CEO's predictions for 2024
The point of view by the participating CEOs at the end of 2023
ceo osszegzo
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Outlook: cautious optimism
It is clear from personal interviews conducted with 297 Hungarian CEOs that compared to last year, when 76% expected a decline in the rate of global economic growth and 85% expected the same for Hungarian economic growth, Hungarian CEOs are now more optimistic. The majority expect economic growth: 54% believe the global economy will improve, while 60% believe Hungarian economic growth will pick up in 2024. Another 22% predict a slowdown both globally and in Hungary.
However, for the first time this year, Hungarian CEOs are more optimistic about economic growth than about their own revenue prospects; the percentage of those who are confident about their company’s revenue growth in 2024 has fallen to 2012 levels (47%).
“The transformation imperative also means that the opportunities for extensive growth have largely been exhausted: CEOs do not anticipate an increase in revenues, and the need to increase headcount is more about ensuring skilled labour than about increasing numbers”
Hungarian CEOs’ expectations have changed a lot over the past year. While they are less confident about their own prospects for revenue growth, the level of concern about the negative impact of external factors has remained unchanged. Inflation remains the top concern for CEOs (51%), followed by skills shortages (48%), macroeconomic volatility (37%), geopolitical conflict (36%), and cyber risks (35%); at least one third of CEOs are concerned about these threats as significantly affecting their profitability. The general unease seems to have subsided: perceived exposure to macroeconomic volatility and geopolitical conflict has declined the most, while concerns about climate change and cyber risks have not changed since last year.
The reinvention imperative
More than half (58%) of CEOs plan to increase prices and more than a third (36%) anticipate increasing headcount over the next 12 months. And it is still true, as we reported a year ago, that 43% of Hungarian companies would no longer be viable in ten years’ time if they continued on their current path.
Over the past five years, CEOs improved the way their company creates, delivers and captures value by developing novel products or services (54%), adopting new technologies (44%) or developing new technologies in-house (32%), and forming new strategic partnerships (47%).
While two-thirds of CEOs report reallocation of resources (financial and human) between core business activities year to year, most companies have only attempted meaningful transformation in response to changes in customer preferences (55%), technological change (44%), government regulation (48%) or competitor actions (30%). CEOs expect more pressure over the next three years from factors that will drive change.
In this ecosystem, government regulation is two-faced: nearly half (48%) of CEOs say it drives change, while more than one-third (35%) say it hinders change. Other barriers inhibiting transformation include bureaucratic processes in the company (20%), lack of technological capabilities (20%), and limited financial resources (19%).
"CEOs perceive enormous inefficiencies across a range of their companies’ routine activities – such as emails, procurement, hiring, and decision-making meetings – viewing roughly 29% of the time spent on these tasks as inefficient. Performing administrative tasks as efficiently as possible is key to transformation"
Generative AI is disrupting business operations
Generative AI was the hottest tech topic of 2023. There has been much talk about it, but generative AI has been adopted by less than a fifth (18%) of companies, and 27% of CEOs say their company has changed its technology strategy because of generative AI. Exceptions include technology, media and entertainment, and telecommunications, where generative AI adoption is much farther ahead than in other sectors; here hopes and fears are also above average.
While corporate adoption rates are low, expectations are already high for the near future regarding the transformative potential of generative AI. Over the next year, about half of CEOs expect AI to improve product or service quality (52%), enhance their company’s ability to build trust with stakeholders (45%), and increase efficiency at work (56%). Within the next three years, six in ten respondents anticipate generative AI will not only require new skills from their workforce (68%), but will also change the way their company creates, delivers and captures value (60%), and increase competition (63%).
Four-fifths of respondents predict generative AI will increase their productivity and efficiency at work (86%), and two-thirds (68%) expect it to improve profitability in the next five years.
Of course, there are also concerns about the role and impact of generative AI: nearly three-quarters (72%) of CEOs mentioned increasing cyber risks related to AI over the next 12 months; and even more (77%) are concerned about this within the next five years. Over half (52%) of CEOs agree that generative AI is likely to increase the spread of misinformation in the next 12 months, while 71% envisage such risk over the next five years. CEOs also expect generative AI to increase legal liabilities and reputational risks: 53% are concerned about this in the next 12 months, and 62% over the next five years.
Climate action: investing in energy efficiency
This year, fewer CEOs said they are concerned about the impact of external factors on their company. The exception is climate change: CEOs show the same level of concern about its negative effects as last year. While this is true for only about a tenth (13%) of CEOs, the vast majority report that they have already started the transition to more climate-friendly operations or plan to start it in 2024, and offset the impacts of the energy crisis that are of direct concern to them and their clients.
Most CEOs have undertaken to improve energy efficiency (84%); innovate new, climate-friendly products, services or technologies (64%); or develop solutions that support their clients’ climate-resilience (52%).
About half (47%) of companies are upskilling their workforce, and 40% are incorporating climate risk into financial planning.
However, 13% of respondents do not consider it their responsibility to reduce their emissions; and surprisingly, an outstanding proportion of these companies are AI champions in telecommunications and entertainment.
The two biggest impediments to decarbonisation are lower hurdle rates for climate-friendly investments (45%) and regulatory complexity (44%). About four in ten CEOs report that they accepted lower hurdle rates for climate-friendly investments than for other investments in the past 12 months – in most cases less than six percentage points lower.
The CEO’s role in the company
We have seen that CEOs’ daily activities are shaped by reallocation of resources, technological and regulatory changes, macroeconomic conditions, climate and cyber threats, and the transformation imperative, while 30% of the time spent in their company on administrative processes is inefficient. What would CEOs rather do? In what areas would they like to have more say?
Four-fifths of Hungarian CEOs want to pay more attention to solving their organisation’s human resources issues (80%), focusing primarily on organisational culture (94%), employer branding (66%), and employee retention (64%).
In addition, almost four-fifths (78%) consider it important to improve their own digital skills (three-quarters also of their colleagues), and 62% want to be closer to making technology decisions – they would like greater involvement in organisational matters related to business development (63%) and forming strategic partnerships (56%).
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CEOs are less concerned, cautiously optimistic
