PwC has published the results from its 28th Annual Global CEO Survey. Amongst other things, this shows that 42% of CEOs believe their company will not be viable beyond the next 10 years without reinvention.
Current risks
The report, which surveyed 4,701 CEOs across 109 countries and territories, finds that while CEOs are optimistic about the global economy, macroeconomic volatility (29%) and inflation (27%) nevertheless remain the top risks for the year ahead cited by CEOs globally, but with clear differences between regions. Geopolitical conflict is seen as the biggest risk in the Middle East (41%) and Central and Eastern Europe (34%). In Western Europe, cyber risk (27%) is a marginally higher concern than a lack of skilled workers (25%) and inflation (24%) – with macroeconomic volatility topping the list at 29%. Inflation is the top concern in Africa (39%), while North America and Asia-Pacific prioritise risks largely in line with the global averages.
Reinvention needed for future viability
Consistent with the last two years, four in ten (42%) CEOs believe their company will not be viable beyond the next decade if it continues on its current path. Among those that do not expect to last without significant change, 42% cite shifts in the regulatory environment as having the biggest influence on their economic viability.
However, CEOs are taking action – across all sectors, almost two-thirds (63%) have taken at least one significant action to change how their company creates, delivers, and captures value in the last five years, with CEOs that have taken more reinvention actions in the last five years reporting higher profit margins in the last 12 months.
As companies look to reinvent their business models, almost four in ten (38%) say they have begun competing in at least one new sector in the last five years – with about one-third (34%) noting this has represented over 20% of company revenue over this period.
However, the pace of reinvention is slow and a large majority of companies lack agility. When it comes to moving budget and people between projects and business units, around half of CEOs said that they reallocate 10% or less of financial and human resources from year to year. More than two-thirds reallocate less than 20%. On average, only 7% of revenue over the last five years has come from distinct new businesses.
