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Tuesday, 9 August 2016 00:03 - - {{hitsCtrl.values.hits}}
KPMG International released its 2016 Global CEO Outlook, revealing that while a majority of CEOs foresee the next few years to be challenging, with expected moderate economic growth, they are optimistic they can successfully manage through this environment.
While 72% of top executives believe the next three years will be more critical to their industry than the previous 50, they are confident in their company’s growth prospects. Further four-in-ten CEOs say they are pinning their prospects on significantly transforming their operating model over the next 3 years, up 12% from last year’s survey.
KPMG’s 2016 Global CEO Outlook study provides a vivid image of global CEOs’ expectations for business growth, the challenges they face and their strategies to chart organisational success over the next three years. The key findings include:
The annual study by KPMG International, of nearly 1,300 CEOs from companies across 11 industries in 10 countries, found that CEOs are concerned with a number of critical issues – many of which they indicate they have not previously experienced in their careers. The most pressing concerns for CEOs are:
Importantly, 65% is concerned that new entrants are disrupting their business models and more than half (53%) of CEOs believe that their company is not disrupting their industry’s business models enough.
KPMG in Sri Lanka Head of Audit and Financial Services Suren Rajakarier noted, “The disruptions caused by new technologies and technology companies are making life for CEOs more challenging. In the financial services space it is understood that the industry’s current operating models are no longer sustainable into the future. Banks which were focused on creating customer experience with their brick and mortar networks are challenged by the mobile and digital channels and this disruption has impacted the financial services industry on a global basis. A challenge that lingers on as a result of the global financial crisis is the regulatory pressures and increased oversight.”
The level of concern about new and unfamiliar challenges is evident from the shift in top risks identified by the CEOs. For example, cyber risk rose to the top in the 2016 survey, whereas it was not among the top five risks in 2015. 72% of CEOs believe their organisation is not fully prepared for a cyber event. CEOs also voiced their concern with their company’s level of data and analytical sophistication, as well as their ability to connect with customers through digital channels. Less than a third (30%) believe they are currently a leader in data and analytics.
The top strategic priorities over the next three years of the CEOs surveyed are:
Despite innovation being the top priority for their organisation and that nearly 8 in 10 (77%) say it is critical to include innovation in their strategy with clear targets and objectives, less than a quarter (23%) of CEOs say that innovation is at the top of their personal agenda.
“Based on knowledge of global progress, there is recognition within organisations in Sri Lanka also that they need to do something; they need to innovate. However, they may have to create a department off to the side, because it’s a challenge to make a creative solution work well if it is set the same sort of performance metrics and requirements that the rest of the organisation runs on – it gets stifled,” says Suren.
In light of the shifting business environment, almost half (41%) of CEOs indicated that their company will likely be transformed into a significantly different entity in the next three years. That number has risen markedly from the 2015 survey, in which 29% of CEOs held that opinion.
In line with expectations of economic and revenue growth, a growing number of CEOs plan to increase talent over the three year period. Ninety-six% expect to increase their headcount over the next three years, up from 78% in last year’s survey. A solid majority (61%) plan on hiring within the next 12 months. However, most report some levels of skills gaps emerging, with over 50% of the CEOs reporting skills gaps in key business functions.
Technology also featured prominently in the CEOs’ transformation plans, with these executives stating that it would be the second largest factor contributing to company growth – after global economic factors and ahead of domestic economic conditions.
The CEOs highlighted new technology as a key enabler to achieve and accelerate their progress, with 18% saying that implementing disruptive technologies will be a key priority.
The CEOs reported that they will devote significant investment to technology over the next three years, with 25% planning to increase data analytics capabilities and 22% planning investments in cyber security solutions. Technology-related risks are also top of mind for CEOs, with cyber security (30%) and emerging technology risk (26%) accounting for two of the top three risks they are concerned about.
