“CEOs are more frequently going with their gut feeling” | KPMG | CH
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“CEOs are more frequently going with their gut feeling”

“CEOs are more frequently going with their gut feeling”

KPMG conducted a global, cross-sector survey during which more than 1,300 CEOs were asked about their medium- and long-term growth prospects, their approach to both digitalization and geopolitical volatility as well as the significance of strategic alliances. During an interview, Stefan Pfister, CEO of KPMG Switzerland, talks about the key findings of the KPMG CEO Outlook 2018.

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“CEOs are more frequently going with their gut feeling”

What challenges are companies facing in the medium term?

Geopolitical volatility and the associated renationalization trends, fundamental demographic shifts and rising cyber risks are the biggest challenges that businesses will find themselves faced with in the medium term. All in all, the corporate leaders in KPMG’s CEO Outlook appear realistic and accordingly pragmatic.

In what ways are they showing realism and pragmatism?

These attitudes manifest themselves in the CEOs’ growth expectations, for instance: 56% of the CEOs surveyed, for example, only expect moderate revenue growth of up to 2% during the current year. 52% have opted to forego new growth targets and related increases in their workforce during the current year as long as previously defined growth targets have not been reached. A third of those surveyed expect strategic alliances to emerge as key growth drivers during the next three years. While fewer than one third (28%) believe that they will grow organically, only 16% of CEOs are striving to achieve inorganic growth through mergers and acquisitions.

Why should companies be entering into partnerships?

The focus is increasingly shifting to strategic alliances, particularly in the age of digitalization. Nearly two thirds of the CEOs feel that their own company needs to become more agile for the company’s digital transformation to succeed and future growth to materialize. More than half are convinced that their own company can only increase its agility through partnerships with third parties.

You mentioned geopolitical volatility as one of the biggest challenges companies are confronted with. What does that mean?

Several things. Geopolitical volatility, for example, coupled with digital transformation and the associated rise in cyber risks, is ushering greater uncertainties into the system as a whole while also hampering companies’ ability to make long-term plans. More and more business leaders are increasingly relying on their intuition and taking cues from the trends and tendencies they see in their environments. Two thirds of the CEOs surveyed are more frequently going with their gut feeling.

Are there any other aspects?

Volatility and digital transformation are also promoting growing trends toward renationalization. Even a rising number of Swiss companies are bringing back, or “re-shoring” processes and units to their home market which had previously been off-shored to a foreign country.

Along with increased prices for production and services?

No. In the future, “digital” work performed here will not only cost around a third as much as the work currently costs in low-wage countries, but also offer greater quality and productivity. One impressive finding is that 62% of the CEOs surveyed around the world expect that the number of jobs created through the continued integration of artificial intelligence, for instance, will exceed the number of traditional jobs eliminated in the process.

How does demographic change present a challenge to companies?

In a lot of ways. The CEO Outlook focuses on market trends. There, we found that companies are still struggling to anticipate the needs and expectations of future generations of customers, in particular. This gap between supply and demand remains unbridged and that is occasionally leaving some CEOs a bit at a loss.

© 2018 KPMG Holding AG is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved.

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