A German perspective on the key themes of the 2017 CEO Outlook Survey.
Commenting on Germany’s results from the KPMG International 2017 CEO Outlook Survey, Ioannis Tsavlakidis, Head of Management Consulting, KPMG in Germany, explains how German companies are reacting to the shortage of digital skills by working more closely with universities, building alliances in order to have access to technology and knowhow, and involving employees from all levels to ensure that their innovations are done with a stronger underpinning of information and insight.
Q: Why do you think German CEOs are less confident than their global peers about the prospects for their own companies over the next three years?
Ioannis Tsavlakidis: German CEOs are facing a number of challenges at the moment. Digitalization is one of the biggest challenges for the country. There is a ‘war of talents’ at the moment which calls for new specialist skills. That in turn makes it difficult to hire, particularly in sectors such as digital labor, robotics and analytics.
Q: How are German companies trying to deal with these challenges?
Ioannis Tsavlakidis: While we are only at the preliminary stages of this, many companies are cooperating with universities to foster greater digital skills training, (for example, supporting digital studies programs). CEOs and others at the C-suite level are also working to improve digital skills within their own companies, particularly mid-sized companies. They are also founding and developing innovation labs for instance, in order to boost their digital skill set.
Q: Only a small proportion of German businesses expect to transform into a significantly different business in the next few years. Do German firms tend to take a more targeted approach to transforming themselves to improve their agility?
Ioannis Tsavlakidis: We expect market conditions to change significantly over the next few years, and business models are likely to change commensurately. We are already seeing this, particularly in the automotive and financial services sectors. The challenge for KPMG remains to provide solutions to these companies according to the changes needed, particularly, as a number of companies have been trying to change their business models over the past two or three years. For example, in the automotive sector companies have been trying to digitalize their actual production processes.
Q: What are the key challenges that you see German businesses facing around innovation-led growth at the moment?
Ioannis Tsavlakidis: Another key challenge is building the right alliances. Many companies in the German market are requesting our help from a technology perspective. We are supporting our clients from a strategic and processual view in collaboration with alliance partners such as Microsoft and IBM. Having these alliances is becoming increasingly important because these companies provide tools and technological skills such as data analytics, cloud computing, and so on. For our German clients’, these tools and skills are normally too expensive for them to be done in-house and they are lacking expertise.
Q: The CEOs in our survey believe that the role of the CEO needs to evolve in order to better lead the business. What are the main reasons why you think this evolution is necessary now? What are the key personal and professional attributes that the CEO of tomorrow needs to have?
Ioannis Tsavlakidis: As technology reshapes companies and sectors, companies need to innovate, and one of the challenges they face is how to make the best use of the capabilities and knowledge of their people to drive this innovation. One of the techniques I have seen work well, is bringing clients and cross-functional colleagues together to come up with new ideas. I have seen a fair number of my clients doing this over the last twelve months. They gather together people who may come from other parts of the company - production, back office, marketing, and so on - to decide on innovative ideas based on their in-depth knowledge of the company. As far as CEO qualities are concerned, the ability to be open to that kind of input is likely to become increasingly important.
Q: What steps should organizations take to improve how they are perceived by the public?
Ioannis Tsavlakidis: Under current circumstances, when so many companies need to think about revamping their business models, whether to react to digitalization or to make better use of data, you need to proactively involve people, to create a sense of team spirit. That, in turn, can create a more empathetic organization, where trust is more likely to be built, won, and maintained.