18 encuesta mundial ceos
TRANSCRIPT
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www.pwc.com/ceosurvey
A marketplace withoutboundaries?Responding to disruption
18th Annual Global CEO SurveyNew ways to compete p2/ Growth, but not as we know it p6/ What business are you in? p12/Creating new value in new ways through digital transformation p18/ Developing diverse anddynamic partnershipsp24/ Finding different ways of thinking and working p28/ The CEO agenda p34
1,322CEOs interviewed in 77 countries
78%of CEOs are concerned about
over-regulation
56%of CEOs think cross-sectorcompetition is on the rise
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New ways tocompete
Given the scale of the challenges anduncertainties that todays CEOs face in globalmarkets, its little wonder that the one must-have attribute they point to for future successis adaptability. Its clear that in 2015, disruptivechange will affect all global markets. But whileCEOs are less condent overall about the
prospects for the global economy, many believethat there are signicant opportunities for their
own business to grow in the year ahead.
Macroeconomic trends are continuing in the
direction we highlighted in last years survey.While overall, global growth prospects couldbest be described as modest, there are pocketsof greater dynamism. Mature markets particularly the US, which for the rst time in
ve years ranks above China as CEOs key
market for growth look likely to offer the bestprospects in the near term. The emergingeconomies notably the BRICS, which havebeen such powerful engines of expansion arenow grappling with political and structuralchallenges. However, underlying drivers ofgrowth, such as youthful populations and a fast-
growing middle class, make many emergingeconomies attractive prospects for the future.The challenge for CEOs, in such a fast-changingenvironment, is where to place their bets.
Its not simply economic fundamentals thatworry CEOs. Over-regulation is cited by 78% asa concern. And these concerns are not limitedto industry-specic regulations but go much
broader into trade, employment, nancial
regulations etc., with CEOs increasingly worriedabout the amount of uncertainty aroundregulation. Cyber threats have increasedmarkedly and are likely to become even more
prominent in the wake of the recent high-proleattacks on entertainment networks. The rapidpace of technological change seen as a challengeby 58% of CEOs is also highlighting a shortageof key skills that could imperil growth.
But CEOs no longer question the pace oftechnological change, as they learn to deal withit. The majority of CEOs believe that investmentsin digital technologies have created value fortheir business, and around 80% say that mobiletechnologies and data analytics are key strands
of their strategy.
The challenges thrown up by these changes areset against a competitive landscape that is alsorapidly and radically reshaping. Competition isnow coming from new and previously unseensources. A wide range of industries is beingdisrupted by regulatory changes, increasingcompetition and new patterns of consumerbehaviour. With that in mind, one-third ofCEOs say they have entered new industries inthe last three years, and more than half (56%)believe that organisations will increasingly be
competing in new sectors in the next three years.
Foreword
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3PwC 18th Annual Global CEO Survey
Dennis M. NallyChairman, PricewaterhouseCoopersInternational Limited
As well as new areas of competit ion, CEOsare also looking to collaborate more with adiverse range of partners that can provideaccess not just to new markets and consumers,but crucially, to the new and emergingtechnologies and innovation that they consideressential to achieve growth. CEOs are thereforebuilding diverse collaborative networks thatembrace not just traditional partners, but
customers, academia, NGOs and evencompetitors. Managing those networks willbe increasingly important for future success.
Diversity, too, is becoming a crucial qualityin the talent pool that CEOs must draw on tocompete. Talent diversity and inclusiveness isno longer seen as a soft issue. Its now a corecomponent of competitiveness and mostCEOs (77%) have, or intend to adopt, a strategythat promotes it.
My sincere thanks go to the more than 1,300company leaders from 77 countries who sharedtheir thinking with us. Their active and candidparticipation is the single greatest factor in thesuccess of PwCs Annual Global CEO Survey,now in its 18th year. We greatly appreciateour respondents willingness to free up their
valuable time to make this sur vey ascomprehensive and accurate as possible.Were especially grateful to the 33 CEOs whosat down with us to hold deeper and moredetailed conversations. Youll see theircomments throughout this report.
of CEOs have entereda new sector, orconsidered it, in thepast three years.
of CEOs do not think thatcooperation betweengovernments is leadingto greater movement ofskilled labour betweenmarkets.
54%
45%
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Growth
6
Time for a reboot 6
The new economicequilibrium
7
Causes for concern
Getting to grips withdisruption
9
10
We live in an era of unprecedenteddigital change the type of changethat is reshaping the relationshipbetween customers and companies,breaking down the walls betweenindustry sectors, and, by extension,prompting forward-thinking CEOs to
question the very business theyre in.
To navigate this digitally-led economy,business leaders will need to understandhow technology can improve theiroperations and bring them closer totheir customers; embrace collaborationboth inside and outside the business;and identify a rich and varied talentpool. More than anything, though,theyll have to develop a exible
vision that allows them to pinpointtheir companys strengths even astheir customers, sectors and marketschange in front of their eyes. Soundlike a superhuman challenge?
Welcome to 2015.
Contents
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2412
18
28
Competition Technology Partnerships Diversity Final words
Rethinking customer
value
A few key capabilities
12
13
The art of understanding
Once more into thesecurity breach
Identifying thepotential of technology
Whats the hold up?
19
21
2216
Go tech young man
Unlikely alliances
25
25
The right mix of talent
Easier said than done
28
31
The CEO agenda 34
Cant get enough data? 36
Soft skills 34
Meet the CEOs
Research methodologyand contacts
Credits
Notes and sources
38
40
41
42
How can you createsuccessful partnerships?
27
34
5PwC 18th Annual Global CEO Survey
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Growth
Time for a reboot
If 2014 taught us anything its that in ourincreasingly technology-led world, no industry,no company and no government, even, isimmune from the effects of change. Take theglobal energy market, where breakthroughinnovations continued to shake up the statusquo. Or the corporate world, where a cyber
security attack had international security anddiplomacy ramications. And what about thatdigital transport start up barely four years old challenging the entire global taxi industrysbusiness model and receiving an $18 billion
valuation for its chutzpah...
Of course, digital change throws up as manyopportunities as risks. We think thats whytheres an underlying sense of optimism formany CEOs, despite the picture theyre paintingthis year of an increasingly uid and disrupted
business environment.
We asked CEOs whether they see moreopportunities for their business today thanthree years ago, and also whether they see morethreats over the same period (see Figure 1). Itsplain that business leaders see more of both.
Growth, but not aswe know it
29%see onlymore threats
31%see only moreopportunities
30%see both moreopportunitiesand more threats
61%see moreopportunities
59%see morethreats
Figure 1 CEOs see more opportunities andmore risks today than three years ago
Q: How much do you agree/disagree that there are moregrowth opportunities/threats for your company thanthere were three years ago?
Every business in todaysworld has opportunities
and threats, so the key
question for us is not to
predict whether or not
we have threats or
opportunities. [Its]
whether or not we can
be...exible enough to be
able to detect those threats
or opportunities. And of
course react to them.
Victor Kislyi
Executive Chairman & CEO,Wargaming Public CompanyLimited, Cyprus
61%of CEOs see moreopportunities todaythan three years ago
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Growth
And it isnt clear-cut which markets offer thebest opportunities. CEOs are broadly upbeatabout established markets notably the US
(see Figure 3). For the rst time since we rstasked the question ve years ago, the US has
overtaken China as CEOs most importantoverseas growth market. Its not hard to see
why. National GDP is 7% higher than beforethe crisis, and more jobs have been createdsince that period than were lost. The USeconomy has also beneted from the fracking
boom, and higher consumer spending isfuelling healthy corporate prots.
CEOs are also more optimistic about othermature markets compared to a year ago: theUK now ranks higher than Brazil; Japan is seenas a better prospect than Russia; and Australiahas moved into the top-ten. Even the Eurozone whose economy still hasnt reached itspre-crisis level and which remains a majorthreat to global growth is inspiring morecondence this year. France, Italy and Spain
have all moved up the ranks, and Germanyretains its third-place position.
Doing business in the BRICS, on the other hand,continues to be challenging as those nations
grapple with a mix of complex structural andpolitical issues. But CEOs recognise the longer-term opportunities, with all of these marketsremaining rmly in their sights.
In China, GDP growth has slowed somewhat but it remains high relative to most othereconomies. The country clearly continues tobe seen as a powerful global growth engine:CEOs are in no doubt that, when it comes tothe most important overseas markets, its stilla two-horse race between the US and China.
The IMF now estimates Chinas GDP to be biggerthan that of the US, in Purchasing Power Parity(PPP) terms. And we think China will overtakeboth the US and the EU in terms of global GDPat market exchange rates just before 2030.
In India, hopes are running high, with reform-minded Prime Minister Narendra Modi now inpower. The opposite is true for Russia, wherefalling global oil prices and Western sanctionshave hit the rouble and the economy moregenerally, raising the spectre of a steep recession.Brazil is being impacted by weak investment anda relatively high-ination, low-growth
environment. And South Africas economicgrowth has been hit by labour market disruptions.
Its not necessarily a
question of looking
at emerging markets,
but about really
understanding where
we think were successful,
and where we can be
successful...We actually
feel we can grow almost as
effectively in the mature
economies as we can in
the emerging markets.
John Neal
CEO, QBE Group, Australia
Increased production
of shale gas may provide
the United States with
the possibility of being
self-sufcient.
Economically, it may
no longer need to import
oil and the money saved
can be used for other
purposes, giving a major
boost to its GDP.
Christian Laub
CEO, Credicorp Capital, Peru
The struggle between the
US-centric and China-
centric spheres is already
underway, and the world
economy will be swayed
by this new world order.
Atsushi Saito
Director & RepresentativeExecutive Officer, GroupCEO, Japan ExchangeGroup, Inc., Japan
US
China
Germany
UK
Brazil
India
Japan
Russia
Indonesia
Australia Mexico
2015 2014
Up from
last year
Down from
last year
Same rank
as last year
38%
34%
19%
11%
10%
9%
8%
6%
6%
6%
33%
30%
17%
12%
10%
7%
7%
7%
7%
5%
Figure 3 CEOs are more optimistic aboutmature markets this year
Q: Which countries, excluding the one in which youare based, do you consider most important for youroverall growth prospects over the next 12 months?
72%of CEOs are concernedabout geopoliticaluncertainty
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9PwC 18th Annual Global CEO Survey
Some other non-BRICS emerging marketscontinue to present growth opportunities forCEOs, however, notably Indonesia, which remains
a top-ten overseas target this year. Mexico,although less favoured than last year, is alsoa top choice, as are Colombia, Korea and Vietnam.
Despite the signicant differences in
opportunities and risks between differentemerging countries, youthful populations anda burgeoning middle class help make thesemarkets generally an attractive opportunity forbusiness. Indeed, the global emerging middleclass could constitute an annual global marketof some $6 trillion by 2021.2The challengeCEOs face is anticipating which nations offerthe best opportunity for growth, given theirfast-changing environments characterised bycomplex distribution systems and limitedaccess to market information.
Causes for concern
In addition to a challenging global growthenvironment, CEOs are grappling with a widerange of risks (see Figure 4). The top threatto business growth prospects is still over-regulation, cited by 78% of CEOs, up 6% fromlast year. National decits and debt burdens
and rising taxes also remain top threats. Butconcerns are coming from a variety of otherplaces many, for example, are anxious aboutgeopolitical uncertainty and social instability.
In fact, CEOs are getting more worriedabout almost all the threats we asked about.Concerns about cyber threats have shot upmost compared to last year and, in light of therecent attacks on gaming and entertainmentnetworks, the perceived risk will only increase.The speed of technological change and the
availability of key skills are other threats thathave seen a marked rise in concern from CEOs.
At a regional level, over-regulation and cyberthreats are of most concern to CEOs in NorthAmerica (see Figure 5). Asia Pacic CEOs are
the most anxious about affordable capital,consumer behaviours, new market entrantsand the speed of technological change. AndCEOs in Africa are by far the most worried ofthe lot, across a range of threats as diverse associal instability, inadequate infrastructure,
access to key skills, energy costs, and briberyand corruption all signicant barriers to thecontinent in realising its growth potential.
Over-regulation Availability of key skills
Government response tofiscal deficit and debt burden
78% 73% 72%
Geopolitical uncertainty
Increasing tax burden
Cyber threats includinglack of data security
Shift in consumerspending and behaviours
Social instability
Speed oftechnological change
New marketentrants
72%
70%
61%
60%
60%
58%
54%
2012 2013 2014 2015
Annual averages
72%2014
63%2014
71%2014
78%
73%
72%
Over-regulation
Availability of key skills
Government response to
fiscal deficit and debt burden
Key threats
Top three threats
Base: All respondents (2015=1,322; 2014=1,344; 2013=1,330; 2012=1,258)
Note: Only those threats asked about in each of the past four years were included in this
analysis. Those were: over-regulation, availability of key skills, government response to fiscal
deficit and debt burden, increasing tax burden, shift in consumer spending and behaviours,
high or volatile energy costs, protectionist tendencies of national governments, new market
entrants, inadequate basic infrastructure and supply chain disruption.
Average%o
fCE
Osexpressing
concernaboutthreats
47%
52%
57%
62%
Figure 4 CEOs are getting more concerned about a wide range of risks
Q: How concerned are you about the following potential economic, policy, social and
business threats to your organisations growth prospects?
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Growth
Getting to grips with disruption
Business leaders are also keenly aware thatfundamental forces of change will impact theirindustries over the long term. Megatrends suchas shifts in global economic power, technologicaladvances and demographic changes and theinterplay between them are transformingthe macroeconomic landscape. As businessesrespond to these shifts, the competitiveenvironment across a broad range of industriesis being disrupted. Rajiv Bajaj, ManagingDirector of Bajaj Auto Limited in India, seesdisruption as an opportunity to be a pioneer,to create new categories for protable growth,
saying, I dont know of any way of managing
a disruption other than to be the creator of it.
Business leaders see regulatory change as thenumber one disruptor within their industriesover the next ve years (see Figure 6).
Government policies both national andinternational are recurrent themes on thelist of CEO concerns (see Whats the hold up?on pages 1617).
Over-regulation
Geopoliticaluncertainty
Socialinstability
Global high
Global average
Global low
Availabilityof key skills
Cyberthreats
Speed oftechnological
change
North America
Central and
Eastern Europe
North America,
Central and
Eastern Europe
and Middle East
Latin America
Africa
North America
and Western Europe
Africa
Western Europe
North America
Latin America
Asia Pacific
Central and
Eastern Europe
85% 78% 98% 90% 80% 71%
78% 72% 60% 73% 61% 58%
70% 54% 49% 58% 45% 37%
Figure 5 Concerns vary by region
Q: How concerned are you about the following potential economic, policy, social and business threats to yourorganisations growth prospects?
The challenge we and
many others are facing
is that its very hard toknow when exactly the
disruption will become
so big that you actually
dont even survive
without being part of
that disruption.
Pekka Lundmark
President & CEO,Konecranes Plc, Finland
Figure 6
CEOs see regulation, competitionand customer behaviours as thetop industry disruptorsQ: How disruptive do you think the following trends will be for your industry over
the next five years?
35%
40%
39%
32%
66%
61%
61%
50%
31%
21%
22%
18%
Changes in industry regulation
Increase in number of significant
direct and indirect competitors
Changes in customer behaviours
Changes in distribution channels
Somewhat disrupt ive Very disrupt ive
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Increased competition and changes in customerbehaviours are also seen as top-three disruptiveforces. The impact on CEOs thinking is clear:those we spoke with were highly focused on the
value their companies offer, in terms of meetingcustomer needs and differentiating from thecompetition.
Some industries are, of course, undergoing
more upheaval than others (see Figure 7).Financial services industries are poised forgreatest change, based on the views of CEOsin those sectors. Regulation, unsurprisingly,is the biggest driver of change. Technologyalso plays a key role, in terms of customerbehaviours, competition levels and changesin distribution. In recent years, the traditionalnancial services arena has been upended by
new entrants in the form of supermarkets anddigital payments providers such as Apple Pay.
Figure 7 Different industries are being disrupted in different ways
Q: How disruptive do you think the following trends will be for your industry overthe next five years?
Changes in distributionchannels
Changes in customerbehaviours
Increase in number of significantdirect and indirect competitors traditional and new
Changes in industryregulation
Insurance
Banking and
capital markets
Pharma and
life sciences
Power and utilities
Entertainment
and media
Communications
Retail
Asset management
Hospitality
and leisure
Consumer
Automotive
Healthcare
69% 71% 64% 88%
54% 57% 66% 87%
59% 56% 64% 82%
42% 62% 56% 89%
64% 63% 66% 56%
50% 67% 54% 69%
59% 68% 57% 50%
50% 59% 55% 69%
53% 57% 63% 59%
57% 57% 57% 60%
52% 59% 57% 56%
37% 63% 51% 71%
Tough questions about findinggrowth in a disrupted world
What changes are you making to your growth
strategy in emerging and frontier economies
to take into account key structural and political
issues in these countries?
How is your growth strategy in mature markets
changing as these nations continue to see
economic improvements?
How widely are you looking to see how yourindustry could be disrupted? How well are you
assessing the impact of cross-sector competition,
emerging business models and new technologies,
for example?
In what ways are you using information to assist
in making strategic and risk decisions?
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Competition
In the face of an ever-growing set of concerns,the question CEOs are asking is this: How do wemanage the day-to-day business while havingthe condence and vision to explore a much
wider range of opportunities than weve everconsidered before?
Rethinking customer value
In these extraordinary times, businesses thatwant to grow protably must rethink how
they create value for customers. Operatingwithin traditionally dened demographic
segments, channels, product/service offerings,geographies or industries increasingly doesnt
work. Customers today defy classic notionsof what drives their purchasing decisions.
Customer relationships are now much moreuid: theyre moving from one-off transactions
toward broader and longer-term experiences
that can span dif ferent product and serviceofferings, channels, countries and sectors.Companies are, in short, increasingly focusedon customer problems and looking at how theorganisational capabilities that differentiatethem can be used in cross-disciplinary waysto solve those problems.
As Dong Mingzhu, President & Chair womanof Gree Electric Appliances Inc. of Zhuhai,in China, explains, We used to win marketshare by doing a better job than our competitors
with existing products. I think this is [the]wrong approach. We shouldnt care too muchabout what our competitors are doing. We needto focus on what consumers want.
The focus on customers, rather than traditionalcompetitive boundaries, is broadening theeld of competition. Indeed, forward-thinking
CEOs are increasingly questioning just whatbusiness theyre really in. Its also activelytaking businesses into adjacent or completelynew sectors. More than half (56%) of CEOsthink it l ikely that companies will increasinglycompete in new industries over the next threeyears (see Figure 8). Three in ten have entereda new sector or sub-sector in the past threeyear and 21% have considered doing so.
Its not just large conglomerates moving intoother industries. Over half (51%) of the smallerrms we polled, with revenues up to $100
million, have entered a new sector or sub-sector, or considered doing so, within the pastthree years, compared with 64% of the largestrms, with revenues of over $10 billion.
What business areyou in?
In the past, competition
was only within [the]
sector. Entry to [the]
banking sector was
highly costly and almost
impossible. However,
digital dynamics began
to undermine barriers
to entry. In this respect,competitors may emerge
from any industry, such
as technology companies,
telco, retailers, social
networks, even start-ups.
H. Faik Akaln
CEO, Yap Kredi, Turkey
54%of CEOs have entered anew sector or sub-sector,or considered it, in thepast three years
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Cross-industry moves arent a newphenomenon, of course. Corporate historyis packed with stories of companies thatshifted focus to take advantage of new marketopportunities. Nokia, for example, famouslybegan life as a paper mill. But what the digitalage has done is supercharge the opportunitiesfor business transformation and demonstratehow vulnerable companies are if they dont
understand what their customers want.
What will this shift in market strategy meanfor business as a whole? The companies thatbest adapt to meet their evolving relationship
with customers will have to embracefundamental changes in their organisationsDNA rather than approach it as a marketingand brand-positioning exercise. And, asorganisations increasingly dene their
own unique competitive spaces, CEOs mustcarefully manage how they diversify.
A few key capabilities
A desire to be close to the customer canconict with the desire for efciency and focus.
It brings increased complexity, for one thing,due to the need for customisation or to align thecustomer experience across channels, productsor industries. It also requires investment toenhance capabilities.
Companies that can successfully manage thetension between breadth and focus will be
those that use their differentiating capabilitiesas the basis for expansion. They will be thosethat diversify by extending their value chainsrather than creating new ones; those that lookat their own unique strengths to determinethe competitive spaces they can thrive in; andthose with strong coherence between theircapabilities, value proposition and portfolioof product/service offerings.
We will hire professionalcompanies to advise us
on restructuring, so that
in the next ve to ten
years [we] will become
a leading construction
material distribution
corporation, rather than
a corrugated steel
production corporation,
as we are at the moment.
Le Phuoc Vu
Chairman, Hoa Sen Group,
Vietnam
The metro train is in
itself a competitor for
the two-wheeler maker.
There is no doubt that a
metro coming up in Delhi
has in some way affected
demand for motorcycles.
Rajiv Bajaj
Managing Director,Bajaj Auto Limited, India
Figure 8
Over half of CEOsthink that cross-sectorcompetition willbecome more commonQ: How likely do you think it will be that organisations
will increasingly compete in new sectors otherthan their own, over the next three years?
56%
15%
26%
Likely
Neither/nor
Unlikely
56%of CEOs think competitionwill increasingly comefrom other sectors orsub-sectors
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Competition
Indeed, some moves into different sectors mayseem entirely unexpected, until assessed from acapabilities perspective. One example is CEMEX,
the Mexico-based cement company that hasmoved into micronance in emerging countries
and infrastructure solutions globally, drawingon strong relationship building and innovationcapabilities to do so. Another is Danaher, whichhas acquired many companies in sectors asdiverse as dental tools and environmentalmetrics. The success of these businesses is drivenby the highly effective and speedy deploymentof the Danaher Business System, a continuouscycle of change and improvement one of thecompanys key capabilities.
Theres evidence that focusing on a fewcapabilities is key to successful growth strategies.PwC studied Fortune 500 companies thatexhibited signs of long-term revenue declinessince 2009 and found successful recoverieswere closely tied to dening and rebuilding
existing capabilities.3
To be sure, however, the ability to diversify ina focused way presents signicant challenges.
There are hard decisions to be made betweenwhich of potentially numerous growth strategies
make the most economic and competitive sense.And what constitutes a coherent strategy maynot be immediately obvious when CEOs considerthe myriad ways their business could bedisrupted in the longer term.
No matter how CEOs choose to rethink theircapabilities, there are three factors theyve toldus are vital for success:
1. Creating new value in new ways throughdigital transformation
2. Developing diverse and dynamic partnerships
3. Finding different ways of thinking andworking
Tough questions about rethinking capabilities
What do your customers really value, and how do your organisations
differentiating capabilities deliver that value?
How are you learning from other industries to solve customer problems in
your own industry?
Are you considering how your organisations key strengths can be
leveraged to solve customer problems in other industries?
What business are you really in?
Companies that can effectively combine thesehighly interdependent approaches aroundsimple yet powerful value propositions will be
positioned as winners in the new competitivelandscape. A good example is Konecranes Plc,which started life as a traditional machinebuilder in Finland before broadening itsproposition to become a service company.President & CEO Pekka Lundmark says, Itsa fundamental principle in our thinking thatif you want to be a successful service company,not only a machine builder, you have to startyour service strategy creation from the customersproblem and not from your machine. And thecustomers problem is unrelated to the fact of
whose equipment they are using.
By marrying digitalisation with its machine-building business, and partnering with IT anddata networking and analytics companies,Konecranes Plc is able to meet customer needsthrough a new generation of lift ing machinerythats intelligent and networked. And, byenabling customers to track and improve theproductivity of their lif ting equipment,Konecranes Plc has transformed its operationsinto a world-leading provider of productivity-enhancing lifting solutions. The nal ingredient
for Mr. Lundmark is a widening pool of talent:I think its very clear that to be able to besuccessful in the future, in this marriagebetween IT and machine builders, theglobalisation of the economy will mean thatour workforce will be much more diverse.
In the following pages, well explore each ofthe three approaches that CEOs think can helpachieve competitive advantage.
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Competition
Technology ies aroundthe world very fast today
and so to benet fully
from it we need to make
sure that products and
systems can do the same,
with as much free trade
as possible, and barriers
as low as possible.
Olof Persson
President & CEO, The VolvoGroup, Sweden
Whats the hold up?The emerging competitive landscape revealsthe tension between the conditions needed forbusinesses to thrive and the existing frameworkof national and international standards andregulations within which they operate. Newmodels of competition cross-sector, networkedand decentralised are straining against policiesdesigned for a different world. And while globalbusinesses are more connected than ever before,geopolitical trends seem to be moving in theother direction.
David I. McKay, President & Chief Executive Ofcer
of RBC, speaks for his peers on the emergingtensions as industry boundaries transform.I hear a number of CEOs talk about, well, theregulatory barriers that we have [that] are sohigh. (Just wait till the Googles of the worldand the Apples have to comply as a bank).
But Mr. McKay warns against waiting for thatday to come. Their [technology competitors]goal is not to become a bank and walk in ourshoes. Their goal is to take our shoes and throw
them out and give a new set of shoes to thecustomer. So I think regulatory barriers buyus time, but we cant hide behind them becauseour competitors are trying to take them downor trying to build a whole new wall over here.So I think those are two critical things we haveto think about as bank CEOs and how to evolveour franchise.
Its no surprise that government policies aresuch a big issue for CEOs. This year over-regulation again tops the list of threats theyremost concerned about, and business leaderssee regulatory changes as the prime disruptivetrend in their industries over the longer term.Many CEOs are also worried about themounting tax burden. And while two-thirdsthink their governments top priority shouldbe an internationally competitive and efcient
tax system, just 20% say their government hasbeen effective in achieving this.
On the global front, freer movement of people,capital and ideas would clearly be a competitiveboon, as would the ability to simplify complexcorporate structures and operations. But CEOsare divided as to whether collaboration betweengovernments or between public and privatesector is improving the ability for businessesto compete across borders (see Figure 9).Forty-three percent, for example, see greatermovement of skilled labour between markets but45% do not believe this is the case. Its evidentthat companies are struggling to navigatethrough different tax and regulatory regimes.
Getting government and business on thesame page clearly requires collaboration ofa different sort.
Part of this is a change in mindset, startingwith the ability for business and government tounderstand each others perspectives. Businessleaders clearly accept the need for regulation,but want it to be more effective in how itsdesigned and implemented. Governments,meanwhile, understand the need for better
regulation but must deal with a legacy ofpolicies designed to address very real problemsof the past. Responding to business excesses inthe wake of the nancial crisis is a case in point:
the large body of regulations put in place atthe time were an answer to societal demandsand a means to create a badly-needed trustmechanism. Policymakers must also navigatethe tension between the need to raise revenues particularly to tackle debt and decit issues
brought on by the crisis and the desire toattract and retain investment.
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Technology
CEOs no longer question the need to embracetechnology at the core of their business in orderto create value for customers. Beyond a shadow ofa doubt, digital technologies have revolutionisedhow customers perceive value. Creating the
personalised and ongoing experiences that areincreasingly in demand requires a full view ofthe customer and all their relationships with thecompany. It requires an unprecedented level ofcustomisation, responsiveness and innovation.
Doing all this effectively just isnt possible bytinkering at the edges. Companies increasinglyrecognise that they need to recongure their
operating models and perhaps their businessmodels. And in order to do so they need toensure that theyre not only investing in theright digital technologies, but can deploy themin a smart and effective way.
As Michael Dell, Chairman and Chief ExecutiveOfcer of Dell Inc. says, The instinct when
something new shows up is to say, How dowe bolt this on to the old way we were doing itand deliver some incremental improvement?.Thats the wrong way of approaching thechallenge, he explains. What you really haveto do is rethink the problem and say, Nowthat we have all these new tools and newtechniques, how can we solve the problem
in a fundamentally different way?.
Creating new value innew ways through digital
transformation
Any company, to survive
in the current environment
and into the future, has
to be at the forefront of
technology.
Alan D. Wilson
Chairman, President andChief Executive Officer,McCormick & Company, US
Suddenly, those of us
who use the internet, for
example... are dinosaurs
compared to the next
generation. They use
mobile. I can see it inour mobile bank [where]
clients have interactions
almost every day; [in]
the internet bank [its]
maybe once a week or
once every second week.
And how often do they
actually enter a branch?
The average in Sweden
is once a year.
Annika Falkengren
CEO, Skandinaviska Enskilda
Banken AB (SEB), Sweden
[Communications
technology] represents
an enormous change in
the way we work and will
ultimately lead to shorter
stays at the hospital.
Rita Ziegler
President of the HospitalExecutive Board, UniversityHospital Zurich, Switzerland
81%of CEOs think mobiletechnologies arestrategically importantfor their business
We see that new
technology is impacting
how quickly and
efciently we are able to
drill and complete wells.
It also impacts on cost
at the end of the day.
Abdulrazaq Isa
CEO, Waltersmith Group,Nigeria
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19PwC 18th Annual Global CEO Survey
The art of understanding
CEOs are in no doubt about the role informationcan play in gaining insight about customers andhow to engage with them.
Mobile technologies have been around fordecades, but the sheer ubiquity of mobiledevices today has revolutionised customersability to obtain information. The number of
mobile phone users globally was expected tototal 4.55 billion in 2014 nearly 70% of the
worlds population with smartphone userstotalling 1.75 billion.5The volume of mobiletrafc generated by smartphones is now about
twice that of PCs, tablets and routers despitehaving only surpassed them in 20136 and ispredicted to grow ten-fold by 2019.7
Access to information has, in turn, transformedhow customers perceive value and the type ofrelationships they want to have with companies.
So its understandable that 81% of CEOs seemobile technologies for customer engagement asmost strategically important for their organisation more than any other digital tool (see Figure 10).But companies that want to exploit the powerof mobile technologies to engage customersface tough choices about how, and how fast, tomove to mobile channels and how to integratethose with more traditional channels.
Data analytics, meanwhile, has transformedthe ability of companies to access, analyse andcirculate information about their customers,and use that information to create the type ofrelationships that their customers want. Indeed,theres evidence that companies that can mosteffectively use analytics to inform demand-sidedecisions about business processes outperformthose that cant.8Small wonder, then, that 80%of CEOs cite data mining and analysis asstrategically important.
Mobile technologiesfor customerengagement
Data miningand analysis
Cyber security
Internet of Things
Socially enabledbusiness processes
Cloud computing
Battery and powertechnologies
Robotics
Wearablecomputing 3D printing
81%
80%
65%
60%
47%
37%33% 27%
61%
78%
Figure 10 Getting, analysing and using information is key to the currentand emerging technologies that CEOs see as most important
Q: How strategically important are the following categories of digital technologies foryour organisation?
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Companies, however, face challenges in theirability to effectively leverage data analyticstools. For one thing theyre not using analytics
enough. Its been estimated that 23% of alldigital data generated annually would be usefulif tagged and analysed yet at present, just 3%of it is tagged and 0.5% analysed.9Then thereare issues about data quality, informationoverload and a continuing lack of trust in the
value of digital data. UK business executiveswho were polled about how they make bigdecisions, for example, ranked their ownintuition and experience, as well as the adviceand experience of others, above data and dataanalytics.10
When companies do invest in digitaltechnologies to deliver what customers want,that commitment would appear to be bearingfruit. The majority of CEOs think that digitaltechnologies have created high value for theirorganisations in areas like data and dataanalytics, customer experience, digital trustand innovation capacity (see Figure 11).
Its in the area of operational efciency that
CEOs are seeing the best return on digitalinvestment. Eighty-eight percent think value
has been created in this area, with half ofthese CEOs seeing very high value. Thetransformation of cost structures is a symptomof the digital transformation that companiesare undergoing as they align their businessand operating models to new ways of deliveringstakeholder value. Indeed, 71% of CEOs alsotell us theyre cutting costs this year thehighest percentage since we began asking thequestion in 2010.
After having put signicant funds into IT over
the years, CEOs now also want to see a strongconnection between digital investments andbusiness objectives. 86% say a clear vision ofhow digital technologies can help achievecompetitive advantage is key to the success ofdigital investments (see Figure 12). And 83%say the same for having a well-thought-out plan including concrete measures of success fordigital investments. But CEOs also know it canthappen without them: 86% think its importantthat they themselves champion the use ofdigital technologies.
Technology allows us
to gather information,
know our consumersbetter, speed up informed
decision-making, and
improve the quality of
everything we do. Our
manufacturing facilities
are computer-controlled
in ways that allow us to
make rapid production
changes according to
market needs. Our
track and trace system
capabilities prevent
product falling into the
hands of illicit traders.Our internal networking
systems keep 27,000
people in 364 ofces
around the world
in constant contact.
Its powerful stuff.
Thomas A. McCoy
President and Chief ExecutiveOfficer, JTI (Japan TobaccoInternational), Switzerland
The data is great, the
information is better, but
how you use it as leaders isthe most important thing.
Dr. Marc Harrison
Chief Executive Officer,Cleveland Clinic AbuDhabi, UAE
Figure 11
Digital investments to createcustomer value are paying off
with a positive impact for coststructures tooQ: To what extent are digital technologies creating value for your organisation in
the following areas?
44%
40%
37%
37%
40%
88%
84%
77%
72%
71%
44%
45%
40%
35%
31%
Operational efficiency
Data and data analytics
Customer experience
Digital trust including
cyber security
Innovation capacity
Quite high value Very high value
Technology
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Digital technology, as well
as the changes resulting
from the disruption it
causes, is a big topic and a
big challenge for the future.However, it also creates
opportunities. Whats
important is that we
provide the right conditions
for our people to be able to
integrate the knowledge of
new digital technologies in
order to understand and
confront the challenges
created by them.
Monique F. Leroux
Chair of the Board, Presidentand Chief Executive Officer,
Desjardins Group, Canada
Figure 12 CEOs think that a clear vision and plan and their ownsupport are key to the success of digital investments
Q: How important are the following factors in helping your organisation get themost out of its digital investments?
86%
86% 83%A clear vision of how
digital technologies
can help achieve
competitive
advantage
A well-thought-out planfor digital investments,
including defining
measures of
success
You, as CEO,
champion the use of
digital technologies
Once more into the security breach
The central role of information places cybersecurity squarely on the CEO agenda, particularlygiven the series of high-prole hacks over the
past year. With vast quantities of their informationreadily accessible around the clock, customersexpect a certa in amount of privacy andcondentiality. How companies honour this will
mean much for their ability to engage with and
retain customers, and build brand value.
Yet in a recent PwC poll of consumers, 24% saidthat their trust in companies ability to protecttheir personal data had declined over the past12 months.11Cyber security incidents are nowso commonplace that the number of detectedincidents soared 48% in 2013 to 42.8 million.12In the past year virtually every industry hasbeen impacted, with many incurring signicant
costs as they seek to manage and mitigate thebreaches.13Small wonder, then, that concern
about cyber security has seen the biggestincrease of all the potential threats we askedbusiness leaders about, with 61% of CEOs citingconcerns compared with 48% a year ago.
But while we expect cyber security issues tocontinue to be a growing threat, organisationsare adapting to this new reality: CEOs seecyber security technologies as a top-threemost strategically important type of digitaltechnology for their organisation. And 53%think its very important strategically ahigher proportion than for any other type ofdigital technology we asked about.
The real benet of cyber security isnt just in
defending value. Its about creating new value byenabling the trust thats so central to doing businesstoday. Cloud technology, for example, has elevatedsecurity concerns; the key to demonstrating theClouds true value is to make it really secure. Itsencouraging, then, to see that the requisite shiftin thinking seems to be underway, with 72% ofCEOs seeing digital technologies as creating
value in the area of digital trust.
21PwC 18th Annual Global CEO Survey
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Technology
Boundaries across
industries are becoming
more and more blurred,
because computing
technology, digital
technology is having such
a profound inuence onevery industry...The next
generation of successful
companies, whether they
are transformations of
existing companies or
completely new ones that
emerge, will come at this
intersection of taking
traditional processes and
activities and completely
rethinking them...
Dr. Vishal Sikka
Chief Executive Officer& Managing Director,Infosys, India
Figure 13 CEOs see the technology sector as the main sourceof cross-sector competition
Q: From which industry or industries outside of your own do you think a significantcompetitor is emerging or could emerge?
Identifying the potentialof technology
Given technologys increasingly integral role
across business sectors, the ability to harnessit effectively is becoming a key differentiatingcapability, presenting opportunities for those
who can and threats for those who cant.
Signicant numbers of CEOs see technology
as a key v ulnerability for their organisations.Concerns about the speed of technologicalchange saw the second biggest increase of allthe threats we asked about, with 58% of CEOsexpressing anxiety, compared with 47% lastyear. The pace of change is inescapable: less
than a decade after its initial public offering,Googles revenue soared from $3 billion to$60 billion. CEOs are concerned, too, about theability of new entrants to exploit weaknessesin technological capabilities: 32% nametechnology as the sector from which signicant
competitors are emerging far more than thosewho name any other sector (see Figure 13).
Yet for companies in which technology is astrength, there are signicant opportunities for
growth. The CEOs who told us that there aremore opportunities for their business today than
three years ago are more likely than those whosee greater threats to place strategic importanceon a range of digital tools, and to have derivedhigh value from them.
Technology
32%
Retail andwholesale
distribution
19%
Communications,entertainment
and media
16%
Professionaland business
services
13%
Financial services,including real
estate
13%
Manufacturing(industrialproducts)
11%
Transport andlogistics
11%
Manufacturing(consumerproducts)
10%
Goverment andpublic services
8%
Construction
6% Agriculture,forestry, fishing
and hunting
5%
Hospitality andleisure
5%Manufacturing(automotive)
7%
Energy, utilitesand mining
11%
Healthcare,pharma andlife sciences
9%
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Opportunities to leverage technologicalcompetencies are also taking companies into
other sectors. The technology industry, togetherwith the healthcare, pharmaceuticals and lifesciences industry, is the single biggest sectoroutside their own that CEOs are targeting: 15%have entered this arena, or considered doingso, in the past three years. While its mainlytechnology companies targeting other sub-sectors, companies from completely differentindustries for example banking and capitalmarkets are also looking to bring theircapabilities into the technology arena.
However, its the ability to see the opportunitiesthat technology enables that will unlock the truevalue of those investments; its not just access toincreasingly affordable tools and platforms thatdenes leaders and laggards. For example, while
nearly every organisation lays claim to being adigital enterprise, only 20% of respondents ina recent PwC survey rated their company ashaving excellent Digital IQ, dened as how well
they understand the value of technology andweave it into the fabric of their organisation.14
The time is clearly ripe for partnershipsbetween those who have technologicalprowess and those who dont.
Tough questions about creating
new value in new ways throughdigital transformation
What technologies do your customers,
partners and other stakeholders use and
value, and how do they use those technologies?
In what ways does your business and
operating model need to change to fulfil
evolving customer needs?
What are you doing to ensure that youre
investing in the right digital technologies
and using them most effectively?
How are you maximising the use of data
analytics to deliver customer value?
How are you ensuring that your information
assets are as secure as possible?
23PwC 18th Annual Global CEO Survey
15%of CEOs who haveentered,or consideredentering, into a newsector or sub-sectorhave chosen technology
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Partnerships
As CEOs increasingly focus on what theyre goodat, theyre looking to partner with others whosecapabilities could complement or enhance theirown. Fifty-one percent plan to enter into newstrategic alliances or joint ventures over thenext year the highest percentage since webegan asking the question in 2010.
The CEOs we spoke to repeatedly stressed thestrategic importance of partnerships. Theyveplayed a vital role in the development of thehybrid plug-in buses that The Volvo Grouprecently launched, for example. We didnthave the knowledge about charging stations...advance trafc management systems and...
how to integrate this in the city structures thatwe have, says President & CEO Olof Persson.We have a great product, but by partnering withthose who have that additional knowledge wecould actually get the product to market faster.
Technology is eroding the minimum requirementsneeded for a fi rm to exist. Todays nimblestcompetitors are lighter rms with simpler value
propositions, a tighter set of core competenciesand fewer assets. For companies looking tomove in this direction, partnership networkshave an important role to play in bolsteringcapabilities. This is especially the case asorganisations increasingly seek to create new
value by solving problems in more innovative ways.
Developing diverse anddynamic partnerships
At one stage our
organisation was in
18 products in the
international investment
community. What weve
found is were really good
at ve things and those are
the things our customers
are open to. They valueour expertise in those
areas; they never saw
us as great at 18 things.
So if those other 13 can
be provided by somebody
else, we would consider
partnering with them.
I think thats where [the]
point about doing all
things for all people comes
in. I dont think you can...
Ross McEwan
Group Chief Executive, RBS, UK
51%of CEOs will enter intonew alliances in thecoming 12 months
We follow that guiding
principle of focusing on
our own strengths and
growing those hard and
fast, and then partnering
in areas where we are
possibly not that good.
Theo Spierings
Chief Executive Officer,Fonterra, New Zealand
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25PwC 18th Annual Global CEO Survey
Go tech young man
Crucially, CEOs arent only partnering to expandmarkets, cut costs or share risks. Access to newcustomers and access to new and emergingtechnologies were both top reasons for partnering,cited by 47% of CEOs (see Figure 14). The abilityto strengthen innovation capabilities is alsoa key driver, cited by 40% of CEOs. Weve foundthat companies that looked to outside sources
for innovation ideas were more likely to betop performers in terms of revenue growth,protability and innovation.15
Investment partners in France and Japan havehelped Phnom Penh Water Supply Authority(PPWSA) improve their operations. Thanks totechnology and various applications, includingour software package from France, we havestreamlined our processes for issuing bills.Helping to adopt metering technology,meanwhile, has helped the Director General of
PPWSA, His Excellency Sim Sithas operations inCambodia to reduce water loss from 72% to 7%,the lowest in South East Asia after Singapore.
Figure 14
Access to newtechnologies is atop reason CEOs
want to partnerQ: What are your reasons for collaborating in jointventures, strategic alliances or informalcollaborations?
47%
47%
42%
40%
Access to new/
emerging technologies
Access to new
customers
Access to new
geographic markets
Ability to strengthen our
innovation capabilities
Note: % of respondents who ranked each option 1st,
2nd or 3rd
If you have unlimited
resources and I dont
know any company that
does you can try to go it
alone and take time and
build products. But if you
want to accelerate what
youre doing, its better
and easier with a partner
that understands the
market.
Alan D. Wilson
Chairman, President andChief Executive Officer,McCormick & Company, US
When partnering with
technology companies,
its a broader area,
including big data,
sensors, and computing.
Therefore we are
beginning to understand
how technology
companies and
healthcare companies
like Johnson & Johnsoncan collaborate and
create value.
Joaquin Duato
Worldwide Chairman,Pharmaceuticals, Johnson& Johnson, US
54%of CEOs rank access tonew technologies as their
number one reason forpartnering
Unlikely alliances
Whats more, CEOs are starting to developdiverse collaborative networks. True, moststill work mainly with more traditionalstakeholders: 69% are partnering or haveconsidered partnering with suppliers, forexample. But two-thirds are also doing so withcustomers GE and Unilever both have OpenInnovation initiatives to develop new business
ideas and ways of collaborating with customersand consumers, for example. Such partnershipscan help drive innovation, with ev idencesuggesting that the most innovative companiesco-create almost twice the proportion of theirnew products and services with customers thanthe least innovative.16
Furthermore, half or more of CEOs arepartnering, or have considered partnering, withbusiness networks, rms from other industries,
academia or even competitors (see Figure 15).
Forty-four percent of CEOs are working withstart-ups, and at least a third with governmentand NGOs. Indeed, 44% of CEOs plan to work
with their governments to develop a skilled andadaptable workforce over the next three years.Twenty-seven percent want to collaborate withgovernment to create a more competitive andefcient tax system. And almost as many will
be collaborating to develop an ecosystem thatdrives innovation.
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Partnerships
53%50%
52%
37%
44%
69%
66%
52%
36%
Suppliers
Customers
Academia
Competitors
Firms from otherindustries
Government
NGOs
Start-ups
Business networks,clusters, or trade
organisations
Figure 15 CEOs are starting to build diverse collaborative networks
Q: Are you currently engaged with or considering engaging with any of the followingtypes of partners through joint ventures, strategic alliances or informal collaborations?
More diverse networks, however, create greatercomplexity. Stakeholders now wear multiplehats; customers, for example, can now be
suppliers or partners at the same time. This hasimplications for how companies think about,and engage with, their partners switchingbetween competing and collaborating withpeers for example. And it has implicationsfor how companies manage the multiplerelationships they can have with a singlestakeholder; the ability for different teamsto engage in a consistent way is becomingincreasingly important.
The ability to effectively develop and managemuch larger, more dynamic and more diversenetworks of partners will be a hallmark of successin the new competitive environment. We believethe most effective ecosystems will bring togetherestablished rms, start-ups, individuals and
networks of individuals, and public, privateand third sector organisations. Theyll utilisedifferent types of contractual arrangements,
whether short- or long-term, formal or informal.In short, such ecosystems will have the abilityto take on the role that internal businessfunctions currently play.
The power of such diverse partnerships cannotbe underestimated as a means of generatingnew perspectives and solutions. In theEuropean Union, for instance, the formation ofnew industry clusters is being encouraged as ameans to promote competitiveness abroad, withbig companies partnering with smaller ones,and businesses collaborating with governments,customers and academia.17And in emergingmarkets, with complex and fragmented routesto market, a exible strategy that relies more
on getting the right local partner and less on
control and visibility is key.18
The competitor theme is a
very interesting one
because I dont believe in
competitors, I only believe
in colleagues that act
together...to bring us more
business opportunities.
Oscar Farinetti
Founder and Creator,Eataly, Italy
If one thinks about
capability development,
leadership development,collaboration with the
world of academia and
universities is extremely
important. So its not just
about the technology [or]
expanding your service
offering, but nowadays
it includes [almost] the
whole value chain of a
company, while naturally
you need to be very good
[at] the core with ones
own competencies.
Kimmo Alkio
President & CEO, Tieto, Finland
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27PwC 18th Annual Global CEO Survey
Tough questions about developing diverse anddynamic partnerships
How are you leveraging partnerships to enhance your organisations
core capabilities?
What types of organisations are you collaborating with? Do they include
those outside your industry, or those outside the private sector?
What can you learn from your collaborative networks in order to
deliver new value to customers?
How are you ensuring that your partnerships are mutually beneficial
and aligned in objectives?
In what ways are you harnessing the power of collaborative technologies?
How can you create successfulpartnerships?
Finding innovative ways to build relationships
that are benecial for all parties is vital tosuccess. Cooperation can take on forms otherthan price as partners within a network becomemore interdependent. During the nancial
crisis, for example, Toyotas suppliers wereunable to borrow money, so Toyota did it ontheir behalf, both increasing the total valueof that ecosystem and enhancing the qualityof their relationships.
Such new systems of interaction with checksand balances will become increasingly
important, with trust being central to success.
Ultimately, the ability to harness the powerof technology for collaboration will be key tocreating and managing effective partnerships.77% of CEOs say that digital technologiesare creating value for internal and externalcollaboration. We believe the use of social media,for example, will be critical in facilitating thefree ow of information within collaborative
networks and in allowing idea generation tobecome distributed. Already many companiesuse online platforms to develop new products
and services, or to improve supply chain andsourcing relationships. Statoil and GE, forexample, created crowdsourced marketingcampaigns to fuel innovation, while Nikedeveloped a mobile app to share its sustainableproduction and material standards with thegreater design community. Having commonstandards and protocols, however, will becritical in enabling widespread collaborationusing digital tools.
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Diversity
Views about diversity and inclusiveness seemto have reached a tipping point. No longer are
they seen as soft issues, but rather as crucialcompetitive capabilities. Of the 64% of CEOs
whose companies have a formal diversity andinclusiveness strategy, 85% think its improvedthe bottom line. And they also see suchstrategies as beneting innovation, collaboration,
customer satisfaction, emerging customerneeds and the ability to harness technology all vital capabilities for success in the newcompetitive environment.
The right mix of talent
Having a good mix of talent and the abilityto alter the mix depending on business needs is critical as companies look to apply theircapabilities in more innovative ways, partnersuccessfully and harness technology effectively.These approaches require people who can thinkand work in highly different ways: those whocan imagine and those who can implement;all-rounders and deep specialists; as well asthose who can lead cross-functional, cross-sector, cross-cultural initiatives. Equallyimportant are people who can adapt the way
they think and work, as circumstances require.
Finding different waysof thinking and working
We want people in the
company that havediffering ideas, differing
experiences, differing
opinions, because we
need to solve our
customers problems.
The only way you do
that in a world-class way
is to bring a variety of
people together and utilise
their collective know-how.
Diversity and inclusion
will make us that much
more competitive in themarketplace.
Denise Ramos
Chief Executive Officer andPresident, ITT Corporation, US
Cultural differences
help us progress in areas
such as governance
and innovation.
Jean Kacou Diagou
Chief Executive Officer, NSIA,Cte dIvoire
85%of the CEOs whoseorganisations havea diversity andinclusiveness strategy sayits enhanced businessperformance and
56%say its helped them
compete in newindustries or geographies
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29PwC 18th Annual Global CEO Survey
A one-size-ts-all approach wont work to get
this broad mix of talent, and companies areemploying a diverse range of strategies to nd
and develop the people they need.
Skills are at the top of CEOs talent agenda.81% say their organisations are now looking fora much broader range of skills than in the past.This is unsurprising at a time when CEOs want
to increase headcount but concerns about theavailability of key skills are at an eight-yearhigh (see Figure 16).
Smaller companies in particular are suffering:CEOs of companies with up to $100 million inrevenue are much more likely than largercompanies to be increasing headcount in 2015and also much more likely to be extremelyconcerned about access to key skills. A recentsurvey of family businesses showed that nearlyhalf were apprehensive about their ability
to recruit skilled staff in the next 12 months,and 61% saw retention of skills and talent asa key issue that must be addressed in the nextve years.19
Technological skills are especially soughtafter; 75% of CEOs think that specic hiring
and training strategies to integrate digitaltechnologies throughout the enterprise are keyto getting the most out of digital investments.As part of the increased clock speed throughnew technologies, you have to keep your eyescontinuously open and really try to learn
something new every day, says Kimmo Alkio,President & CEO of Tieto in Finland. Focusedon what Tieto calls Generation T, Alkio believestodays organisations have to think differentlyabout how we serve the young talent [and] whattype of opportunities, networking and type ofculture you need to develop as a company.
Figure 16 Half of CEOs plan to increase headcount in the coming year
Q: Do you expect headcount in your company to increase, decrease or stay the sameover the next 12 months?
decrease in headcount
(2014: 20%)
headcount will
remain the same
(2014: 29%)
increase in headcount
(2014: 50%)
50%
21%
28%
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Diversity
Figure 17
CEOs are using a diverse range of strategiesto get a good mix of talent
Q: To what extent do you agree or disagree with the following statements about your organisationstalent activities?
56%
58%
52%
48%
81%
81%
78%
71%
25%
23%
26%
23%
We always equip employees with new skills through
continuous learning or mobility programmes
We look for a much broader range of skills when
hiring than we did in the past
We always use multiple channels to find talent,
including online platforms and social networks
We actively search for talent in d ifferent geographies,
industries and/or demographic segments
Agree Agree strongly
To nd the skills they need, companies are
searching in many more places. Seventy-eightpercent of CEOs told us their business alwaysuses multiple channels to nd talent, including
online platforms and social networks (seeFigure 17). And 71% said their business activelysearches for talent in different geographies,industries and demographic segments. Tappinginto the labour pool in emerging markets is
particularly important; by 2020, it s estimatedthat more than half of graduates aged 24 to35 years will be found in these countries.20
Developing the skills of the existing workforceis also high on CEOs list of priorities. Most(81%) say that their business always looks toequip employees with new skills, throughcontinuous learning or mobility programmes.Nurturing an adaptable talent pool can havereal value for the business; research indicatesthat this could unlock up to $130 billion in
additional productivity globally.21
Learning and development is a particularfocus; when CEOs were asked which aspectsof diversity and inclusiveness were specically
addressed in their companys talent strategy,this was among the top categories of responses.Indeed, US spending on corporate traininggrew 15% in 2013 the highest growth ratein seven years.22
Mobility is also increasingly important asthe availability and location of global talentchanges; a recent study shows that 89% oforganisations plan to increase the numbersof internationally mobile staff in the comingtwo years.23Mobility is also important inmeeting the needs of new workers, with over70% of millennials wanting to work abroad.24
81%of CEOs are seekinga much broaderrange of skills
Design thinking teaches
us that great productsand solutions come when
there is a synthesis of
lots of different kinds of
perspectives, and when
we are diverse we create
the opportunity for that
rich synthesis of great
perspectives. The more
diverse we are, the better
we will all be.
Dr. Vishal Sikka
Chief Executive Officer &
Managing Director, Infosys,India
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31PwC 18th Annual Global CEO Survey
Figure 18 Gender and knowledge, skills and experience are the most common dimensions addressed in CEOsdiversity and inclusiveness strategies
Q: Which dimensions of talent diversity and inclusiveness do you specifically address, or plan to address in your companys talent strategy?
33%
Gender Knowledge, skills
and experience
Ethnicity/
nationality/race
Attitude to
career/progression
Age Disability Personal quality/
mind-sets
32.4%
24.5%
8.2% 8% 7.2%
4.7%
Religion/
creed
Adaptability
1.2% 0.8%
Easier said than done
Much more, however, could be done to leveragethe power of different talent.
Gender and knowledge, skills and experienceare by far the main reference points for diversityand inclusiveness strategies (see Figure 18).But we believe whats needed are people who are
different across all dimensions for exampleother physical characteristics, life situations,experiences, perspectives and personalities.
Whats more, while most CEOs say theirorganisations are looking more widely acrosschannels, geographies, industries anddemographic segments to nd talent, only
a quarter cite access to talent as a top-threereason for partnering; even though collaborating
with a range of organisations academia,government and business networks can bea rich source of talent.
Base: 858
Note: Respondents may have highlighted more than one dimension in response to this question.
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Diversity
And nearly one third of CEOs say theirorganisations dont have a strategy to promotediversity and inclusiveness, though 13% say
there are plans to adopt one (see Figure 19).Yet formal strategies can help to broaden themix of talent; CEOs who do have such strategiesin place are more likely than those who dontto hire in different markets, industries anddemographic segments, use differentrecruitment channels, search for a wider rangeof skills, and equip employees with new skills.
Identifying talent is just one piece of the puzzle.Even after being hired, employees who dont t
stereotypical characteristics for particular rolesoften struggle to succeed in the workplace. OurWomen in Work index a weighted average ofvarious measures that reect female economic
empowerment, including equality of earnings shows, for example, that while women dorelatively well in places like Scandinavia,Canada, Australia and Switzerland, they havea long way to go elsewhere in the OECD.25
Creating an environment for success meanshaving strategies to tackle such issues asunconsciously-held biases, as well as havingdecision-making processes to encourage
divergent thinking, and concrete indicatorsof progress. Here again, formal diversity andinclusiveness strategies have a role to play.
Putting measures in place to help a wide rangeof talent to succeed is important for developingleaders who can think and work in different
ways. Having such leaders has an impact oncorporate success; one study of global companiesshows, for example, that those with at least one
woman on the board delivered higher averagereturns on equity, lower gearing, better average
growth and higher price/book value multiples.26
Figure 19 Most CEOs organisations have adiversity and inclusiveness strategy but nearly a third dont
Q: Does your organisation have a strategy to promotetalent diversity and inclusiveness or have plans toadopt one?
64%
13%
17%
Yes, we have such a
strategy in place
No, we dont have
such a strategy
nor do we plan
to adopt one
No, we dont have such astrategy but plan to adopt one
We need to have ever
more people, from
the most diverse
backgrounds, as we do
not know what area will
produce the innovation
that will make a
difference for us. It can
be products, it can be
services, it can be forms
of communicating with
or understanding the
customer. Therefore,
the more diverse people
we have in terms of
expertise, age and
nationality, the better.
Roberto Oliveira de Lima
CEO, Natura CosmticosSA, Brazil
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Tough questions about finding different ways ofthinking and working
How are you getting the visibility that you need to ensure that skills are
being deployed effectively in your organisation?
Are you measuring how diversity and inclusiveness contributes to your
bottom line? And assessing its impact on the capabilities you have or
need to develop?
How are you ensuring that your organisation has access to the skills it
needs now and in the future?
What strategies do you have in place to ensure that you are looking
as widely as possible for talent?
What measures of diversity are important to help your organisation
achieve its goals?
Ross McEwan, Group Chief Executive of RBS,conrms the benets of additional female
senior executives recently introduced to histeam. We have found that diversity aroundthe table has been fantastic, he says, notingthat these executives bring dif ferent points of
view, are able to come at problems from quitea different angle and deal with people issuesquite differently from the way male executives
traditionally would. If I dont have thosepeople sitting there, I dont get that point of
view, or its a lot harder to get because youhave to go outside the room to bring it in.
Yet despite the rapidly changing composition ofworkforces in general, executive ranks remainoverwhelmingly white and male. One recentstudy shows, for example, that just six CEOsof Fortune 500 companies are black 1.2% ofthe total.27Another, which analysed workforcedata for more than 1.7 million employees in
28 countries, found that although womenconstitute 41% of the global workforce only19% of executives are female.28
Theres also much more that companies cando to leverage technology in their peoplestrategies. Fifty-eight percent of CEOs thinkdigital investments have created value for theirorganisation in terms of nding, developing
and retaining talent. This, however, is fewerthan those who see value for many other areas
of their business, despite obvious benets for
both the learning and development programmesand the multi-channel recruitment strategiespursued by so many companies. And althoughmany CEOs told us two years ago that theylack critical information about their workforce,data analytics still appears to be under-used;
just 46% of CEOs this year say their companiesalways use it to provide better insight into how
effectively skills are deployed.
Overall, there seems to be a denite disconnect
between the importance companies ascribe tousing digital technologies to engage customersand the use of such technologies as a means ofengaging employees.
Those companies who do more fully leveragethe power of diverse talent are better equippedto seize business opportunities. We found thatCEOs who see more opportunities today than
three years ago were more likely than thosewho see more threats to have a diversity andinclusiveness strategy, and to have seen a rangeof benets from that strategy. Theyre also
more likely to look widely for talent, upskillemployees and use data analytics to assess howskills are being used. All this is perhaps givingthese CEOs the condence to hire, as theyre
much more likely to be increasing headcountin the coming year.
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The CEO agendaWhats needed to
compete in todayseconomy?
When asked to name the one capability thattomorrows CEO must have, strategic thinking
and adaptability were cited by an overwhelmingnumber of business leaders. Small wonder;constant change is the key characteristic oftodays competitive landscape. Megatrends, andhow companies react to them, are changing themarkets where CEOs seek growth, the range ofthreats to business and the very fundamentalsof entire industries.
In fact, to plan effectively for the near future,CEOs might also want to have a healthyappreciation of the surreal. After all, many of
those disruptive technologies didnt even existten years ago, yet today theyre allowing start-upsto dominate entire industries, customers to beimportant collaborators, and a new generationof employees to bring in new thinking that couldchange the very DNA of the companies they
work for. And theres every reason to believethat the pace of change will only accelerate.
But just how can CEOs adapt to such upheavals?
Weve identied six steps that business leaders
can take to help build success in 2015 (see box,page 35). We believe that those CEOs who candevelop the strategic focus and capabilitiesconsidered here will be best placed to win in theemerging competitive landscape. Its arguablethat these approaches wouldnt have beensubstantially different ten years ago. But whatsdifferent now is the impact of digital technologies
on virtually every aspect of business.
The transformational effect of the informationage on customer desires is fuelling the need forbusinesses to re-evaluate their capabilities andthe value they create and to leverage digitaltools to deliver what customers want.Widespread and fast-changing developments ina range of industries driven in large part bytechnological change are spurring governmentconcerns, making improved dialogue betweenpublic and private sector vital. And digital
technologies have made possible the abilityto develop and manage a workforce andpartnership network thats more diverse,adaptable and connected than ever before.
Soft skills
Ultimately, given the many new challengescompanies face in the rapidly evolving globalmarketplace, CEOs could be forgiven for
wondering if they didnt need somesuperhuman qualities to provide the bestleadership seeing around corners could
certainly come in useful.
Of course X-ray vision and future-gazing arentreally offered as Learning and Developmenttraining. So what qualities are needed tobecome the type of leader who can not justunderstand the key pointers we offer here buthave the condence to apply them effectively
throughout the business?
Final words
In todays world, which
is becoming more globaland multicultural,
whether you like it or
not, industries overlap
and penetrate each
other. If you dont
know how to learn,
you will not survive.
Alexey Marey
Chief Executive Officer,Alfa Bank, Russia
In order to identify and
learn, we clearly need
to be a more agile, fast
moving company and,
something of great
importance, we need to
search for more partners
and more entities to
work with and above
all, I think technology
plays a decisive factor
in this.
Dr. Javier Genaro GutirrezPemberthy
Chief Executive Officer,Ecopetrol, Colombia
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More than anything, the CEOs we talked to thisyear stressed the soft skills of leadership. Theyspoke of the need for vision, and for agility and
exibility in decision-making. They highlightedthe importance of being curious about theirbusiness world even when sometimes theymight prefer to stick their head in the sand andhope change passes them by. Being curiousgives a CEO the insight to separate real changefrom temporary hype, and act decisively on thereal change.
Above all though, perhaps the quality CEOsmost need to master is humility. By beinghumble while leading, a CEO will be able tolisten and learn from the team they have builtaround them; theyll be able to take maximumadvantage of the diversity they are cultivatingand theyll be receptive to the insights they gainfrom new collaborations. Most important, thishumility will give CEOs the condence to pass
on what they have learnt to the next generationof leaders.
Tough questions about leadershipin todays economy
How do your leadership skills need to evolve over
the next five years or ten?
How are you ensuring that youre picking upand acting on trends as they emerge with
increasing rapidity?
How are you navigating the sea of information
out there in order to focus on the things that
really matter?
Have you got the right team around you that you
can trust to make quick decisions when required?
From whom do you learn, and how do they help
you to make better decisions?
The one attribute CEOs need in the future to
succeed, that I would place my bet on, is curiosity.
From curiosity comes learning and new ideas.
In businesses that are changing very rapidly,
if youre not curious, if youre not learning, ifyou dont have new ideas, youre going to have
a real problem.
Michael Dell
Chairman and Chief Executive Officer, Dell Inc., US
1. Focus on what youre good at
In an increasingly confusing marketplace, its crucial to identify
your organisations key capabilities, those which make it unique.
We dont think companies can manage more than three to sixtruly differentiating capabilities.
2. Re-evaluate the business youre in
Once you understand your strengths, consider the true value you give
to stakeholders. Recognise who your competitors really are including
those in different industries. Ensure theres strong cohesion betweenyour organisations capabilities, value proposition and product and
service offerings. It could be that your core strengths could excel in
a sector youve never been part of before.
3. Anticipate policy issues
Pre-empt them by self-regulating effectively. Work with government
to develop effective and balanced policies, as part of a collaborativenetwork of partners.
4. Build diverse yet aligned partnershipsConsider how partnerships could enhance your capabilities. Develop
a broad, diverse and dynamic ecosystem of partnerships that you can
adjust upwards or downwards depending on needs. And strengthencollaborations by identifying mutually beneficial outcomes.
5. Transform through digital
Understand the impact of digital technologies on your stakeholders and
the value they seek. Assess how your operating model needs to change
to fulfil new needs and desires and have a clear vision and plan forhow digital investments can help achieve these changes.
6. Develop a good mix of talent
Leverage the full spectrum of differences in thinking and working to
build a collaborative and technologically skilled workforce that can
deliver the innovation you need to compete in the new economy.
Technology
Diversity
Customer-driven capabilities
Partnerships
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Final words
Cant get enough data?
Figure A CEOs are concerned about a wideand growing range of threats
Q: How concerned are you about the followingpotential economic, policy, social and businessthreats to your organisations growth prospects?
Figure C CEOs want to partner not only to expand markets but to accessemerging technologies and strengthen innovation capabilities
Q: What are your reasons for collaborating in joint ventures, strategic alliances orinformal collaborations?
Figure B Technology and healthcare are the top two industriestargeted by companies from other sectors
Q: Which industries has your organisation entered within the past three yearsor considered entering?
Over-regulation Availability of key skills
Fiscal deficit and
debt burden
Geopolitical uncertaintyNew in 2015
Rising taxes Cyber threatsNew in 2014
Consumer behaviours Social instabil ityNew in 2015
Speed of technological
change
New market entrants
2013 2014 2015 2013 2014 2015
2013 2014 2015 2013 2014 2015
2013 2014 2015 2013 2014 2015
2013 2014 2015 2013 2014 2015
2013 2014 2015 2013 2014 2015
69
72
78
58
63
73
71 71 72 72
62
70 70
48
61
42
47
58
40
46
54
49
52
60
60
Base: Respondents who stated yes