CEOs navigating uncertainty in the US:

The view from abroad

Concrete actions to overcome near-term concerns and prepare for long-term success — such is the consensus approach of the 214 CEOs of international companies with major US operations who participated in PwC’s 2020 Global CEO survey.

Inbound CEOs’ responses are significant not just for what they say about their own organizations, which are often major stakeholders in the US and global economies: 65% of Inbound CEOs in our survey lead corporations with over $1 billion in annual revenue. These leaders’ insights also indicate what those foreign corporate leaders who best know the US are expecting — and what actions they plan to take.

Two key themes run through the responses. The first is that a majority of Inbound CEOs — whose companies frequently have operations all over the world — consider the US the top growth country for their business. The second is that these leaders are tempering long-term confidence with near-term caution.

Amid rising concerns about global growth and their own revenue prospects in the immediate future, Inbound CEOs are deploying strategies to address 1) growth in uncertain economic times, 2) heightened technology concerns, 3) upskilling challenges and 4) climate change risks and opportunities.

1. Growth in uncertain economic times

Forging a long-term vision amid near-term caution

Global CEOs as a whole are cautious — with their confidence in growth and revenue prospects at the lowest level since 2009 — and Inbound CEOs are even more wary. Only 13% of Inbound CEOs expect global growth to accelerate over the next 12 months. Sixty-five percent say it will decline. Only 23% of Inbound leaders are “very confident” that their own revenue will increase in the next 12 months.

Why such caution? The list of top five concerns (cited by respondents as “extremely concerning”) shows significant changes from last year (see Figure 1.) Cyber threats’ top ranking (cited by 46%) is consistent with a long-term vision, since a breach that leads to a loss of consumer trust — and thereby an organization’s ability to gather, secure, analyze and monetize data — can severely hurt a company’s long-term prospects in the Fourth Industrial Revolution.

Although climate change did not make the top five threat list, 23% of Inbound leaders cited it as “extremely concerning” — a promising sign for these leaders’ readiness to address climate change’s challenges and opportunities (see Climate change section.)

Cyber threats is #1 on list of concerns

Reaffirming their commitment to the US

Despite threats, Inbound CEOs are not merely staying in the US. They are planning to grow. When asked to choose among 127 countries, 51% of Inbound CEOs (the vast majority of whose companies span the globe) chose the US as one of the three best places in the world for growth (China was second at 41%, with Germany third at 17% — see Figure 2.)

For reasons that include increased scrutiny by US regulators, Chinese CEOs’ view of the US as a growth market has fallen sharply: only 11% called it a top three destination, compared to 59% two years ago. But overall, 66% of Inbound Asia-Pacific CEOs still consider the US a top-three destination, as do 59% of Inbound CEOs from Western Europe.

Near-term concerns are not inhibiting long-term plans for growth in the US (see Figure 3.) A majority of Inbound CEOs (59%) are not merely relying on “conservative” measures such as organic growth and operational efficiencies; they are planning to launch new products or services. Many are also still on the hunt for deals: a solid 43% (compared to just 35% of the global sample) are looking to M&A for growth.

Inbound CEOs are also preparing for a new challenge: 64%, compared to only 50% of the global sample, expect the Internet to become “more fractured,” due to new government legislation about content, commerce and privacy.

Figure 2. US continues to be top growth territory for Inbound CEOs
Figure 3. US Inbound CEOs seek growth through efficiencies, collaborations and deals
2. Heightened technology concerns

Addressing security threats and regulatory hurdles

Cybersecurity isn’t a new concern, but beefing up protection has shot up the priority list. Between 2019 and 2020, there has been a 50% increase in the number of Inbound CEOs citing cyber threats as a top concern, moving it to #1 from #6 on the threat list.

The reason? Regulators and public concerns certainly play a role, but most of all, Inbound CEOs are moving to protect their organizations against a concrete threat: hackers’ increasing sophistication (see Figure 4.)

Inbound CEOs are also buckling down for stricter technology regulation: 76% expect more legislation to force the private sector to regulate internet content (compared to 71% of the global sample.) Forty-six percent expect legislation to force companies to compensate individuals for the personal data they collect (51% global.) And a surprising 77% — compared to 68% of the global sample — expect legislation to break up dominant technology companies.

With their unique vision straddling their home countries and the US, Inbound CEOs are also preparing for a new challenge: 64%, compared to only 50% of the global sample, expect the Internet to become “more fractured,” due to new government legislation about content, commerce and privacy. On privacy specifically, Inbound CEOs are similarly wary: only 37% (compared to 41% of the global sample) say that governments are successfully designing privacy regulations that both increase consumer trust and maintain business competitiveness.

The technology scenario is therefore full of challenges: the ever-present need to keep up with cyber threats, as well as stricter regulation that may fracture the Internet while failing to balance consumer and business needs.

Figure 4. Top six factors shaping strategy against cyber and digital threats

77% expect legislation to break up dominant tech companies; 64% expect government legislation to lead to a more fractured Internet

3. Upskilling challenges

ROI needed — and ROI found

Upskilling that provides real results is desperately needed, due to four accelerating imperatives: increasing job automation, decreasing talent availability, decreasing mobility of skilled labor, and an aging population (see Figure 5.)

Figure 5. Increasing job automation - Decreasing talent availability
Decreasing mobility of skilled labour - Agent talent

Fortunately, Inbound CEOs who invest in upskilling are achieving results. Similar to their global peers, more than three quarters of Inbound CEOs call their upskilling programs “moderately” or “very” effective in talent acquisition and retention, business growth, reduced skills gap, greater innovation, a stronger corporate culture, and higher workforce productivity (see Figure 6.)

Clearly, upskilling pays off, and just as clearly, there is room for improvement, as only a minority described their upskilling initiatives as “very effective.” And in one critical area, only a bare majority of Inbound CEOs (51%) report “moderate” or “significant” progress in establishing upskilling programs that develop a mix of soft, technical and digital skills — the precise mix that many new business models based on emerging technology require.

Figure 6. US Inbound leaders who invest in upskilling see results

Faster progress needed — and solutions are at hand

Why aren’t Inbound companies moving faster to develop the mix of skills that the Fourth Industrial Revolution requires? Why aren’t more upskilling initiatives “very” rather than just “moderately” effective? When citing the top challenges that their upskilling programs face, Inbound CEOs were more likely than the global sample to cite a lack of resources. They were also less likely to cite concerns about retaining newly upskilled employees (see Figure 7.)

Further resources for upskilling could, therefore, be highly impactful — especially when combined with the techniques of Upskilling 2.0: a digital approach in which business leaders set direction and goals, then stand back: giving employees the tools, platform and incentives (through both compensation and recognition) to learn skills and then use them immediately to perform their work in new, more creative ways.

Figure 7. The #1 challenge to upskilling is “a lack of resources”
4. Climate change risks and opportunities

Looking to lead the green economy

Even if climate change has not cracked the top ten list of threats for Inbound CEOs (see Growth section,) most have assessed the risks and — far more than their US counterparts — they are expecting “green opportunities” in the US. Sixty-nine percent of Inbound CEOs — including 82% of those from Asia-Pacific — say that their organizations have assessed the potential transition risks (such as carbon regulation and technology shifts) to a “greener” economy. That figure puts Inbound CEOs far ahead of the US companies with which they compete: only 52% of US CEOs report having assessed climate-related risks (see Figure 8.)

Most Inbound CEOs also report having assessed potential physical / infrastructure risks of climate change (59%) and say that their stakeholders have “reasonable expectations” about their approach to this challenge (84%). With an awareness of the risks and stakeholders on their side, it is no surprise that 65% of Inbound CEOs (compared to 63% of the global sample and only 43% of US CEOs) expect climate change initiatives to lead to “significant new product and service opportunities for my organization.” (See Figure 9.)

Figure 8 & 9. US Inbound CEOs are well-positioned to compete in the green economy

Thirty-nine percent of Inbound CEOs also expect to benefit from government funds or financial incentives for green investments — only slightly below the 44% of global CEO, and above the 34% of US CEOs, who report the same. Finally, 79% of Inbound leaders (compared to 74% of global CEOs and just 61% of US CEOs) expect to find a reputational advantage for their organization from climate initiatives.

Inbound CEOs are wise to look to lead on assessing climate risks and greening the US economy. Some countries are already looking to make accounting for and reporting of climate risks mandatory, while initiatives from the private sector and the World Economic Forum aim to set standards for such reporting. These leaders are also wise to look for growth opportunities, since the green economy is growing quickly.

A no-regrets strategy to navigate the uncertainties

Amid the many uncertainties, our team has identified five solutions to help Inbound CEOs address their top threats and continue to prosper, no matter how technology develops and the economic and geopolitical winds blow.

Cyber

To help protect against threats while also better using data to drive revenue growth, build systems with digital resilience and develop a data trust strategy — one that will encourage consumers to trust the company with their data and, in turn, provide data that company decision makers can trust.

View more

Trade

Accelerate the digitization of business processes and supply chains. Digitization is not only a benefit in itself, enabling greater reliability and lower costs. It also promotes agility in supply chains, helping a company to potentially profit rather than suffer from possible rising protectionism or other changes in the trade environment.

View more

Technology

The fast pace of change may privilege a modular approach to technology, so parts can be updated without buying whole new systems. It also requires upskilling suitable for the digital age: programs that offer bite-sized pieces and produce immediate performance as well as knowledge.

View more

Regulation

Take advantage of the new tools to monitor regulations worldwide, and help shape those regulations, especially around still-evolving technology. Companies should make their view heard both through industry groups and direct dialogue with officials.

View more

Economic growth

Uncertainty shouldn’t mean paralysis, and wait-and-see doesn’t mean waiting idly. Persist with long-term goals to upskill your workforce and upgrade technology, while also preparing plans to take advantage of different scenarios. A slowdown, for example, could mean M&A opportunities for those who are ready. With these five strategies, Inbound companies can be well-prepared to continue their success not just this year, but for many years to come.

View more

With these five strategies, Inbound companies will be well-prepared to continue their success not just this year, but for many years to come.

{{filterContent.facetedTitle}}

{{contentList.dataService.numberHits}} {{contentList.dataService.numberHits == 1 ? 'result' : 'results'}}
{{contentList.loadingText}}

Contact us

Michael Burak

Michael Burak

Tax, Partner, PwC US

Follow us