Knowledge & Insight

The view from the top

Thu 28 February 2019

A recent paper published by KPMG explores the hugely diverse web of challenges faced by CEOs at 1,300 large companies around the world, including over 150 UK-based businesses. The general outlook expressed by these global leaders is a positive one, albeit tempered by European bosses’ concerns around the impact of Brexit.

Primary challenges

Technology-led disruption might be viewed by some companies as a major threat, yet the majority of CEOs shared the view that disruption is an opportunity to be exploited, rather than a risk to be mitigated – and the continued advance of digital technology appears to be a major driver of the high level of optimism. However, two potentially serious threats were identified by a number of individuals. The first of these is geopolitical uncertainty, as the international consensus on globalisation appears to be faltering, in the form of new trade tariffs between major trading partners like China and the USA, and potentially Europe and the UK. The second major threat identified is the risk of serious cyber attack – which is the flipside to the growth of the digital economy, and one that has already gained high profile media attention.

Prospects for growth

Despite the challenges detailed above, two thirds of CEOs expressed a high level of confidence that the global economy would continue to grow strongly over the next three years, with 78% of the sample confident that growth would be maintained in their own sector. Notable exceptions to the rule were CEOs at European-based companies, with leaders in Germany, Spain, Italy and particularly the UK, all holding a more bearish outlook. The country boasting the most optimistic CEOs was USA, with 85% of leaders holding a positive view of their own country’s economic growth prospects. While the most dramatic change in outlook has taken place in Italy, where confidence levels have fallen from 92% in 2017 to just 64% in 2018.

Ongoing digital revolution

Technological disruption is usually associated with smaller, more agile business, often with radical new business models. Yet with larger investment budgets, it is increasingly well-established companies which are succeeding in delivering genuinely disruptive innovations. But it’s not all plain sailing, because whilst new digital technologies continue to drive improved levels of efficiency and agility, the unrealistically high expectations of some board members is creating its own challenge, with many tech investments failing to deliver the kind of return expected. So the challenge for CEOs is to create tech investment strategies that optimise returns, whilst also managing stakeholders’ expectations.

Balancing intuition with data

Technology is continually reshaping industries and business models, so operational agility is a critical success factor for every company – and this sentiment is particularly strong here in the UK, where 79% of CEOs (that’s 20 percentage points more than their peers across the globe) felt that “they need to act with agility to survive”. And that agility is increasingly facilitated through the use of data-led predictive analytics. Yet while CEOs recognise the value of these sophisticated techniques, many still prize their own experience and intuition over data-driven outputs, and many leaders are now working closely with insight teams to ensure strategy development is informed by a sensible blend of data-driven insight and human perspective.

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