The research was conducted with participation of 163 global Energy CEOs from Australia, China, India, Italy, Germany, Japan, France, Spain, UK and US.
Energy CEO’s survey responses reflect the uniquely challenging times presentedby today’s markets for energy players across the value chain. While capital markets insist on dividends and growth, the recent severe downturn in oil prices, coupled with elevated global economy and demand pressures and escalating regulatory requirements, affect all energy segments and present CEOs no easy path.
Thus, Energy CEOs reflect dual priorities to both develop new growth strategies, aswell as reduce cost structures and increase cash flow from operations. Consistentwith these priorities, the top challenges they indicate include the needs to strengthenprocesses and achieve operational excellence, while responding to ongoing regulatoryand market changes in order to ensure financial growth.
Given these tumultuous times, it is not surprisingly that a majority of chief executives inenergy are focusing their time on leading their companies in rethinking their strategies and business models. Asset and business portfolios are being evaluated rigorously to assess fit, including current profitability, upside potential, and having the competitive advantages and position necessary to drive current and future margins. The imperative to drive competitive advantage is leading companies to consider the cost and value impact of their products and services on customers, and whether their business model propositions to customers offer a strong enough solution. The use of alliances and M&A is escalating to create more compelling solutions as well as capture cost reductions through synergies.
Looking ahead, CEOs are seeking to balance risk with the need for new business models to drive growth, recognizing that challenging times require new approaches .And they anticipate thereafter shifting their focus from setting new strategies toensuring their execution.
Energy prices at 62 percent and global economic growth at 55 percent are the biggest issues impacting energy companies.
Talent pool is ranked lowest at 17 percent.
The top strategic priorities over the next 3 years are geographic expansion at 34 percent developing new growth strategies and reducing cost structure at 33 percent.
Promoting and advancing the company at 13 percent and consolidating, rather than expanding at 14 percent are viewed as the lowest.
Ensuring financial growth at 33 percent is the most critical challenge over the next 3 years and becoming a more data driven organization and maintaining, strengthening consistency of corporate culture at 12 percent eachwere ranked the lowest.
The areas/functions that will be most transformed over the next 3 years will be the operating model at 58 percent and strategy at 53 percent.
Management structure at 14 percent and customer base at 17 percent are the least to be transformed.
Clearly energy CEOs feel adequate attention is being paid to achieving cost efficiencies at 99 percent. The energy industry was highest compared to the eight other industry CEOs interviewed. The technology and investment management industries were the lowest at 85 and 87 percent respectively.