In my experience, there’s one important question that continually preys on the minds of CEOs, regardless of their organisation or sector: Are things about to get better or worse?
It is always hard to predict the future since a single event in a single industry or country can be enough to trigger wider upheaval. Just consider the environment we’re operating in today. Nevertheless, I believe that our 20th CEO survey, launched on the slopes of Davos a few weeks ago, offers some telling insights. Today 59% of CEOs think that governments will become more protectionist, up from 46% in 2009. Furthermore, less than a third (29%) anticipate that global economic growth will improve in the short term.
Understandably, the confidence levels of CEOs tend to vary by sector. So while the past few years have been tough for miners due to the slowdown in China, 50% of mining CEOs feel optimistic about the economy in the short term. That’s because uncertainty has boosted investor demand for gold while the election of President Donald Trump should lead to increased expenditure on large-scale infrastructure projects in the US.
A third (37%) of automotive CEOs are also positive, encouraged by high North American sales in recent years, important technological advances such as electric and driverless cars, and the future potential to sell more vehicles in Europe, Asia, the Middle East and Africa.
On the other hand, around a quarter of CEOs working in consumer goods, transport and logistics and insurance take a more pessimistic view of the world economy. Trade restrictions will make life harder for the two former groups, while insurers continue to wrestle with intense price competition, low investment yields and a heavy regulatory burden.
CEOs must have grown used to uncertainty since they have become more optimistic about their own organisation’s growth prospects over time. In 1997, the year of our first survey, just a third of participants felt very confident about their company’s three-year revenue outlook. This year, by contrast, 51% of CEOs are very positive about the next three years while 38% feel the same about their company’s prospects of 12-month revenue growth.
It strikes me that CEOs’ optimism is linked to their investment in innovation and digital capabilities and their willingness to seek out the right partners for these projects. Globally, nearly half (48%) of CEOs are turning to strategic alliances or joint ventures to drive growth and profitability. Meanwhile, more than a quarter (28%) of CEOs are looking at collaborating with entrepreneurs or start-ups instead of, or as well as, forming an alliance. A keenness to work with disruptors is particularly evident in sectors that are at the forefront of the digital transformation, such as technology, media and telecommunications and financial services.
Over the long term, the twin forces of technology and globalisation will continue to change the world, putting CEOs under pressure to ensure that the benefits of progress are more equitably distributed. Furthermore, in an age of people power, suspicion of apparently ‘faceless’ multinationals is likely to become even more widespread.
So as CEOs adapt to an environment that is radically different from the one their predecessors knew, they must confront new challenges. How can their organisation harness the power of purpose to compete in a diverging world? What’s the best way to manage both man and machine? How can organisations gain from connectivity without losing trust? What’s the CEO’s role in making globalisation work for all?
These are the kinds of questions we’ll be answering in a series of industry deep-dives from our 20th CEO Survey starting with the financial services, energy and government and public services sectors. Stay tuned for more industry views over the coming weeks.
Robert Swaak is Vice Chairman, Clients and Markets. In this role he oversees PwC's global markets through regions and industries. Read more