When PwC surveyed more than 4,000 CEOs from more than 100 countries and territories, it found that nearly 75% of the world’s top executives expect economic growth to slow in 2023. But a two-year study by PwC found that perceptions are completely changing. Three out of four CEOs expressed optimism.
CEOs today navigate the tension between short-term financial pain and the long-term commitment to change to remain competitive.
Nearly 40% of CEOs believe their company will not be financially viable in 10 years if they continue with business as usual, according to PwC’s Annual Global CEO Survey.
“My advice is: Get your business ready for growth,” Mohamed Kande, vice president of US consulting solutions and co-head of PwC and global head of consulting for Fortune’s CEO series, said Wednesday. “Make all the necessary cost structures and reinvest in growth.” And that growth has to come from technology. “This is where the future lies.”
Federal Reserve officials have been fighting inflation for more than a year and have consistently raised interest rates to slow the economy and moderate rising prices. But policymakers are trying to do this in a way that would ideally lead to a mild or short-lived recession, or perhaps avoid one altogether. The strategy has been quite successful so far, as inflation in the United States is slowing, but observers such as the International Monetary Fund have predicted continued economic growth in 2023.
Glenn Fogel, CEO of online travel agency Booking Holdings, says his company must find a balance between the macroeconomic environment and the future needs of its business. Booking.com is largely focused on accelerating technological innovation, and Fogel points to a recent A.I. and chat room called ChatGPT.
“You have to have the courage to not just look at the next quarter,” says Fogel. “Tourism is growing much faster than GDP.” So I always have to say, “Don’t worry too much about the short term.” Let’s make sure we go the long way.”
Michael Sonnenshein, CEO of crypto asset manager Grayscale Investments, also likes to think long-term. He has been in the crypto industry for nine years and says the industry has experienced a lot of noise and even mistrust since the high-profile crypto bankruptcy. exchange FTX. But he says it’s a failure of those involved, not an indictment of the crypto market as a whole.
“Don’t be fooled by the headlines,” says Sonnenshein. He says he reminds his team to stay focused on what Grayscale is trying to build as an organisation and that “the day-to-day crypto discussions shouldn’t take away from the long-term belief we have in the active class.”
Tire maker Michelin’s long-term thinking also encouraged the manufacturing giant to survive the three key levers at the heart of the five-year plan. Alexis Garcin, president of Michelin North America, says all three—focusing on customers, accelerating the digitization of factories, and investing in their workforce—also reduce overhead costs. Brad Jackson, CEO of consulting firm Slalom, says he thinks many executives want a short-term dip because it allows them to reset investment and employee expectations.
He believes that companies that will succeed in the future will need a broader cultural reset with a strong focus on customers and their employees.
“I would like to see more awareness of long-term investments and their impact on corporate valuations,” says Jackson. “They don’t talk about it much today.”
Even if the United States is experiencing a short-term recession, Suresh Muthuswami, president of Tata Consultancy Services North America, says that while companies may cut costs to prepare for a recession, this should not affect employee engagement. He says that breaking morals can even be harmful.
“Technology is the last thing they cut,” says Muthuswami, referring to conversations he’s had with clients.
Janeen Gelbart, CEO of Indiggo, an A.I.-based management software platform, says managers know that society is always changing and uncertainty is always present. And he asked a rhetorical question about who was to blame. His take: Much of the responsibility lies with burned-out middle managers and executives.
“We need a balance of quick wins in building the organisations of the future,” says Gelbart. “The mix of change, innovation, and change is very difficult.”
Source: Fortune, PWC