"As CEOs become less concerned about shorter time horizon (e.g.: macroeconomic) challenges, they are increasingly able to focus on disruptive and longer-term factors within their industry. Although more optimistic about the global economy, they are less sanguine about their own revenue prospects than last year and are typically aware of the need for a fundamental overhaul of their business. Whether it's accelerating the adoption of generative AI or addressing the business challenges and opportunities associated with climate change, this year the transformation will accelerate," summarizes, Szabolcs Mezei, partner at PwC Hungary.
In most parts of the world, CEOs are more optimistic than pessimistic about the domestic economic outlook. In North America and Western Europe, however, CEOs do not follow this trend: In Western Europe, 32% expect the domestic economy to grow, while 48% expect it to contract; in North America, the two proportions are 31% and 52% respectively.
CEOs are typically planning to increase rather than decrease their workforce over the next 12 months, with 39% reporting that they plan to increase their workforce by at least 5%. Employers in all regions are more likely to expect to increase headcount, with the Middle East region having the most ambitious hiring expectations (65%).
CEOs are increasingly aware of global megatrends and their impact on businesses. Although the trajectory is positive, optimism is cautious, mainly due to megatrends – including technological changes (typically generative artificial intelligence), and climate change. Nearly half of CEOs (45%) believe that their company will not be viable in a decade if it continues on its current path (39% in 2023).
Also reflecting the uncertainty about how to deal with megatrends, CEOs are less confident about their own company's revenue growth prospects over the next 12 months (down from 42% to 37%).
CEOs clearly see the potential in generative AI, with nearly three-quarters (70%) of respondents believing it will significantly change the way they create value over the next three years. They are also optimistic about the short-term impact of AI, with 58% expecting it to improve the quality of their products or services, and almost half (48%) say it will increase their ability to build trust with stakeholders over the next 12 months.
They also expect AI to support the bottom line of their business, with 41% predicting an increase in revenue and 46% improving profitability. The technology, media, and telecoms sector is the most confident about the impact on profits (54%), while executives in the energy and utilities sectors are the least optimistic (36%) about AI.
CEOs are increasingly looking for the transformative benefits of generative AI, and 69% see this as requiring upskilling of the workforce. Concerns about AI include cybersecurity risks (64%), misinformation (52%), legal liabilities and reputational risks (46%), and an increase in bias against certain groups of customers or employees (34%).
CEOs are well on track to meeting their climate commitments: 76% have already taken steps to improve energy efficiency, while 58% have made similar progress in innovating new climate-friendly products, services, or technologies. However, only 45% reported that they have integrated climate risks into their financial planning (31% have no plans to do so). CEOs were also mixed on measures to adapt to physical climate risks, with 47% having taken action and 29% having no plans to do so.
The survey shows strong support for decarbonization, with only 26% of respondents saying that board or management resistance is a moderate or significant barrier to it. CEOs cite regulatory complexity (54%) and lower returns on climate-friendly investments (51%) as the biggest barriers to overcome.
The survey shows that smaller companies are at greater risk: 56% of CEOs of companies with annual revenues of less than USD 100 million believe that their business will be viable for up to 10 years if it continues on its current trajectory. This proportion fell to 27% for firms with annual revenues of USD 25 billion or more.
Nearly all CEOs (97%) noted that they have taken steps to change the way they create and deliver value and services in the past five years, and more than three-quarters (76%) have taken at least one action that has had a significant impact on their company's business model. However, change creates a number of challenges for business leaders, with two-thirds (64%) highlighting the impact of the regulatory environment in hindering business model rethinking, 55% citing conflicting operational considerations and 52% highlighting a lack of skilled labor.
Another barrier is inefficiency. CEOs perceive significant inefficiencies in their company's routine activities, from decision-making meetings to emails – around 40% of the time spent on these tasks is considered inefficient. PwC's conservative estimate is that this inefficiency can result in productivity losses of up to USD 10 trillion.
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