CEOs are faced with a stark choice. In the face of unparalleled environmental, economic and technological change, they are looking to expand their businesses by creating the organisational agility to disrupt existing business models and challenge long-held market orthodoxies.
According to the fifth "KPMG International Global CEO Outlook", just over half of CEOs are confident they will succeed but at the same time they are realistic, with 53% projecting cautious three-year growth of up to 2% (down from 55% in 2018).
As with 2018, they are also maintaining a positive three-year growth outlook for the global economy, though the share of such responses has slipped to 62% from 67% a year ago. This confidence is also shown by their commitment to hire, with 36% of CEOs projecting to expand their workforce by 6% or more in the next three years.
"A successful CEO now needs to be an agile CEO," said Bill Thomas, global chairman of KPMG International. "Succeeding in a world of volatility and uncertainty requires different leadership skills, particularly in large, multinational organisations. It's no longer a question of simply defending your position and using scale to maintain competitive advantage.
"Today, CEOs need to be comfortable disrupting their business models by forging new strategic partnerships, considering alternate M&A strategies and increasing the skills of their workforces."
MULTIPLE RISKS
CEOs named climate change as the biggest risk to their organisation's growth, the first time in five years it was rated a top concern compared with technological, territorial, cyber and operational risks. But with only a small margin between each of them, the responses paint a picture of a complex and ever-shifting risk landscape.
A majority of CEOs (84%) believe a "fail-fast" culture is required in today's marketplace, in which lessons from failures are learned quickly, yet only 56% say that kind of culture is in place in their organisation. Eight out of 10 CEOs (84%) are therefore looking to change the makeup of their leadership teams to disrupt the status quo.
Cybersecurity continues to be high on the CEO agenda, despite falling from the second-highest risk last year to fourth this year. In 2019, a larger group of CEOs (69% vs 55% in 2018) are prioritising the creation of a robust cybersecurity strategy, and most (71%) view information security as a key factor in their broader innovation strategy.
For many CEOs, mergers and acquisitions present the best opportunity to upgrade digital capabilities quickly. A proactive M&A strategy is on the agenda for 84% of CEOs who have a moderate-to-high M&A appetite for the next three years. Driving this appetite is the ability of M&A to transform a business model faster than organic growth.
"In Thailand, the M&A landscape is also going strong due to a combination of the Asean Economic Community, infrastructure investment for 5G technology, and the emergence of Thailand as a stronger regional and global player," said Winid Silamongkol, chief executive of KPMG in Thailand.
Mr Winid said the firm's survey of M&A within Thailand showed that 88% of survey respondents expected to make at least one more acquisition in Thailand within the next five years, with 65% expecting to do at least two, and almost a quarter expecting to do more than six. "This is a good opportunity for companies in various industries to transform and expand their business through M&A," he said.
When asked to prioritise between buying new technology or developing their workforce to improve their organisation's resilience, CEOs favoured technology by 2 to 1 (68% vs 32%).
AI EXPERTS TAKE NOTE
Artificial intelligence (AI) is also on the minds of CEOs, yet only 16% have AI and automation programmes in place in their organisations. A further 31% are still at the pilot stage, while 53% admit to undertaking a limited AI implementation. Yet 65% of CEOs say the inclusion of AI and automation will create more jobs than it eliminates.
"All together, this year's survey is telling us that we've entered a new era of leadership," Mr Thomas said. "Agility comes from balancing a CEO's instinct with having confidence in what the data is telling you. Strategic decisions require data that has bias removed.
"It's no longer enough to seek 'big data'. Instead, CEOs must use technology to uncover quality data. Only through this will they create the organisational resilience to drive growth."
To view additional information about the study, visit www.kpmg.com/CEOoutlook
