Strategic headwinds hold back Australian growth as CEOs take on digital challenge
Emerging disruptive technologies, environmental issues and the re-emergence of protectionism are top of mind for Australian CEOs who are cautiously optimistic about business growth.
Digital disruption is still high on their list of concerns and a large majority (86 percent) are “overwhelmed” by the time needed to manage it. Emerging from this is a strong cohort (68 percent) who see themselves as personally responsible, digital champions leading their companies through radical change to their operating models to remain competitive.
Overwhelmingly they see technological disruption as an opportunity.
In this year’s KPMG Global CEO Outlook, released yesterday, there was a notable new focus on Artificial Intelligence (AI).
Australian organisations are well advanced in the implementation of AI with just over half piloting AI into process automation. And unlike the negative commentary around AI and robotics taking jobs away from working Australians, most CEOs believe AI will boost their companies’ ‘agility’ and create more jobs. This underpins our belief that the future will see the ‘rise of the humans’ rather than the ‘rise of the machines’.
Australian CEOs are already advanced down the path towards a workplace where everyone will be digital. An augmented workplace where people and machines work together is where we are headed, but we should not underestimate the importance of skills such as the ability to collaborate, be flexible and adapt quickly to change.
Looking ahead, the majority of CEOs (62 percent) are pre-emptively hiring for where they see the organisation going, rather than waiting to achieve growth before hiring the new skill sets they need. It is encouraging that Australian CEOs are being more proactive in this area than their peers in other countries. To build this capacity they are seeking to hire cyber-security specialists, data scientist and emerging market specialists.
The report revealed interesting insights into companies’ growth strategies.
Strategic alliances are increasingly important with nearly 75 percent seeing third-party partnerships as essential for organisational agility. By contrast 50 percent believed acquisitions would have only a moderate impact on their growth prospects.
When considering business partnerships, it is encouraging to see trust and cultural fit is high on the agenda. Three-quarters of Australian CEOs say they would re-consider going ahead with a partnership if they feared that organisation did not fit well with their own culture and values, even if they were successful in other ways.
In previous years, Australian CEOs have been more inward facing, seeing their growth potential firmly rooted in expanding their footprint in Australia. This year there is a notable change with nearly 80 percent seeing new and emerging markets, primarily Asia-Pacific as important for their growth. And they are hiring accordingly.
But the fear of an increasingly territorial global landscape is causing concern to CEOs both in Australia and overseas. Protectionism, trade wars and raised tariffs that limit free trade feature as the second greatest ‘threat to growth’.
Despite these challenges, Australian CEOs maintain a positive view, more confident about their own company growth than their global peers.
Summed up, this year’s survey shows Australian CEOs as ‘realistically optimistic’ about the future.
About KPMG’s 2018 Global CEO Outlook survey
The survey covers 1300 CEOs in 11 key markets (Australia, China, France, Germany, India, Italy, Japan, Netherlands, Spain, UK and US) and 11 key industry sectors (asset management, automotive, banking, consumer and retail, energy, infrastructure, insurance, life sciences, manufacturing, technology and telecoms). A third of the companies surveyed have more than US$10B in revenue, with no responses from companies under US$500M. The survey was conducted between 22 January and 27 February 2018. NOTE: some figures may not add up to 100 percent due to rounding. Read the full report.