The CEO agenda had evolved at a relatively modest rate for several decades. However, the pace has become relentless in the past few years as technology has impacted the boardroom like never before.
The latest CEO Outlook from KPMG highlights just how much CEOs in Ireland and around the world recognise that successful leadership in the digital era depends on an educated awareness of what’s at stake. With three quarters (76%) of Irish CEOs stating that they are ready to personally lead their organisations through radical transformation of their operating model, Managing Partner Shaun Murphy says; “One of the biggest challenges for CEOs is how to carefully weigh what they stand to lose if they don’t adopt new technologies, and what they stand to lose if they adopt new technologies ineffectively.”
In the report, Shaun Murphy describes technology as “An enabler, a disruptor and, with the threat of cyber attacks, a very significant risk.” So how to strike a balance between such risk and opportunity? Former Intel CEO Andy Grove talked about “how only the paranoid survive” – a point echoed in the report which highlights CEOs excitement about the potential of technology, but also touches on their “appropriate nervousness” about what the future holds. Murphy concurs, noting that “Technology has the potential to leave behind those who are not transforming fast enough or those who fail to understand the implications.”
Shaun Murphy highlights data as an example of the double edged sword that technology can often become; “Using data to learn and understand more about customers and to improve the customer experience is a natural ambition and it should help generate loyalty and profitability.” Companies have been gathering and analysing customer data like never before, and for 68 percent of Irish CEOs, the investments they have made in trying to personalise the customer experience have helped deliver the growth benefits they were hoping for. Creating a personalised experience rests on customer data, generating the right insights from it and acting on these insights. The regulatory angle of data—exemplified by new laws about customer data protection—is an area of intensive scrutiny and change. It is no surprise that for a majority of Irish CEOs (88 percent), protecting customer data is hugely important. But customer data remains an asset which is prone to cyber security attacks and privacy concerns.
According to Murphy; “For Irish CEOs, digital innovation can create significant value across business models, customer experience and operations”. However, he notes just how such greater connectivity brings increasing cyber vulnerability “Almost a third of Irish CEOs surveyed say that a cyber attack is now a case of ‘when’, not ‘if’.”
However, it’s not just the protection of data that the survey highlights, it is also how it is used. When confronted with a critical decision and data-driven insights contrary to their experience, over one third of Irish CEOs (36 percent) have overlooked data-driven insights and trusted their intuition on occasion over the last three years. According to Shaun Murphy, it is never solely about the data. What you think the data is telling you matters most. “CEOs look at data – often in great depth,” he adds, “but then they may challenge it to understand the data quality, they follow their instincts around risk taking and ultimately – and this is the real test of leadership – they apply their own judgment.”
The KPMG CEO Outlook also highlights how traditional ways of looking at metrics are evolving via technology. Growth is a quantitative measure of movement in revenue or profits but can also include newer metrics such as employee engagement or customer satisfaction. Murphy highlights the report’s findings that Social Media is an increasingly valued ‘listening post’ for CEOs and their teams.
CEOs’ confidence in the macroeconomic environment is not translating into very ambitious growth targets. The majority of CEOs in Ireland (72 percent) anticipate top line growth of less than 2 percent in the year ahead. CEOs’ hiring plans also reflect that view. Two thirds of Irish CEOs (68 percent) predict headcount growth of less than 5 percent over the next 3 years. In addition, many CEOs are cautious about going ahead with hiring of new skills into the enterprise. Almost two thirds (64 percent) say they will not hire new skills until growth targets are met. According to Shaun Murphy, this caution reflects CEOs’ concerns about wider volatility - including Brexit and the potential for protectionism in other markets. “Ireland is well placed in many respects but we are far from immune to world events and our CEO survey reflects cautious optimism.” CEOs recognise that most organisations still depend on traditional revenue streams says Murphy. As they seek out new growth areas, they recognise that traditional sources will decline and need to be replaced. Murphy concludes; “CEOs are playing an increasingly critical role in driving innovation and growth by challenging the status quo in their organisations to stimulate new thinking and promote innovation.”
An abridged version of this interview originally appeared in The Irish Times and is reproduced with their kind permission.