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Redefining business
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changing world
CEO Survey
www.pwc.com/ceosurvey
More disorienting still for CEOs is their
Introduction from
growing feeling that our globalised
economic and social fabric is fraying as
divergent political, business, societal
Dennis Nally
and cultural movements take hold.
This is driven by digital technologies
that have enabled people all over the
world to be more connected, better
informed, and as a result, increasingly
How to lead in complicated times? Thats the question all CEOs are empowered and emboldened.
seeking to answer at a time of prolonged and continuing uncertainty.
Its not lost on CEOs that a great many
of these technologically empowered
As they look forward to the year ahead citizens are also their customers or
CEOs are less confident about prospects potential customers. While they are
for the global economy than they were better connected than ever before
in 2015. The same is true overall when they must also navigate a world that
they consider their own companys is being dramatically shaped by
prospects for growth. other megatrends such as increasing
urbanisation, climate change and rapid
Many CEOs do still see opportunities demographic and social shifts. Faced
but they are looking to play things safe. with these changes, CEOs tell us that
The United States and China are far customers will increasingly judge
and away the most important markets companies based on how they help
that CEOs identify as offering the best greater society and how they live up
prospects for growth, with Germany and to their own values. Notably, nearly a
the United Kingdom some way behind. quarter of CEOs said their company has
That said, CEOs also see potential in changed its sense of purpose in the last
Indias bullish business attitude and three years to take into account the
in Brazil despite its current political broader impact it has on society.
and economic struggles. Potential
new opportunities in Mexico and To successfully address the expectations
the UAE have also made CEOs pay of a super-connected and technologically
attention in the last year. smart society, companies are looking to
technology (of course) for answers.
CEOs continue to highlight over- Internet-enabled technologies continue
regulation as their biggest concern. to help companies innovate by creating
But even as issues like an increased more relevant products and user
tax burden and governments response experiences for customers, while digital
to fiscal deficits and debt burdens native talent is now deemed essential
loom large, geopolitical uncertainty for future business growth. Yet for all
(exacerbated by regional conflicts the technological breakthroughs in
and increased terrorism attacks) areas like customer insight and
is a top concern for nearly three- marketing, companies still struggle
quarters of CEOs. to create a business proposition that
both drives growth and creates value
for greater society.
Dennis M. Nally
Chairman, PricewaterhouseCoopers
International Limited
PwC 3
Contents
06 18
12 26
14 Is this the era of the good consumer? 28 Can everything be confidently measured?
Navigating complexity
to exceed expectations
32 Linking strategy to execution
PwC 5
Growing in
complicated times
Todays CEOs face a business environment
74%
Are we in an environment thats becoming increasingly complicated
where change will take to read and adapt to.
place at tremendous
speed, whether its Seven years on from the global financial crisis,
economic leadership, of CEOs are concerned
about geopolitical the business landscape still hasnt really returned
challenges of emerging
uncertainty to what it was. Will it ever? Last year regulation,
countries or developed
skills, national debt, geopolitical uncertainty and
countries, political unrest,
challenges with extremist taxes topped CEOs list of concerns about threats
... low oil prices have
views around the world, ramifications in terms of to business growth. None of these have gone
new technology, or new social dynamics because away this year. In fact, the level of worry is higher
business models? That it will put pressure on today than at any point in the past five years.
is the new normal. the availability of funds
Companies and countries in the Middle East, Concern about over-regulation in particular
that will lead this new especially as far as the is still highest, cited by 79% of CEOs making
normal have to deal with oil-producing countries it the fourth year in a row that its risen (see
an environment where are concerned ... [which] Figure 1).
theres constant change, have very large young
and be able to adjust to populations ... there are
Geopolitical uncertainty, meanwhile, has
those at a faster and going to be enormous
faster pace. become the second biggest concern, cited by 74%
budgetary pressures on
the various countries. of business leaders. This comes at a time when
John Chambers
Executive Chairman of the
terror attacks are increasing and touching every
Dr. Ahmed Heikal
Board, Cisco Systems, Inc., US
Chairman and Founder, Qalaa
part of the world, many linked to the heightened
Holdings, Egypt conflict in Iraq and Syria. Global conflicts are
also connected to anxieties about social
instability and readiness to respond to crises,
named by 65% and 61% of CEOs, respectively.
Cyber security is also a worry for 61% of CEOs,
representing as it does threats to both national
and commercial interests.
Q: How concerned are you about the following potential economic, policy, social and
business threats to your organisations growth prospects?
Top-three threats
Over-regulation Geopolitical uncertainty Exchange rate volatility
Key threats
There are, moreover, other uncertainties CEOs
Over-regulation 79%
must contend with. Where theres reasonable
economic growth its often being aided by Geopolitical uncertainty 74%
extraordinary monetary policies, even though
the United States Federal Reserve bucked this Exchange rate volatility 73%
trend recently by raising US interest rates for
Availability of key skills 72%
the first time in nine years. This move, together
with Chinas surprise devaluation of the yuan in Government response to
71%
fiscal deficit and debt burden
August 2015, helps explain why exchange rate
volatility, cited by 73% of CEOs, is third among Increasing tax burden 69%
their top concerns.
Social instability 65%
41 37
2013 2014 2015 2016 2013 2014 2015 2016
52
49
PwC 7
Growing in complicated times
Figure 2 CEOs are less confident about global economic and business growth prospects in
these uncertain times
Q: How confident are you about your companys prospects for revenue growth over the next 12 months?
Do you believe global economic growth will improve, stay the same or decline over the next 12 months?
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
CEOs very confident in business growth prospects CEOs confident global economic growth will improve
Base: All respondents (2016=1,409; 2015=1,322; 2014=1,344; 2013=1,330; 2012=1,258; 2011=1,201; 2010=1,198; 2009=1,124; 2008=1,150;
2007=1,084; 2006 (not asked); 2005=1,324; 2004=1,386)
Note: In previous years, respondents were asked Do you believe the global economy will improve, stay the same or decline over the next 12 months?
Q: For each alternative, please select the one that you believe the world is moving more towards
Nationalism and
Political unions 39% 53% devolved nations
Economic unions
Multiple economic
and unified 35% 59%
models
economic models
Common global
beliefs and value Multiple beliefs
14% 83%
systems and value systems
PwC 9
Growing in complicated times
60%
Theres evidence that most business leaders,
are similar to those of for example, are optimistic about deeper
other countries, but have economic integration as a result of the Asia-
enough differences to
30% see more Pacific Economic Cooperation (APEC).1
create a divergence.
34%
opportunities
Michael Daniell
This isnt to say that globalisation is dead.
Managing Director and CEO, see both more
Fisher & Paykel Healthcare opportunities
The climate change accord reached at the
Corporation Ltd., New Zealand and more threats United Nations Climate Change Conference
66%
in Paris in December 2015 is a good example
of inter-governmental cooperation.
29% see more
threats Given the plethora of uncertainties CEOs are
facing, its little wonder that theyre divided
32%
see only
about whether there are more threats or
opportunities today. Two thirds of CEOs (66%)
more threats believe that their business faces more threats
today than three years ago, while almost as many
(60%) see more opportunities (see Figure 5).
Base: All respondents (2016=1,409; 2015=1,322)
?
innovation and talent to execute the
strategies that meet these greater
expectations. CEOs are using technology to get
closer to consumers but are being challenged to Tough questions to ask about
align all parts of their operating model behind
customer strategies. Some companies are growing in complicated times
bridging what we call an execution gap by
shaping their entire value proposition, strategy,
operations and capabilities tightly around a Have you adjusted your operational model to accommodate
strong commitment to what they stand for. future potential increases to your cost of capital as interest
Theyre also looking to build better innovation rates rise and currency markets become more volatile?
and people capabilities to address changing
customer expectations.
Are you tracking the right risks around new political dynamics
The final capability CEOs are looking to such as geopolitical uncertainty and cybersecurity as they
develop are methods of measuring and replace concerns related to coping with the financial crisis?
communicating success. CEOs are seeking
to better measure the impact and value of Whats your organisation doing to prepare itself to respond
innovation and key risks for stakeholders.
to and recover from crisis?
Companies are addressing these challenges
through a greater focus on data and technology
to gain better insight into business processes Do you have a strategy in place for a more divergent world
and to measure a broader range of variables. where authority and influence are more widely distributed?
Theyre also looking to better communicate
a range of softer issues in a reliable and How are you preparing your organisation to face non-
consistent way across multiple channels.
traditional competitors now and in the future?
PwC 11
Addressing greater
expectations
As technology and other factors create an The views of these and other stakeholders,
environment of higher transparency, CEOs have The way we deal with our including employees and investors, arent just
set their radar on a wide range of stakeholders. customers and charge our evolving but diverging, as CEOs have told us.
Customers remain the top priority, with 90% of customers and delight our Customer behaviour, in particular, has become
CEOs indicating they have a high or very high customers has changed more complicated as values and buying
completely from the old
impact on their business strategy (see Figure 6). preferences evolve. The three biggest trends
way of doing business.
But government and regulators come in second CEOs see as most influencing those views
Johan Dennelind
(cited by 69% of CEOs). Thats higher than technological advances, demographic changes
CEO, TeliaSonera AB, Sweden
industry competitors and peers (67%) and no and global economic shifts as well as the
doubt reflects CEOs enduring concerns about interactions between them, are only going to
over-regulation in the marketplace. continue to drive change (see Figure B, Looking
for more data?, page 34).
Q: What impact do the following wider stakeholder groups have on your organisations strategy?
90%
get information and buy goods and services.2 ... as a consequence of the
The Uberization of a growing number of internet and the digital
sectors offering quick, simple and dynamic way of doing things,
ways to access goods and services using mobile customers basically of CEOs say customers
apps is also becoming an important trend in want to do a lot of things have the biggest impact
changing customer perceptions of value. At the themselves. Theyre on strategy
same time, these technologies are giving more self-directed, as we call it.
people more access to more information about They know everything.
what companies do and the impact of their They Google everything.
Therefore they come to the
actions. Together, these factors are helping to
bank with a completely
reshape how people interact with and think different expectation.
about brands, albeit in very different ways.
Ralph Hamers
CEO, ING Group, Netherlands
PwC 13
Addressing greater expectations
Is this the era of the good consumer? Yet interpreting customer views isnt a simple
Its long been assumed that only a small I think our social black-or-white picture. Those same emerging
percentage of consumers seek out ethical purpose and the markets consumers, in Asia Pacific for example,
and sustainable products and services. associated emotional are still happy to drive SUVs as opposed to more
engagement from our fuel-efficient vehicles.7 And theres evidence
Theres growing evidence, however, that this
colleagues is one of the that those same millennials who value so-called
is changing. Take the consumer goods giant,
keys to developing a
Unilever. Its portfolio of so-called Sustainable green products and services are also driven by
winning successful
Living brands now equals half of the companys getting the best deal.8
strategy for Legal &
total growth and is growing twice as fast as General. Why that is
Unilevers other brands.3 Its just one of nine important is it creates A central concern the quest for trust
companies globally that generate a billion tremendous trust Its hard enough for companies to juggle current
dollars or more in annual revenue from amongst our customers customer expectations while delivering results
sustainable products or services.4 Indeed, in and the other politicians
year in, year out. Yet CEOs know that they must
2015 sales of consumer goods from brands with who are helping shape
take on an even more challenging task and that
a demonstrated commitment to sustainability the future, whether those
are local politicians or is to start preparing their businesses today for
grew more than 4% globally.5 As Wilson Ferreira the more complex customers of tomorrow. They
national politicians, and
Jr., CEO of CPFL Energia, observes, Todays worry that not doing so could impact trust in
they want to engage with
consumers make choices not only based on the trustworthy companies. their brand, creating a significant risk to the
quality of the service provided, but even based long-term viability of their business. CEOs are
Dr. Nigel Wilson
on the causes that a company supports. In fact, CEO, Legal & General, UK all too familiar with the fallout from breaches
we are living in the era of the good consumer. of trust. Over half the CEOs surveyed (55%)
are concerned about the lack of trust in business
Part of this change is being amplified by today compared with 37% just three years
demographics: the millennial generation and its ago. The Edelman Trust Barometer 2015 also
growing purchasing power. Globally, 10,000 showed that public levels of trust in business
people turn 30 every day and it appears theyre in 2015 had declined to the lowest level since
more likely to buy from companies that take 2008 and that CEOs were seen as among
action on sustainability issues.6 Campbell Soup the least credible sources of information.9
is one company thats taking notice. Its just The challenge facing business leaders is
bought Plum Organic Baby Food, giving the this: are they trusted to help navigate this
company a window into millennial parents increasingly complex landscape?
and an understanding of how to improve the
way children are eating and making healthier Perhaps the most eloquent description of the
selections at a very young age ... Training the problem was articulated by John Nelson,
taste-buds of the next generation is meaningful chairman of Lloyds, the global specialist
to us, and very much aligned with our company insurance market. As he explained to a meeting
purpose, according to Denise Morrison, of business leaders in 2015, Most concerning
President and Chief Executive Officer of of all in my mind is that we are seeing a definite
US-based Campbell Soup Company. shift in the attitudes towards business of
populations around the world. There is a lack
And what about the expectations of emerging of trust in business big business in particular
markets consumers? They face the challenges and this is leading in terms of real issues
of forging a middle-class lifestyle amid in some cases to mistrust in capitalism.10
diminishing access to natural resources and
rapid urbanisation, with its associated problems There is a body of research supporting the
like pollution and overcrowding. CEOs in Africa idea that, when there is a high level of trust
and Asia Pacific are more likely to say that their in a company, it drives business performance
customers seek out organisations that address by attracting new customers and retaining
the needs of a wider set of stakeholders (39% existing ones.11 A high level of trust also makes
and 31%, respectively) compared to the global employees more committed to staying with
total (27%). the company, partners are more willing to
collaborate and investors more prepared
to entrust stewardship of their funding.
Consequently, those organisations that can
build trust seem to garner significant benefits.
Q: In which of the following ways has your organisational purpose been impacted by
wider stakeholder expectations?
45% 24%
Changed within
Have always had last three years
broader purpose
16%
Not changed and not
considering doing so
12%
Not changed but
considering doing so
about value for one or more of a variety of employees. Consumers Note: Respondents may have highlighted more than one dimension
told us stories about how in response to this question.
stakeholders, including shareholders, supply
our brands really matter
chain partners, employees, customers and to them. Thats led to an
society at large as well as their business itself, umbrella over all of our
in terms of things like growth, productivity or brands, that purpose can
costs (see Figure 9). encompass and motivate
our people around why
what we do every day
matters.
Denise Morrison
President and Chief Executive
Officer, Campbell Soup
Company, US
PwC 15
Addressing greater expectations
52%
... once you have done organisation by the value thats created for
your bit fulfilled your customers. But of those CEOs, over a third
social responsibilities (35%) also talk about value for wider society,
of CEOs say creating value and formed a community employees and/or supply chain partners,
with shared interests,
for wider stakeholders reflecting a clear recognition of the changing
helps profitability with local people
expectations of their customers.
they will welcome your
projects and provide huge
support. So a companys This acknowledgement of the changing needs
own interest and the of customers as well as those of other
social value it provides stakeholders, including their employees is
are closely connected. reflected in other ways that CEOs describe their
In fact, this is also a kind organisation. Eighty-four percent of CEOs
of investment, and it believe their companies are expected to address
always brings returns. wider stakeholder expectations; 82% tell us
Li Huaizhen their company prioritises long-term over
President, China Minsheng short-term views; 64% say that corporate social
Investment Corp., Ltd., China
responsibility is core to their business rather
than being a stand-alone programme; and 72%
say their company reports on non-financial as
well as financial matters (see Figure 7).
?
Such efforts, moreover, are seen to be
compatible with profitability, albeit in different
ways. Fifty-two percent of CEOs say that Tough questions to ask about
creating value for a wider set of stakeholders addressing greater expectations
helps profitability. Richard Goyder, Managing
Director of Wesfarmers, a diversified
conglomerate headquartered in Australia, puts
Has your organisation undertaken scenario modelling or
it this way, I dont think, as a listed company,
theres any doubt that our primary objective is
other initiatives to better understand how global trends like
to generate returns for our investors. But we technological advances, demographic changes and global
have to do that sustainably, we have to do it economic shifts are driving customer expectations today
ethically and we have to do it in a way that and tomorrow?
contributes to the communities in which we
operate. Thats for our own good anyway.
How are your CIO and CMO working together to make the
Because if we help the communities in which we
operate then those communities will have more
best use of data analytics for a full picture of your customers
capacity to do business with us in the future. now and into the future? How about your workforce?
PwC 17
Transforming: technology,
innovation and talent
Walking the talk
45%
We have to have Its evident that most businesses today, in
propositions which are defining what they stand for, recognise the
based on sound ethics needs of a wider set of stakeholders and
of CEOs say additional but which customers
their customers expectations about how they
costs of doing are prepared to pay a
address those needs. Translating a broader
business are a barrier commercial price for.
And getting that balance corporate purpose into the everyday, however,
to responding to
right is fascinating and is another matter entirely. Even the most
stakeholder expectations
not necessarily committed can find it challenging in the
straightforward. extreme to reshape their company while facing
Richard Pennycook day-to-day battles on every front to fight off
CEO, The Co-operative competition, grow revenues and cut costs.
Group, UK
Q: Which of the following barriers, if any, is your organisation encountering when responding to wider stakeholder
expectations?
Additional costs
45% to doing business
42%
Unclear or inconsistent
standards or regulations
Inability to effectively
23% execute on our strategy
PwC 19
Transforming: technology, innovation and talent
Figure 11 Technology and risk management are the top areas in which
Putting technology to work
CEOs are making significant changes to respond to Technology, as in most situations nowadays,
stakeholder expectations can help.
Q: To what extent are you making changes in the following areas in response to
changing stakeholder expectations? As weve seen in the previous section, business
leaders understand all too well how technology
is transforming their relationship with
How we use technology to customers as well as other stakeholders. So it
assess and deliver on wider 6% 39% 51%
stakeholder expectations makes sense that they see technology as the best
way to assess and deliver on changing customer
How we define and manage expectations, with 51% of CEOs making
6% 44% 49%
risks significant changes in this area (see Figure 11).
How we manage our At the top of CEOs minds is the use of technology
brand, marketing and 6% 44% 48%
communications to better interpret the complex and evolving
needs of customers in order to better engage
How we measure success with them. Nearly a quarter of CEOs (24%) feel
and what we hold 11% 51% 35%
ourselves accountable for they dont have enough information about what
customers or other stakeholders want, and a
How we partner and who recent PwC survey showed that the top-three
12% 51% 34%
we partner with challenge most cited by global operations leaders
(63%) is understanding what customers value.12
Workforce rights and Sixty-eight percent of CEOs back the power of
9% 57% 33%
wellbeing data and analytics to deliver these results and
65% favour customer relationship management
How we minimise social (CRM) systems (see Figure 12).
and environmental impacts 14% 49% 31%
of our business operations
Indeed, CEOs growing faith in, and
Our values, ethics and dependence on, data and analytics signals
codes of conduct 24% 44% 31% just how far a data-based, scientific mindset
has penetrated even the complex world of
How we maximise societal stakeholder management. And as big data,
value of our R&D and 15% 45% 30%
innovation
cloud computing and the Internet of Things
become even more important in modern
How we develop new business, the role that technology plays in
ethical products and 18% 49% 23%
services
helping understand wider stakeholder
expectations is also being applied to meeting
How we minimise social and even surpassing those expectations.
and environmental impacts 18% 51% 23%
of our supply chain
How we manage
our tax affairs 34% 44% 18%
65%
analytics
tools enabling suppliers and designers to on every single aspect
quickly assess sustainability criteria. Companies of a company. Whether
its your operational Customer relationship
like GE, meanwhile, are pioneering innovation management systems
in healthcare and smart cities. efficiency in applying
technology to traditionally
manual processes.
Digitisation is central to these efforts, allowing
companies to obtain and utilise data about
Whether its enhanced 53% R&D and innovation
intelligence, from big data
business processes thats necessary to support analysis to help managing
innovation efforts, and to remove costs from the marketing, risk, product
system through greater efficiencies. creation, or assessment
of ideas technology Social media communications
And while technology plays a critical role is going to lead to sea 50% and engagement
PwC 21
Transforming: technology, innovation and talent
Figure 13 CEOs are most likely to change their talent strategy to focus on their leadership pipeline
Q: What aspects of your talent strategy are you changing to make the greatest impact on attracting, retaining and
engaging the people you need to remain relevant and competitive?
38%
Effective performance
management
33%
Pay, incentives and benefits
we provide for our workforce
49%
our data analytics: its all about people. visibility and tone from the top thats necessary
to turn words into action.
So what are CEOs doing to develop the
workforce they need for today and tomorrow? of CEOs are changing The ability to align the entire workforce behind
Nearly half are making changes to how they their focus on the business and growth goals, however, is also
develop their leadership pipeline (see Figure leadership pipeline critical to execution. As Susan Lloyd-Hurwitz,
13). Its not hard to understand why. This new CEO and Managing Director of Australia-based
generation of leaders has grown up in a asset management company Mirvac Group says,
different world and is better equipped to tackle Aligning people to the business, the changes, the
thorny societal issues. expectations and our purpose is absolutely key.
PwC 23
Transforming: technology, innovation and talent
Why government and business need But viewing government through a combative
to work together Regulators have to lens is unlikely to help companies in the long
Across every industry, tensions abound between understand the new run. For one thing, government and regulators
companies, who believe they can be trusted to environment in which we have a big impact on companies, with 69% of
operate in order to make CEOs citing them as highly influential on
do the right thing, and governments that arent
public policies that really business strategy. And, despite their complaints
so sure. The regulations governments are trying
respond to the new
to enforce are intended to be in the best interests about government interference, many companies
situations rather than
of the public, as consumers or employees. But expect the state to provide considerable help,
getting carried away
they can involve reforms, penalties or higher by the sort of political whether its improving workforce skills and
taxes for business that result in higher costs - situations or populism education or the infrastructure needed by any
including those that arise when business doesnt that sometimes lead to modern economy.
have enough clarity about how regulations inadequate public
should be interpreted and implemented. These policies, which can slow As both business and government navigate
costs, in turn, are likely to be passed onto down development and, changing public expectations, theyre going
customers in the form of higher prices. in our case, can hinder to need each other more than they might think.
us in our task of creating In the end, businesses want to create the best
value and trust. value they can for customers, and doing that
This no doubt contributes to CEOs near
universal frustration that over-regulation is David Bojanini increasingly means creating the best value
President, Grupo SURA, they can for society at large. These are the
a threat to their companys growth, and why Colombia
42% cite unclear or inconsistent regulations same goals government shares a win-win.
as a barrier to responding to changing customer
expectations. Whats more, increasingly For business, understanding why regulation
divergent political and legal systems around is there in the first place, rather than focusing
the world make it harder for multinationals only on interpretation and compliance can help
to comply with rules or standards in their ease the stand-off. Regulations are often first
countries of operation without falling foul introduced in response to a market failure or
of their home countrys laws. to embed good business practice in legislation.
Recognising the spirit of what government is
trying to achieve can help businesses pre-empt
the need for regulation by establishing core
principles and values to guide decision-making.
It also paves the way for active alignment with
government goals and programmes in order
to help shape them and improve their
effectiveness. Such actions will also serve
to rebuild trust with regulators.
?
This is, however, proving challenging for
organisations to achieve. Despite the
importance of getting the right talent, just 30% Tough questions to ask about
of CEOs are making changes to their focus on
skills and adaptability in their people (Figure transforming: technology,
13). And despite their embrace of technology innovation and talent
in all things customer-related, companies are
doing little to change either how they use
technology to improve productivity or their use How are you ensuring youre investing in the right
of workforce analytics, with only 4% of CEOs technologies to enable open engagement with your
seeking change in that area (see Figure 13). customers and wider stakeholder groups?
CEOs also recognise the importance of tying
Have you identified the right capabilities to support you
workplace culture to behaviour, with 41%
making changes to this aspect of their talent from strategy to execution?
strategies (see Figure 13). Indeed, companies
that are highly coherent those with strong Is your innovation geared towards generating offerings that
alignment between their value proposition, meet big societal needs and generate good long-term ROI?
capabilities, and products and services view
their culture as their greatest asset.14 But despite
the cultural changes that CEOs are making
What are you doing to enable your people to work towards
in their people strategies, such developments better meeting new and wider stakeholder expectations?
dont loom large in the context of the wider
organisation. Just 31% of CEOs are pursuing How are you working with government to create better
significant changes to values, ethics and codes outcomes for customers and employees?
of conduct compared to 51% for technology.
PwC 25
Measuring and
communicating success
In a complex and rapidly changing world, we
55%
were interested in understanding which areas We like to measure
CEOs want to better measure and which areas things. We say internally
they want to better communicate to the that if you cannot
of CEOs think business multiple stakeholders who interact with their measure it, it doesnt
could do more to organisations. We found that the key metrics CEOs exist. Thats something
measure the impact would like to improve are the ones traditionally that we always mention
and value of innovation because thats the way
seen as harder drivers of business success like
that we approach things.
innovation and risks, while the areas they want
Dr. Nuno Amado
to better communicate are emotional, softer
CEO, Banco Comercial
issues around values and purpose (see Figure 15). Portugus, S.A., Portugal
A large part of the challenge lies in the adoption Business 4th 39%
and use of technology. Theres a digital divide strategy 2nd 54%
between those organisations that have grown PSI: Employees / Providers of capital (including activist investors)
PwC 27
Measuring and communicating success
76%
standards are an important starting point to
improve the visibility of corporate actions for
customers and other stakeholders. The Global 13% 11%
Reporting Initiative (GRI), for example, Disagree Neither
provides sustainability reporting guidelines, Agree
while the International Integrated Reporting
Council (IIRC) supports integrated reporting
for annual reports, and the Sustainability
Accounting Standards Board (SASB) is aimed
at sustainability content for regulatory financial
filings for US-listed companies.
39%
creation of social good.
want them to address.
Larry Ettah
Group Managing Director,
UAC of Nigeria
of CEOs think business
should be doing
more to measure
environmental impact
PwC 29
Measuring and communicating success
Communicating impact
48%
When we measure As the divergent world brings firms into
success at Wesfarmers, competitive markets that may have very
clearly we look at the different rights, expectations and relationships
financial performance: of CEOs are making with society, it makes sense that leaders want
our profits, our cash major changes to how to make sure that their organisation is very
flows, our return on they manage brand,
capital or equity, our clear on what they stand for, and their
marketing and
dividends we pay to distinctive advantage. We think this is why
communications
shareholders. But at the purpose/values (59%) and business strategy
end of the day, the most (54%) are the top-two areas that CEOs want
important measure for These days, in this to better communicate (see Figure 15).
me is our reputation. transparent world that
Richard Goyder we live in, there is no way This set of priorities also makes sense in our
Managing Director, of working other than ever more transparent world. If, for example,
Wesfarmers, Australia with total transparency. information is withheld, either inadvertently
Guillermo Tagle or deliberately, theres no guarantee in todays
Chairman, Credicorp Capital,
Chile
digitally connected society that it wont come to
light and be broadcast globally. As Nigel Wilson,
CEO of UK-based financial services provider
Legal & General puts it, ... business just needs
to become much more transparent, much more
open and have a higher level of engagement.
PwC 31
Navigating complexity
to exceed expectations
Linking strategy to execution
... the first thing we need Technological progress, shifting demographics,
to do is to be clear with urban expansion, the rise of emerging markets
everybody about what and a changing planet are moving the world
we are trying to achieve
beyond globalisation to a multi-polar reality.
...What does good food
As this happens CEOs are learning that much
mean and what do we
want, and making sure of their success depends on sensing and
this is clear for everybody addressing the rapidly changing values and
... I think clarifying up expectations of their many stakeholders.
front exactly what we
mean when we want to Historically, companies have thrived when they
achieve these things is a not only address big societal problems, but also
critical first step around do so in a single-minded way. In the 19th
alignment. century Lever Bros. (the forerunner to Unilever)
Dirk Van de Put made tackling public hygiene in Victorian
CEO, McCain, Canada England its core focus and started a dynasty
through the introduction of Sunlight Soap.17
In the United States, Henry Ford saw the
democratisation of car ownership as
fundamental to raising the quality of living
for Americas growing middle class.
PwC 33
Looking for more data?
Geopolitical Exchange Geopolitical Exchange Increasing Over- Exchange Its geopolitical uncertainty,
uncertainty rate volatility uncertainty rate volatility tax burden regulation rate volatility / however, that not surprisingly
Availability keeps CEOs awake in the
of key skills Middle East (94%) and Central
Note: Respondents who answered somewhat concerned or extremely concerned
and Eastern Europe (86%).
Figure B Technological advances are seen as the Figure C A skilled workforce was the most important societal
global trend most likely to transform outcome cited most frequently by CEOs, followed by
wider expectations of business infrastructure both physical and digital
Q: Please rank the top three global trends which Q: Which three of the following outcomes do you think are most important
you believe will be most likely to transform wider to society today, in the country in which you are based?
stakeholder expectations of businesses within
your sector over the next five years.
A skilled, educated and
76%
adaptable workforce
Technological advances
Adequate physical and
40%
Demographic shifts digital infrastructure
Workforce diversity
23%
and inclusiveness
36%
Greater income equality 22%
43%
58% Reduced environmental
61% 19%
impacts
Safeguards around
8%
usage of personal data
Global
High Low
average
48%
(2015: 21%)
Geopolitical
uncertainty 89% 74% 53%
30%
increase in Energy Healthcare
headcount
(2015: 50%)
headcount will
remain the same
(2015: 28%)
Exchange rate
volatility
88% 73% 49%
Hospitality
and leisure Power and
utilities /
Healthcare
Availability of
key skills
83% 72% 52%
Entertainment
and media Mining
Figure E Similar to last year, the top two planned restructuring activities Social instability 80% 65% 54%
are cost-reduction initiatives and establishing new alliances Hospitality
and leisure
Asset
management
Q: Which, if any, of the following restructuring activities do you plan to initiate in the
coming 12 months?
Speed of
technological
change
81% 61% 31%
68% Banking and Mining
Implement a cost- capital markets
reduction initiative 71%
64%
Cyber threats
79% 61% 38%
49% Insurance Mining
Enter into a new
strategic alliance 51%
or joint venture
44% Shift in consumer
spending and 86% 60% 28%
behaviours Hospitality Mining
and leisure
28%
Outsource a
business process 31%
or function
25% 2016 Interest rate rises
73% 58% 46%
2015 Metals
Entertainment
and media
27% 2014
Complete a
29%
domestic M&A Lack of trust
in business
68% 55% 43%
23% Energy
Retail
16%
Supply chain
disruption
69% 50% 33%
Insource a previously Pharma and
life sciences Power and
outsourced business 14% utilities
process or function
14%
Stock market 62% 44% 25%
volatility Insurance
10% /Mining Transport
Sell majority interest and logistics
in a business or exit 13%
a significant market
13%
Access to
affordable capital 76% 42% 30%
Mining Insurance /
Industrial
9% manufactiring
End an existing
strategic alliance 8% Note: Respondents who answered somewhat or extremely concerned
or joint venture
8%
PwC 35
Meet the CEOs we talked to
Fernando Gonzalez Li Huaizhen John Chambers Wilson Ferreira Jr. Guillermo Tagle
Olivieri President Executive Chairman of CEO Chairman
CEO China Minsheng the Board CPFL Energia, Brazil Credicorp Capital, Chile
CEMEX, Mexico Investment Corp., Ltd., Cisco Systems Inc., US
China
Jean-Bernard Lvy Michael Daniell Canan M. zsoy Luis Pagani Eduardo Stock da Cunha
CEO and Chairman Managing Director and CEO President and CEO Presidente CEO
EDF, France Fisher & Paykel General Electric Turkey Grupo Arcor, Argentina Grupo Novo Banco,
Healthcare Corporation Portugual
Ltd., New Zealand
David Bojanini Ralph Hamers Mikko Helander Dr. Nigel Wilson Ajay Banga
President CEO President and CEO CEO President and Chief
Grupo SURA, Colombia ING Group, Netherlands Kesko Corporation, Legal & General, UK Executive Officer
Finland MasterCard, US
Susanna Campbell Manuel Manrique Herman Gref Takeshi Niinami Johan Dennelind
CEO President and CEO CEO and Chairman of President and CEO CEO
Ratos AB, Sweden Sacyr, Spain the Executive Board Suntory, Japan TeliaSonera AB, Sweden
Sberbank, Russia
Richard Pennycook Larry Ettah Michael Mller Don Lam Richard Goyder
CEO Group Managing Director Director-General Chief Executive Officer and Managing Director
The Co-operative Group, UAC of Nigeria United Nations Office at Founding Partner Wesfarmers, Australia
UK Geneva (UNOG), VinaCapital, Vietnam
Switzerland
PwC 37
Research methodology and contacts
Weve conducted 1,409 interviews with CEOs in 83 countries. Our sample is selected based on the
percentage of the total Gross Domestic Product (GDP) of countries included in the survey, to ensure
CEOs views are fairly represented across all major countries and regions of the world. The interviews
were also spread across a wide range of industries. Further details, by region and industry, are
available on request. Twenty-six percent of the interviews were conducted by telephone, 60% online
and 14% by post. All quantitative interviews were conducted on a confidential basis.
Western Central
North Europe and Eastern
America 314 interviews Europe
(22%) 170 interviews
146 interviews
(10%) (12%)
Middle
East and
Africa Asia
134 interviews Pacic
Latin (10%)
476 interviews
America (34%)
169 interviews
(12%)
1,409
interviews completed
ten countries (by GDP) was 500 employees
or revenues of more than $50 million. The
threshold for inclusion in the next 20 countries
Not all figures add up to 100% due to
rounding of percentages and exclusion of
neither/nor and dont know responses
in 2015 across was companies with more than 100 employees
The base for figures is 1,409 (all
83
countries between
or revenues of more than $10 million.
30% of companies had revenues of
respondents) unless otherwise stated
1,747
Suzanne Snowden
28% of companies had revenues of up Director, Global Thought Leadership
to $100 million +44 20 7212 5481
members of the Global
60% of companies were privately owned suzanne.snowden@uk.pwc.com
PwC CEO Panel were
invited to participate 38% of companies were listed on at least
via the online survey, For media-related enquiries, please contact:
one stock exchange
contributing to the Mike Davies
total online responses. Director, Global Communications
+44 20 7804 2378
mike.davies@uk.pwc.com
Wed like to thank the following PwC experts for their insights
Bridget Atherton, Raymund Chao, Martha Corbett, Emma Cox, Paul Fitzsimon, Bharti Gupta
Ramola, Rob Gittings, John Hawksworth, Ian Hitchen, Stephanie Hyde, Leo Johnson, Per-Ola
Karlsson, Barret Kupelian, David Lancefield, Henrique Luz, Bob Moritz, Alan Morrison, Dennis
Nally, Gary Neilson, Yumiko Noda, Ian Powell, David Percival, Malcolm Preston, Donald Reed,
Daniel Schwarzmann, Norbert Schwieters, Richard Sexton, Robert Shelton, Blair Sheppard, Mark
Strom, John Sviokla, Robert Swaak, David Wijeratne, Norbert Winkeljohann, David Wu, Nora Wu
PwC 39
Notes and sources
1. PwC, 2015 APEC CEO Survey: CEO confidence in 10. Lloyds City Dinner, 30 September 2015
Asia Pacific shaken but strong, November 2015
11. PwC, Understanding the value and drivers
2. PwC, Total Retail 2015: Retailers and the Age of organisational trust, 2015
of Disruption, February 2015
12. PwC, 2015 Global Operations Survey
3. Unilever PLC, Unilever Sees Sustainability
13. Mitch Cohen and John Sviokla, The Self-Made
Supporting Growth, 5 May 2015
Billionaire Effect, December 2014 (Pub. Portfolio)
4. E. Freya Williams, Green Giants: How Smart
14. Paul Leinwand and Cesare Mainardi, Strategy
Companies Turn Sustainability into Billion-
That Works: How Winning Companies Close the
Dollar Businesses, August 2015 (pub. AMACOM)
Strategy-to-Execution Gap, January 2016 (pub.
5. Nielsen N.V., Consumer Goods Brands That Harvard Business Review Press)
Demonstrate Commitment to Sustainability
15. B Lab, About B Lab
Outperform Those That Dont, 12 October 2015
16. PwC, Valuing our total impact, 2015
6. Morgan Stanley, Sustainability Through the Eye
of the Investor, 27 February 2015 17. Unilever PLC, Our History
7. Global Industry Analysts, Inc., The Global Sports 18. Paul Leinwand and Cesare Mainardi, Strategy
Utility Vehicles (SUVs) Market, September 2015 That Works: How Winning Companies Close the
Strategy-to-Execution Gap, January 2016 (pub.
8. Business Insider UK, Millennials apparently
Harvard Business Review Press)
love Wal-Mart and employees are shocked,
16 June 2015 19. Ibid.
9. 2015 Edelman Trust Barometer