CEO Outlook: Pragmatism in uncertain times

in Firm, 22.05.2018

Geopolitical volatility, renationalization trends, fundamental demographic shifts and rising rates of cyber attacks are the biggest business risks faced by business leaders around the globe. All in all, the 1,300 corporate leaders surveyed by KPMG as part of this year’s CEO Outlook seem to be realistic and accordingly pragmatic.

This realism and pragmatism manifests itself in CEOs’ growth expectations: 56% of CEOs expect only moderate growth of up to 2% in their own companies during the current year. 52% have opted to forego new growth targets and related increases in their workforce during the current year as long as previously defined growth targets have not been reached. 33% of those surveyed expect strategic alliances to emerge as key growth drivers during the next three years. While fewer than one third (28%) believe that they will grow organically, only 16% of CEOs are striving to achieve inorganic growth through mergers and acquisitions. Particularly in the age of digitalization, CEOs are increasingly focusing on strategic alliances: 59% feel that their own company needs to become more agile if the company’s digital transformation is to succeed and more than half (53%) are convinced that their own company can only increase its agility through partnerships with third parties.

Geopolitical volatility and digital transformation are also promoting growing trends toward renationalization. As part of this trend, even Swiss companies are increasingly “re-shoring” processes and units back to Switzerland that had previously been off-shored to a foreign country. In the future, “digital” work performed here will not only cost around a third as much as the work currently costs in low-wage countries, but also offer greater quality and productivity. One impressive finding is that 62% of the CEOs surveyed around the world expect that the number of jobs created through the continued integration of artificial intelligence will exceed the number of traditional jobs eliminated in the process.

Demographic change is posing a challenge to companies because they are still struggling to anticipate the needs and expectations, in particular, of future generations of customers. This gap between supply and demand remains unbridged. Geopolitical volatility, digital transformation and the associated increase in cyber risks are raising the level of uncertainty in the system as a whole while also hampering companies’ ability to make long-term plans. Business leaders are relying heavily on their intuition as a result and taking cues from the trends and tendencies they see in their environments. Two thirds of the CEOs surveyed (67%) go with their gut. Conversely, more than half (51%) doubt the significance of predictive analyses.

Given the country’s strong focus on exports, the findings of this worldwide study also apply to Switzerland. Local companies are well advised to take a systematic approach to addressing these risks.

Discover the full report: 2018 Global CEO Outlook