55 percent predict cautious revenue growth of less than 2 percent over next 3 years: 4th annual KPMG International survey
Despite being relatively bullish on the economy at large as well as their overall outlook for their country, optimism from global CEOs is tempered by a healthy dose of realism, with half (55 percent) predicting cautious topline revenue growth for their own business. Half of CEOs (52 percent) say they will need to hit growth targets before hiring new skills. According to the KPMG Global CEO Outlook, they are driving growth against a backdrop of significant demographic shifts, geopolitical volatility and the seemingly inevitable future cyber-attack. CEOs are stepping up to the cyber challenge, in particular, with 59 percent saying they feel a personal responsibility for protecting customer data.
Jamal Fakhro, Managing Partner at KPMG in Bahrain, commented on the report findings and said: “We operate in a connected world whereby opportunities and risks are constantly evolving. Geopolitical uncertainty, disruption and cyber threats have become a norm. CEOs needs to keep up with these changes to steer their organizations to growth, and the best are turning them to valuable opportunities by changing their systems and in some cases their entire business model.
According to the report, it is also clear that driving growth in 2018 and beyond will require CEOs to combine resourcefulness and realism in equal measure.”
KPMG Global CEO Outlook report features insights on key issues that over 1300 CEOs from many of the world’s largest organizations are facing. This includes Tim Murray, the CEO of Aluminium Bahrain B.S.C. (Alba).
According to Murray, cyber security should be a priority in the Boardroom. Greater connectivity can improve operations, but it can also increase cyber vulnerability. “New technologies are allowing us to find innovative ways to improve safety. For example, adding wireless connectivity to heavy machinery and vehicles helps to bring automation, additional checks and alerts that can reduce the risks of error or accidents. If these systems were hacked or locked-up, it could obviously have a major impact on us.” He added.
Stepping up to the challenge of an uncertain world
CEOs play an essential role in pivoting their organizations to the consumers of tomorrow in order to seize every opportunity to grow, with four in ten (38 percent) responding that their business requires repositioning to meet the needs of Millennials. There’s also a growing sense of inevitability of a cyber breach with nearly half (49 percent) of CEOs saying that becoming the victim of an attack is a case of ‘when’ and not ‘if’. Given the current geopolitical environment, it’s perhaps not surprising that a ‘return to territorialism’ was named the number one threat to growth this year.
Driving realistic growth
CEOs are optimistic about the macroeconomic environment; they are confident about global and industry growth prospects (67 and 78 percent, respectively). They’re also feeling confident in their individual country growth (74 percent are confident, although this is down 3 percentage points from 2017). But there’s a more complex story emerging regarding company growth prospects:
— 90 percent are confident in their company’s growth prospects (up 7 percentage points from 2017).
— However, only 37 percent plan to increase headcount by more than 6 percent over the next 3 years (down 10 percentage points).
— And 55 percent predict cautious revenue growth of less than 2 percent over the next 3 years.
Making digital a personal crusade
CEOs are embracing the digital agenda like never before and taking personal ownership of data and trust.
— 71 percent are personally ready to lead a radical organization transformation.
— 59 percent see protecting customer data as a critical personal responsibility.
— Counter to popular opinion, 62 percent expect AI to create more jobs than it destroys.
Putting instinct over facts
With customer demands changing continually, and the technology landscape in a constant state of flux, agility and intuition are critical.
— 59 percent believe agility is the new currency of business; indicating if they’re too slow they will be bankrupt.
— More than half (51 percent) are less confident in the accuracy of predictive analytics compared to historic data, and have the highest trust for social media sources over all others.
— 67 percent admitted they have relied on their own intuition over data-driven insights to make strategic decisions in the past 3 years.
Rising cyber threats
The ever-present risk of a cyber security threat is rising on the radar, up from fifth to second place overall this year in terms of risks hampering future growth. Only half (51 percent) of respondents indicated they are well-prepared for a cyber-attack, even though over half (55 percent) say that a strong cyber strategy is critical to engender trust with key stakeholders.
Developing markets a focus for growth
Seventy percent say their biggest priority for geographical expansion is emerging markets, with Central/South America noted as the most important region.
The full report is available in our website here. To view additional information about the study, please visit kpmg.com/CEOoutlook. You can also follow the conversation @KPMG on Twitter using the hashtag: #CEOoutlook.
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