Many CEOs are still broadly confident about global economic prospects. However, this optimism has dipped from 80 percent last year to 65 percent this year, according to KPMG International’s 2017 Global CEO Outlook.
While this optimism was similarly shared among ASEAN CEOs (65 percent), Singapore CEOs were slightly more confident (73 percent).
Featuring interviews with almost 1,300 CEOs of the world’s largest companies, the 2017 CEO outlook finds that globally, 65 percent of CEOs see disruptive forces as an opportunity rather than a threat to their business. Among Singapore and ASEAN CEOs, this figure was even higher at 96 and 92 percent respectively.
“Disruption has become a fact of life for CEOs and their businesses as they respond to heightened uncertainty,” says John Veihmeyer, Global Chairman of KPMG. “But importantly, most see disruption as an opportunity to transform their business model, develop new products and services, and reshape their business so it is more successful than ever before. In the face of new challenges and uncertainties, CEOs are feeling urgency to ‘disrupt and grow’.”
In 2017, 83 percent of CEOs when looking within their own businesses describe themselves as confident of their company’s growth prospects over the next 3 years. Singapore and ASEAN
CEOs were even more confident, at 96 and 98 percent respectively.
Globally, 74 percent of CEOs say their business is aiming to be the disruptor in their sector. Similar numbers were seen for Singapore (77 percent) and ASEAN (83 percent).
ASEAN CEOs surveyed generally had higher than global average intentions to invest in new technologies and using digital to connect to customers. Intentions to invest in robotic processes over the next 3 years averaged about 45 percent higher than among CEOs outside the region.
“Greater digital investments offer CEOs and their companies more opportunities to find competitive advantage in an increasingly uncertain global geopolitical environment,” said Ong Pang Thye, Managing Partner, KPMG in Singapore, “Comparing our results across ASEAN with the rest of the world, we see a greater confidence among ASEAN business leaders that should translate into an economically positive year for the region.”
A changing geopolitical climate
Geopolitical change is of increasing concern among CEOs in companies across 11 industries of the 10 key countries in the report.
Among CEOs surveyed, 43 percent are reassessing their global footprint due to the changing pace of globalization and protectionism. This is 42 percent of Singapore CEOs, and 56 percent across ASEAN.
Fifty-two percent believe the impact of the political landscape on their organization is at its highest in many years. In contrast, 62 percent of Singapore CEOs and 65 percent of ASEAN CEOs agreed.
Thirty-one percent think protectionist policies at home will rise in the next 3 years, ASEAN CEOs were generally less pessimistic (21 percent). Just 19 percent of Singapore CEOs thought similarly.
The evolving risk landscape
A striking change this year is the rise in the number of CEOs who cite reputational and brand risk as a top current concern. Not featuring in the top 10 concerns in 2016, it is now the 3rd most important risk (out of 16 in total) this year. Singapore and ASEAN CEOs ranked it similarly.
CEOs also see reputation and brand risk as having the 2nd biggest potential impact on growth over the next 3 years (rising from 7th place in 2016). Singapore CEOs ranked it 3rd, and ASEAN CEOs ranked it 5th.
Cyber security, ranked as the top risk in 2016, has this year fallen to 5th position globally, 7th in Singapore and 9th across ASEAN. This may reflect CEO views of progress made in cyber risk management. Globally, 42 percent (Singapore 50 and ASEAN 46 percent) say they feel adequately prepared for a cyber event – up from 25 percent in 2016.
“The WannaCry ransomware incident occurred after this survey was completed. This suggests that companies must never become complacent about cyber security,” says Ong, “While it may be impossible to fully prepare for unknown cyber threats, strengthening cyber security practices is a continuous and evolving journey in protecting their brand reputation.”
Technology challenges – a battle for talent
Customer insight is seen as hindered by a lack of quality data among 45 percent of global CEOs. More than half (56 percent) are concerned about the data they are basing decisions upon.
As they adopt cognitive technologies, businesses are also expecting short-term headcount growth. Across 10 key roles, an average of 58 percent of CEOs are expecting a slight or significant growth in numbers. This is similar for Singapore CEOs (62 percent) and ASEAN CEOs (65 percent) polled.
While 32 percent globally (25 percent in Singapore and 27 percent in ASEAN) expect only slight growth, in the short term more rather than less specialist employees will be needed. This suggests that customer experience, not cost reduction, is seen by CEOs as a key driver in adopting cognitive technologies.
Attracting highly skilled talent – instead of managing technical issues around the technology itself – is seen by CEOs as the top challenge in implementing cognitive technologies.
More generally, CEOs expect headcounts to continue growing but in lower numbers than 2016. Last year, 73 percent of CEOs expected their number of employees to increase by more than 6 percent over the following 3 years. In 2017, 47 percent agreed, globally and about a third of Singapore and ASEAN CEOs are expecting similar growth over the coming 3 years.
“Speed to market and innovation are strategic priorities for companies growing in uncertain conditions,” says Ong. “Both are the outcomes of a clearly-articulated digitalization strategy whose benefits go beyond cost savings and greater efficiencies to supporting faster decision- making and strengthening customer relationships. These efforts can be transformational; helping organizations respond swiftly to market conditions and new opportunities.”
A focus on trust
With an increasingly transparent business environment, 74 percent of CEOs globally and almost all Singapore and ASEAN CEOs say their organization is placing greater importance on trust, values and culture for a sustainable future.
Some 72 percent of global CEOs correlate being a more empathetic organization with higher earnings. This view was almost unanimous among Singapore and ASEAN CEOs (96 and 98 percent).
In the immediate future, CEOs believe that a trend of consistent or declining trust in businesses will continue: 65 percent agreed that trust in business will stay the same or decline over the next 3 years. This view was similar among Singapore and ASEAN CEOs (96 and 91 percent respectively).
Ong says, “Building public trust is consistent with pursuing business objectives and being good corporate citizens. Companies which focus on developing a values-based culture, treating both internal and external stakeholders fairly are also more likely to earn the trust of their customers.”