The latest PwC CEO Survey highlights how companies are collaborating to harness big data, the need to pin down New Zealand's business identity and a desire to leave a legacy of sustainability.
With all this talk of our 'rock star' economy, New Zealand chief executives are moving from survival mode to a forward-thinking focus.
The 43 CEOs in New Zealand who contributed to PwC's annual CEO survey are significantly more positive about the outlook for the global economy over the next 12 months than their global peers but they're more confident about the international outlook than their own business prospects.
They point to technological advances, demographic changes and global economic power shifts as the key changes to watch out for.
At least 75 percent recognise the need for change; are developing suitable strategies; have concrete plans for change; or have already started making changes. But very few have completed these changes and worry that parts of their business are not ready to act.
Opportunities for growth
Over half of New Zealand CEOs plan to increase headcount over the next year and 37 percent say product/service innovation is their biggest growth opportunity.
More than 90 percent think technology will be the biggest transforming trend for their businesses and are conscious of the potential offered by big data, particularly for customer relationship management. The challenge is to understand what big data means and how it can yield customer insights.
CEOs recognise it may not be possible to access the full potential offered by big data in isolation and are starting to consider how they might partner with other businesses to make the most of opportunities. Of the New Zealand CEOs interviewed, half had entered into a new strategic alliance or joint venture in the previous 12 months, compared to just 34 percent globally.
Most understand the need for innovation to keep up with changes in customer demands but see changes to the regulatory environment as significant inhibitors to growth.
PwC New Zealand chief executive Bruce Hassall says with so much change happening, a key challenge for CEOs is how they bring people along with them.
“We are seeing big changes in the stakeholder environment. Businesses recognise that society, as a whole, needs to feel positive about an organisation. This means getting the balance right between making money, contributing to sustainable business practices, and generally being a good corporate citizen.
“Tomorrow’s businesses need to think beyond traditional stakeholders such as customers, staff and investors and bring communities and the Government on board with their growth aspirations."
New Zealand and the world
New Zealand CEOs still rate Australia as number one for growth potential. Also at the top of the list are China, the US, the UK and Indonedia.
Westpac's Peter Clare had this to say: “We are absolutely living through the re-emergence of Asia in the broader sense, as the global economic power house. Ignoring the inevitable rise of the East and decline of the West is folly. And we, in New Zealand, will benefit from our relative proximity to this growth.”
But developing our national business identity remains a challenge. As the report says: "Do we want to be a global player that welcomes overseas capital and investment? If so, how do we do this while maintaining our sense of ‘New Zealand’? Where and how do we want growth, and what are the implications of that?"
It seems CEOs believe in the absence of strong input from the business sector, this discussion is being led by the media, and business needs to get more involved.
According to Inland Revenue's Naomi Ferguson: “All of the things that we like about New Zealand – we are small, we have a beautiful countryside, natural assets, people know each other, community sense – all of those things are great. But as you grow, you might risk some of those. Do we want to be a global player or not? And I’m not sure if in New Zealand, in a general sense, we have figured it out.”
A new approach to planning
Just under half of New Zealand CEOs who took part in the survey are currently working to a three-year plan, although three quarters see five years or more as the ideal. But in today's world, a mix of the two may be the best in a rapidly changing world. Some organisations are working to two strategic plans: one that takes a long-term view – usually five years – and one that takes a one to three-year revolving strategy,
Andrew Thorburn says BNZ's strategic planning process has changed a lot since the GFC. "We are now giving it a shorter time horizon. Things can change so quickly and I have seen very few three-to-five year projects work. In things like digital and product development, we think about them in 18-month horizons. We look at getting ideas from people, to then size them up, give them a little bit of money and let them run with it. If it doesn’t work, we stop it."
A legacy of sustainability
When asked about the one thing they’d like to be remembered for, Kiwi CEOs said they wanted to influence positive change through projects that contributed to their organisation’s sustainability.
Says NZTE's Peter Chrisp: “In net terms did we add value for our country? This is the only thing that ever has really driven me... We work for a cause, not an institution. And the cause is the country, so that’s the real motivator.”