No Match Found
By Blair Sheppard, Global leader, Strategy and Leadership for the PwC network and Peter Bartels, Global Entrepreneurial & Private Business leader.
Inflation. Recession. War in Europe. The energy crisis. The aftermath of the pandemic. Supply chain disruptions. It’s hardly surprising that we often hear the challenges facing today’s businesses described as “unprecedented” or even “unique”.
Arguably, similar crises have all happened before. But while today’s crises are not unique individually, two factors are putting all businesses in truly uncharted territory.
Firstly, today’s crises are hitting companies at the same time, while the comparable crises of the past – from the First World War to Spanish flu to the Great Depression – happened in sequence, not simultaneously. So this time you can’t pull them apart and tackle them separately. Put simply, you can’t solve one without thinking about the others. Secondly, this time is different because today’s crises are caused and accentuated by long-term Megatrends. These Megatrends were long in the making but are now finally hitting the world in very real terms.
A sobering statistic in the 26th PwC CEO Survey is that approximately 4 out of 10 CEOs predicted that their business would not be trading in 10 years from now if they continued on their current path. To survive and thrive businesses need to address both the effects of the short term polycrisis and the impact that the long term Megatrends will have on their future.
This requires business leaders to think and act differently, and so 2023 must be a year of true creativity. A year for adapting and reinventing, during which they’ll have to combine the entrepreneurial spirit with speed, foresight and responsiveness to position themselves for future success.
In our view, private businesses will be in the forefront of this change. Why? One reason is that they’re agile by nature and can move faster than listed companies. Another is that they have the latitude to take risks without having to report to public shareholders. A third is their vast experience of reinventing themselves in response to changing market conditions – something many family businesses have done multiple times. Last but not least, the entrepreneurial spirit at the heart of private businesses gives them an edge in times of disruption and flux.
On a practical level, we believe that these five key areas are where private businesses should focus in 2023 and beyond.
All businesses know they need to act on Environmental, Social and Governance (ESG) issues. Now the time has come for real change – going beyond good intentions to create a practical plan that achieves tangible results.
According to PwC’s CEO Survey 2023, 44% of private business CEOs are adjusting their supply chains which is lower than listed company CEOs. Considering the growing geopolitical tensions between the West and countries such as China and Russia, now is the time to reflect on the vulnerability of supply chains.
In the past, private and family businesses sometimes struggled with digital transformation. But now they’re making great strides, often energised by their ‘digital native’ NextGens.
Private businesses gain a competitive edge from their employee relationships founded on shared values and mutual trust. But even the strongest bonds must be nurtured especially given the effects of the pandemic and technology on people’s roles and working patterns.
Our final point runs through all of the above and that’s to never let a crisis go to waste. It also encapsulates this idea of thinking both short and long term. To survive and thrive in the face of multiple disruptions, private businesses may need to consider radical changes to aspects ranging from who owns the business to who takes executive decisions to how it’s funded.
Whatever 2023 brings, it’s a year that will play to private businesses’ inherent strengths. It’s time to leverage those strengths to the full – and focusing on our five key issues will help.