Driving growth and delivering value are familiar concepts to Australian ASX-listed CEOs and other corporate leaders. As the complexity of business increases in local and global markets, the drivers for growth need to be clearly understood.
KPMG’s CEO Study 2015 was launched last month and it highlights there is local optimism but also the importance of technology and innovation both as challenges and drivers for positive change.
The finding that 85% of Australian CEOs who participated in the study said they planned to increase head count in the next three years to 2018 is a reflection of that optimism but also of their recognition of the need for human resources to help achieve growth and remain in front. The KPMG CEO Study showed Australian CEOs are looking to extract greater profitability from their existing businesses – and that comes out of a stronger focus on clients and a drive to deliver positive customer experiences via products and services.
Yet there are also key issues the KPMG CEO Study highlights for Australian business: that we are not outward looking enough nor focused on challenging traditional models from within. Asked about their top strategic priorities, only 19 percent of local CEOs rated fostering innovation in their top three vs 27 percent of global respondents; implementing disruptive technology was an even lower priority in Australia at only 13 percent vs 18 percent globally.
How can a company keep its products and services relevant? How will it keep up with new technologies? How to stay ahead of competitors that didn’t even exist a few years ago? These are key questions all leaders should be asking and many are at this moment, seeking the answers.
Yet as quickly as the questions are raised, other concerns emerge: when the Australian CEOs were asked about future uncertainties, 85 percent expressed concern about the potential for new entrants to disrupt their business models. Sixty-eight percent were worried about the relevance of their products and services in three years’ time, 59 percent were concerned about keeping up to speed with new technologies and 74 percent noted concerns about customer loyalty.
It’s true the business world is undergoing rapid change including the impacts of disruptive technology. We are seeing these impacts in areas such as Fintech where leaders understand the world of the future will have different paradigms and partnerships. But the imperative more broadly is to realise that, while Australia is advancing in the area of technological change, its leaders can’t afford to wait too long to both understand and act. The CEO Study highlights that we need a different way of thinking at the top. That means Boards, CEOs and executive teams willing to look at a different way of going about business. The top strategic priorities shown by the KPMG CEO Study for Australian CEO’s were a stronger client focus, increasing cash flow, developing new growth strategies and reducing cost structures. Yet when asked about the critical challenges CEOs expected to face in the next three years, only 15 percent of Australian CEOs listed ‘spurring innovation’ as the most critical vs 33 percent of Chinese CEOs and 46 percent of those surveyed in Spain.
This highlights the imperative for leaders to identify where they must invest to continue to drive growth and profitability and at the same time, understand technological change and strive to successfully innovate. Australians have always been keen ‘early adopters’ and I believe Australian business can evolve as an innovation leader embracing complexities of change and meeting the growth challenge.
About the 2015 KPMG CEO Outlook Study
The survey targeted 1,278 CEOs in 10 key markets (Australia, China, France, Germany, India, Italy, Japan, Spain, UK and US) and nine key industry sectors (automotive, banking, insurance, investment management, healthcare, manufacturing, technology, retail/consumer markets and energy/utilities). A quarter of respondents have over US$10B in annual revenue, with no responses from companies under US$500M. The survey was conducted from April 22 to May 24, 2015. Australia had 52 respondents from the following sectors: banking (10 percent), insurance (6 percent), investment management (10 percent), manufacturing (26 percent), technology (13 percent), consumer/retail (19 percent), healthcare (12 percent), and energy/utilities (4 percent).