Forum Institutional

Here's how CEOs can manage today’s turbulence while reinventing their businesses for the future

Wise CEOs know it's the currents that exert lasting influence on a ship’s direction of travel

Wise CEOs know it's the currents that exert lasting influence on a ship’s direction of travel Image: Wellcome Collection/Wikimedia Commons

Bob Moritz
Global Chair, PwC
Share:
Our Impact
What's the World Economic Forum doing to accelerate action on Forum Institutional?
The Big Picture
Explore and monitor how Leadership is affecting economies, industries and global issues
A hand holding a looking glass by a lake
Crowdsource Innovation
Get involved with our crowdsourced digital platform to deliver impact at scale
Stay up to date:

Davos Agenda

This article is part of: World Economic Forum Annual Meeting

Listen to the article

  • According to PwC’s 26th Annual Global CEO Survey, 4 in 10 companies may not be viable in 10 years without deep transformation.
  • CEOs see a range of forces that will sweep away those who do not adapt, such as changing customer demand, regulatory changes, skills shortages and tech disruption or data explosion.
  • But here’s how some CEOs are delivering deep change in the face of near-term pressures.

Business leaders, like ship captains, must navigate both surface waves and deeper currents. As every captain knows, waves on the ocean surface can capsize a ship and so must be carefully navigated. But it’s the currents – the more enduring forces that are sometimes harder to see – that exert lasting influence on a ship’s direction of travel.

PwC’s 26th Annual Global CEO Survey makes clear this dual imperative. CEOs see profound near-term disruptions: inflation, macroeconomic volatility, geopolitical conflict, and a deeply pessimistic outlook for the global economy. In the survey, 73% of CEOs expect economic growth to decline in the next 12 months.

However, CEOs also see the need for deep, long-term transformation – transformation that truly delivers results. Shockingly, almost 4 in 10 don’t think their organization will be economically viable in 10 years if they continue on their current course.

The potential danger is that leaders can be so distracted by near-term waves that they fail to navigate deeper change.

At PwC, through our work with clients and their business partners and through our CEO Survey, we’re seeing some of the ways that CEOs are managing today’s turbulence while also reinventing their businesses for the future. Here are four of these approaches, along with actions business leaders can take to get the balance right.

1. CEOs are pursuing profound reinvention

As we’ve seen, almost 40% of CEOs believe their companies will not be viable in 10 years’ time without a sharp change in direction. This finding holds true across sectors from tech to healthcare to manufacturing. CEOs see a range of forces that will sweep away those who do not adapt, such as changing customer demand, regulatory changes, skills shortages and tech disruption/data explosion.

We’re seeing far-sighted CEOs rethink their company’s place in a world that is changing under our feet. For example, at PwC, we have helped a global retailer reinvent itself from a chain of offline stores into an online, multi-channel company; and we’ve helped a global automaker diversify into car subscriptions to meet changing customer demands.

Action: Reimagine the firm’s value proposition. Reinventing a company for long-term success requires a willingness to answer the most elemental questions about a company, such as: “What unique value do we contribute in today’s world – and tomorrow’s?”

2. CEOs are cutting costs, but not people

52% of CEOs we surveyed said they were cutting costs in response to near-term economic pressures, but only 16% are currently reducing the size of their workforces. The rationale was clear: leaders told us they expect employee attrition to stay the same or worsen, suggesting they see no end in sight to the Great Resignation and the consequent competition to attract talent with the right skills for the future. As a result, CEOs – with an eye on keeping their companies afloat in the longer term – are maintaining their investments in people despite acute near-term cost pressures. I believe this is the right approach; at PwC, despite economic headwinds, we invested over half a billion dollars last year in building our highly skilled workforce.

Action: Attract and retain talent by delivering what today’s workforce truly wants. This year, we asked 52,000 workers globally why they chose and changed jobs. We found compensation is important, as always, but employees also want flexibility or hybrid working, new skills to remain relevant and the chance to contribute to a larger purpose (75% said they want to work for an organization that contributes positively to society). The lesson for CEOs? Keep investing in everything it takes to get and keep great people.

3. CEOs are building supply-chain resilience

Our CEO survey shows that leaders who believe their companies are exposed to geopolitical risks are taking actions such as adjusting their geographic footprint and supply chains (46% are doing this). Companies are not simply exiting the territories in question en masse; for example, the 2022 China Business Report, developed in partnership with PwC, confirms that only 17% of US companies are considering moving operations out of China in the next three years. This suggests some CEOs are seeking to mitigate potential impacts from geopolitical tensions while keeping their eyes on the long game of China’s economic importance. So instead of leaving, many business leaders are applying a range of strategies to build supply-chain resilience.

Action: Stormproof the supply chain. We’re seeing companies build diversification and redundancy into their supply chains and expand their reserve inventory (moving from just-in-time inventory to just-in-case). Firms are making their supply chains cleaner and greener, and they are embedding data and technology into them more than ever before, for example, with artificial intelligence-enabled control towers that enable nimble adaptation to shifting risks.

Have you read?

4. CEOs are realizing that climate change is not an issue for the distant future – it’s an issue for today

In contrast to our 2021 CEO Survey, when a minority (40%) of CEOs told us they had factored climate change into their risk management strategies, our latest survey shows a clear majority (58%) of CEOs are developing a data-driven, enterprise-level strategy for reducing emissions and mitigating climate risks. Perhaps this is because 50% of today’s CEOs expect their cost profiles to be impacted by climate change not far off in the future but in the next 12 months.

Action: Adapt now to a hotter world while mitigating emissions. At PwC, we’re helping many clients map and manage their climate risks, from disrupted supply chains to lost staff productivity from heat stress. In the process, we often uncover opportunities to innovate ahead of competitors while protecting the bottom line.

Discover

How is the World Economic Forum contributing to build resilient supply chains?

In my nearly 40 years of working with business leaders, time and again, I’ve seen the payoffs for leaders who are far-sighted, looking past near-term issues to make long-term moves. I’ve seen the most perceptive CEOs recognize that what might appear to be far-off challenges – like climate – are, in fact, among the deepest currents changing the game now and must be addressed starting today. Though we should be under no illusions about the seriousness of the challenges we face, the future belongs to those who can manage the short term with speed, scale and a focus on results, thereby enabling and fuelling the investments needed for longer-term opportunities.

Don't miss any update on this topic

Create a free account and access your personalized content collection with our latest publications and analyses.

Sign up for free

License and Republishing

World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use.

The views expressed in this article are those of the author alone and not the World Economic Forum.

Related topics:
Forum InstitutionalLeadershipBusiness
Share:
World Economic Forum logo
Global Agenda

The Agenda Weekly

A weekly update of the most important issues driving the global agenda

Subscribe today

You can unsubscribe at any time using the link in our emails. For more details, review our privacy policy.

Institutional update

World Economic Forum

May 21, 2024

About Us

Events

Media

Partners & Members

  • Join Us

Language Editions

Privacy Policy & Terms of Service

© 2024 World Economic Forum