Released earlier this week, PwC’s 19th Annual Global CEO Survey shows only 23% New Zealand CEOs believe the global economy will improve this year (compared to last year’s considerably more confident 47%), while 51% remain confident about their company’s growth prospects in the coming year.
“Given the wide-ranging uncertainties CEOs are facing - cyber security, over-regulation, geopolitical stability – it’s easy to see why they’re divided about whether there are more threats or opportunities today,” says PwC NZ CEO Bruce Hassall.
“Kiwi organisations are remaining optimistic about their own growth prospects despite the possibility of a stagnant or declining global economy.”
According to the survey, 55% Kiwis CEOs say there are more opportunities for growth than three years ago, and 66% say there are more threats.
To equip themselves for this challenge, chief executives are apparently focusing on three core capabilities: addressing greater stakeholder expectations; harnessing talent, innovation and technology; and new metrics for success beyond the bottom line, Hassall says.
“CEOs everywhere are understanding that despite the tremendous challenges they face today, they need to build a business that’s ready for the more complex global marketplace of the future.”
Availability of key skills tops the list of concerns named by 85% of NZ CEOs, more than the global level (74%), and slightly up from last year’s New Zealand figure (84%).
- Worry about the speed of technological change has increased slightly to 70% for New Zealand respondents from 68% last year, and slightly higher than 61% of CEOs globally
- Concern about cyber threats and the lack of data security has seen one of the biggest jumps with 77% Kiwi CEOs viewing it as a top threat to business growth, compared to 66% last year
- Over-regulation was noted by 74% of New Zealand respondents, and 79% of CEOs worldwide as cause for concern; the fourth year in a row that it has risen
- Other top concerns cited by New Zealand’s CEOs include exchange rate volatility (74%), and geopolitical uncertainty (54%) although less than global peers (74%).
Preparing for the worst
CEOs say they will undertake a number of restructuring activities to strengthen their companies this year.
- 64% of New Zealand CEOs say they will cut costs (compared with 68% globally)
- 57% will form strategic alliances or joint ventures (49% globally)
- 21% will outsource a business process or function (28% globally)
Shifting international markets
- New Zealand CEOs still consider Australia (70%), China (60%) and the US (47%) as the top three markets in the coming year.
- The TPP agreement appears to mark a movement towards regional trading blocs, as expressed by only 23% of NZ CEOs saying the world is moving towards a single global marketplace
- New Zealand CEOs cited geopolitical uncertainty at 51% (compared to 74% globally), and new entrants to markets at 68% as key concerns
- Worldwide, anxiety around fiscal deficits and debt burdens (72%), increasing taxes (70%), as well as social instability (60%) and shifting consumer patterns (60%) also ranked
Internationally, the US is still ranked as the most important market for growth over the next 12 months. 39% of CEOs say the US is among their top-three overseas growth markets, compared with 34% for China, 19% for Germany, 11% for the UK and 8% for Brazil.
The majority of New Zealand CEOs (85%) expect technological advances to be the most significant global trend to influence stakeholder expectations within their sector over the next five years.
New Zealand CEOs say they are finding more ways to use technology to engage with their stakeholders, with data and analytics (72%) and social media communications and engagement (70%) rating the highest in terms of connecting technologies.
70 per cent of New Zealand respondents still view the speed of technology change as a business threat, with 77% citing cyber security specifically as a key concern.
New metrics for success
New Zealand CEOs say they have identified a number of areas in which businesses should be doing more to measure impact and value. These include:
- Key risks (40%)
- Environmental impact (40%)
- Communicating organisation purpose and values (60%)
- Business strategy (57%).
36% of New Zealand respondents say businesses should be doing more to measure the impact and value of innovation. Despite this only 55% of New Zealand CEOs say they are making changes to improve societal value of research and development and innovation in response to changing stakeholder expectations (compared to 76% globally).
The full report can be downloaded here.