Last year ended not with shooting stars but with a bleak space of unknown. Weak international trade and subdued investments impacted global growth, bringing it to its slowest pace since 2009. The outlook for this year seemed much brighter, but a number of unknowns still loom on the horizon. By Chad Gates
From unpredictable political leaders to unclear economic policies and unresolved geopolitical agendas, the remainder of 2017 is fraught with uncertainty for decision-makers who rely on facts and trends to assess risks and shape strategies.
How are Australian CEOs reacting to this ambient volatility? If the results of recent research undertaken by The CEO Institute and Pronto Software are any indication, they are cautiously optimistic, using this lull in activity as an opportunity to reinforce their resilience and preparedness.
The study surveyed 185 CEOs from various industries, including IT, media, resources, manufacturing, retail and imports. The results show that their top six concerns focus on organisational and environmental challenges. Compared to insights secured from the annual survey in 2015 and 2016, the key difference is that this year, economic and political uncertainties have taken centre stage. Now, more than ever, organisations need informed and decisive leaders to transform current challenges into future successes. Lets hone in on the top five concerns for Australian CEOs currently, according to the study.
1. Seeing clearly despite uncertainty – Three key words appeared repeatedly throughout the survey responses: “Donald Trump” and “Brexit”. The respondents agreed that both events have left a trail of uncertainty behind them
. As one CEO puts it, “At this point, not much is known about Donald Trump’s ability to go through with his measures… but one thing is sure. They’re bound to have unintended consequences on business confidence, spending and dynamism.” Until there is a clearer view of what the impact will be on the global economy, CEOs are struggling to determine how to move strategically.
What is the best way to overcome this ambient volatility? Sit tight and continue to be innovative, until visibility clears. As one respondent says, “It’s a very different world now; the rules have changed and we need to be able to adapt to the new environment. Until then, it’ll be a wait-and-see approach to business this year.”
2. Transforming thanks to adoption of new technologies – Another major concern for one- fifth (21 per cent) of CEOs is their business’ ability to keep up with technological advances. Further, almost half (48 per cent) of CEOs know that technology will make or break their organisation’s ability to grow in the future, but they are unsure about which technology will do so. Disruption will come from artificial intelligence and automation according to 17 per cent of respondents.
As one CEO puts it, “They may still be on the fringes and probably won’t be visible for some time, but advancements in robotics, automation and machine learning will all impact us in some way.” While, for 11 per cent of respondents, big data and advanced data analytics, and cloud technologies will be the major disruptors because of their ability to reduce costs and increase efficiencies.
But the real question is less about which technologies will be disruptive, so much as how they will do it? Will new technologies help companies get better at what they do or will they make their business models obsolete? On this topic, opinions diverge.
For some, technological disruption comes with the risk of getting side-stepped, or even absorbed, by the very tools that are supposed to help them. For others, technology opens the door to a competitive edge. It provides an opportunity to lead the transformation of their organisation and their sector.
It’s critical for organisations to embrace business management systems that enable internal processes to be made more efficient and streamlined, allowing staff to be more focused on those tasks that require human intervention. Systems that integrate with business intelligence functionality is also key, ensuring staff at any level have access to the insights and analytics they need in order to drive smarter decision making.
3. Managing and improving operational processes – Managing change is an important concern for 12 per cent of CEOs, as it was for the past two years. Change calls for the transformation of operational processes and adaptation of organisational strategies. It is a direct result of the uncertain environment and technological disruption that are destabilising corporate assumptions and expectations. CEOs also frame the need for change management as a condition for survival.
Overall, whether reactive or proactive, it seems that operational agility is the key to longevity. It’s made clear that the need to be competitive on all fronts and in all areas, from consumer-facing operations to internal processes, is vital.
4. Sustaining growth and revenues – Since the start of 2017, the Australian economy has appeared to be gaining confidence, but business leaders remain cautious. For 11 per cent of respondents, a key concern for the rest of the year will be to “find growth in a low growth economic environment”, as one CEO puts it.
How do CEOs plan to sustain growth and revenues despite the seemingly unfavourable global conditions? One approach is to innovate in as many ways as possible, developing new products and identifying new market opportunities. For others, it is best to roll with the punches.
Continuing to drive down costs while maintaining a high standard of product is the balancing act many CEOs are juggling, and will continue to, as they see this as the only way to stay afloat.
5. Attracting and retaining skilled staff – In 2015, hiring and retaining staff was the leading concern of CEOs and in 2016 they placed it second. Today, it is only an issue for 11 per cent, putting it on equal footing with the need to sustain growth and revenues.
This change does not necessarily indicate that finding skilled talent is no longer an issue, but it does show how leaders’ priorities have shifted from seeking competent people towards seeking competent people who have the right specialty at the right time.
While conditions may not be ideal, most of the surveyed CEOs are cautiously optimistic and are getting ready for when things regain some resemblance of normality.
Instead of waiting for the next big disruptive marvel, they are proactively equipping their organisations with the processes and skills that will allow them to keep partners and competitors on their toes. And, rather than waiting for external conditions to improve, they are ensuring their organisations can overcome uncertainty better and more rapidly than others.
Chad Gates is Managing Director, Pronto Software