parties manage AI risks. They’ll also need to develop sophisticated approaches to cyber-risk, such as using gen AI itself for cyber defence.
- Organisational inertia. Survey respondents say that 40% of the time spent on meetings, administrative processes and emails is inefficient, as is 35% of time spent in decision-making meetings. Executives need to recognise that many of these perceived constraints fall squarely within their wheelhouse, and use the levers over which they have some degree of control—bureaucratic processes, workforce skills, technological capabilities—to overcome the barriers, which are a drag on both efficiency and reinvention momentum.
Explore the findings of PwC’s 28th Annual Global CEO Survey.
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