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 * Overview
 * Introduction
 * 1. What’s the half-life of your business?
 * 2. When will your company’s climate clock run out?
 * 3. Should you bring your key business risks forward?
 * 4. How much is your mood today affecting your view of tomorrow?
 * 5. How do your resilience and your workforce strategies fit together?
 * 6. As geopolitical risks rise, what new contingencies are you preparing for?
 * 7. How much time and money are you investing in the future?
 * 8. How central are you to your company’s reinvention?
 * 9. What kind of ecosystem are you building?
 * Territory results
 * Download the PDF


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WINNING TODAY’S RACE WHILE RUNNING TOMORROW’S

PwC’s 26th Annual Global CEO Survey

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15 min read

January 16, 2023

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Evolve or die, say 4,410 chief executives in our 2023 CEO Survey. But are they
spending enough time on business reinvention? Many tell us no.



DE


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CEO26_AUDIO-POSTER

Forty percent of global CEOs think their organisation will no longer be
economically viable in ten years’ time, if it continues on its current course.
That stark data point underscores a dual imperative facing 4,410 CEOs from 105
countries and territories who responded to PwC’s 26th Annual Global CEO Survey.
Most of those CEOs feel it’s critically important for them to reinvent their
businesses for the future. They also face daunting near-term challenges,
starting with the global economy, which nearly 75% believe will see declining
growth during the year ahead. We’ve organised this year’s survey summary into
nine tough questions—which naturally fall into three groups—about what it takes
to operate in our dual-imperative world:

 * The race for the future: The first three questions reflect the race that CEOs
   must run to stay ahead of longer-term threats to their companies, to society
   and to the planet itself.
 * Today’s tensions: The next three questions speak to day-to-day tensions that
   leaders are facing as macroeconomic conditions deteriorate, uncertainty rises
   and inflation hits levels not seen in decades.
 * A balanced agenda: The final three questions epitomise the balancing act that
   CEOs must perform to deliver on their dual imperative.


NINE TOUGH QUESTIONS, UNDER THREE THEMES, THAT CEOS NEED TO TACKLE. CLICK ON A
QUESTION TO NAVIGATE TO THAT SECTION:


THE RACE FOR THE FUTURE

 * 1. What’s the half-life of your business?
 * 2. When will your company’s climate clock run out?
 * 3. Should you bring your key risks forward?


TODAY’S TENSIONS

 * 4. How much is your mood affecting your view of tomorrow?
 * 5. How do your resilience and your workforce strategies fit together?
 * 6. As geopolitical risks rise, what new contingencies are you preparing for?


A BALANCED AGENDA

 * 7. How much time and money are you investing in the future?
 * 8. How central are you to your company’s reinvention?
 * 9. What kind of ecosystem are you building?

The data we’ll present shows that CEOs are already wrestling with these
questions, though sometimes without fully recognising it. By making the
questions explicit, we hope to help leaders zero in on their biggest
possibilities and vulnerabilities. Along the way, we also suggest CEO priorities
for action, based on PwC’s research and experience helping global leaders with
all of these issues. The dual imperative facing today’s CEO is a challenge of
the first order, but it’s also an opportunity to lead with purpose and help
business play the role needed so desperately by society—a catalyst of innovation
and a community of solvers that plays for the long haul.


1. WHAT’S THE HALF-LIFE OF YOUR BUSINESS?



CEOs recognise the potential for disruption ahead. Nearly 40% of CEOs think
their company will no longer be economically viable a decade from now, if it
continues on its current path. The pattern is consistent across a range of
economic sectors, including technology (41%), telecommunications (46%),
healthcare (42%) and manufacturing (43%).

Download chart

When asked about the forces most likely to impact their industry’s profitability
over the next ten years, about half or more of surveyed CEOs cited changing
customer preferences, regulatory change, skills shortages and technology
disruption. Roughly 40% flagged the transition to new energy sources and supply
chain disruption. And nearly one-third pointed to the potential for new entrants
from adjacent industries.

Download chart

Underlying these figures, we believe, is consciousness among today’s leaders
that we are living through extraordinary times, with five broad
megatrends—climate change, technological disruption, demographic shifts, a
fracturing world and social instability—reshaping the business environment.
Although none of these forces is new, their scope, impact and interdependence
are growing, with varied magnitude across industries and geographies. CEOs in
Japan (who have been buffeted by demographic headwinds for decades) and China
(who are on the front lines of uncertainties about free-flowing global trade)
were the most concerned about the long-term viability of their business models,
while CEOs in the United States were the most optimistic.

Your next moves: reimagine and choose. The upshot is a race to reinvent. As PwC
authors described in their 2022 book, Beyond Digital, the starting point for
enterprise transformation of this sort often is a reimagination of a company’s
place in the world—looking beyond the current portfolio of businesses and
products to determine what value an organisation will create, and for whom. Such
reimagination often involves hard choices about what not to do. For example,
when Philips reinvented itself as a health-technology company, bringing together
the Amsterdam-headquartered multinational’s consumer-insights capabilities,
depth in medical-device technologies, and strengths in data analytics and
artificial intelligence, it also exited some businesses and deemphasised others.
As Frans van Houten, the CEO at the time, described it in Beyond Digital, ‘I
recognized that the chances that we would transform lighting and healthcare
simultaneously were not so high. And so we made a choice.’


2. WHEN WILL YOUR COMPANY’S CLIMATE CLOCK RUN OUT?



CEOs’ race against time is especially urgent when it comes to climate change. A
majority of global CEOs expect some degree of impact from climate change in the
next 12 months—primarily in their cost profiles (where approximately 50% expect
a moderate, large or very large impact) and their supply chains (42%). Fewer
(24%) are worried about climate-related damage to their physical assets. CEOs in
China feel particularly exposed, with 65% seeing the potential for impact in
their cost profiles, 71% in supply chains and 56% in physical assets.

Download chart

Deeper statistical analysis of the survey shows that the CEOs who feel most
exposed to climate change are more likely to take action to address it. This
kind of reactive approach is understandable—when your house is in the path of a
forest fire, you reach for the hose—but it creates risks of its own. Combating
climate change requires a coordinated, long-term plan. It won’t be solved if the
only companies working on it are those that face immediate financial impact. We
also don’t know how much the actions that are being undertaken most
frequently—decarbonisation initiatives, along with efforts to innovate
climate-friendly products and services—will move the needle, particularly in the
near-term, which, in light of emissions already in the atmosphere, promises
continued warming under virtually every scenario.

Download chart

Moving with the right pace and priority to mitigate climate risks, generate
opportunities and decarbonise are enormous strategic challenges. Many companies
appear to be strategising today without the information provided by an internal
pricing mechanism for carbon. More than half of all CEOs in the survey
(including 38% of those at the biggest companies and 70% of those at US
companies) say that their company has no plans to apply an internal carbon price
to decision-making, even though doing so could help them account for
considerations like taxes and incentives, and clarify strategic trade-offs.
Measuring and communicating progress to critical stakeholders is another big
challenge. In a separate recent PwC survey, 87% of global investors said they
think corporate reporting contains unsubstantiated sustainability claims, often
referred to as “greenwashing.”

Your next move: break it down. PwC experience shows it’s crucial for leaders
to break the climate challenge down into manageable chunks. For example, instead
of looking in the abstract at climate risk, a manufacturer of smartphones might
assess the potential for high-heat-stress days affecting a critical goldmine in
the southern hemisphere, for flood risks at a coastal airport and for wildfire
risk in the western US. Similarly, leaders looking to curb their Scope 3
emissions (those generated in a company’s upstream and downstream value chain)
should focus on the 20% of suppliers that typically generate 80% of Scope 3
emissions; on data and modeling that is extremely granular, moving beyond
industry averages; and on sharp processes for estimating, quantifying and
extrapolating Scope 3 data across the business as a whole.


3. SHOULD YOU BRING YOUR KEY BUSINESS RISKS FORWARD?



Climate change exemplifies a time-horizon challenge that comes into clearer
focus when we look at a broader set of external threats to the global economy.
Over the next 12 months, CEOs feel most exposed financially to inflation,
economic volatility and geopolitical risk. All three are immediate,
headline-grabbing issues that can reinforce and compound one another, as, for
example, the war in Ukraine pushes up prices, encouraging central banks
worldwide to intervene through growth-dampening interest rate hikes. The picture
changes for CEOs’ medium-term (five-year) outlook. Over that time frame, cyber
risks and climate change join inflation, macroeconomic volatility and
geopolitical conflict in the top tier of risk exposure.

Download chart

The disconnect across time horizons begs the question of whether CEOs run the
risk of being blindsided in the near term as they focus on here-and-now threats.
In the case of cybersecurity, it’s easy for important business technology
investments—launching a new consumer-facing app, developing a business line
built around AI, expanding into a new market—to inadvertently create cyber
vulnerabilities.

Your next move: mobilise the C-suite. CEOs have an important role to play to
stay ahead of cyber challenges, ranging from speaking publicly about their
commitment to cybersecurity, to using their influence to inspire sweeping
changes, and creating a united front against attacks. Unity starts in the
C-suite, according to PwC’s recent Digital Trust Insights research, which found
that a critical contributor to cybersecurity improvements at leading companies
was C-suite collaboration to make the most of sustained, cumulative investments
in risk mitigation.


4. HOW MUCH IS YOUR MOOD TODAY AFFECTING YOUR VIEW OF TOMORROW?



The biggest near-term challenge facing CEOs, of course, is the state of the
global economy. Not surprisingly, nearly three-quarters of CEOs responding to
this year’s survey project that global economic growth will decline over the
next 12 months. Those expectations, which held across all major economies,
represented a stark reversal from last year, when a similar proportion (77%)
anticipated improvement in global growth. Last year’s optimism, reflecting hope
that economic conditions would continue improving as the global pandemic eased,
was dashed in 2022 by shocks such as Europe’s largest land war since World War
II, knock-on effects like surging energy and commodity prices, and accelerating
general wage and price inflation.

Download chart

We can dimensionalise CEOs’ pessimism by comparing their confidence in their own
company’s growth prospects (as opposed to the overall economy’s) over the next
12 months. This is a question we have been asking CEOs since 2007. The drop-off
in CEO confidence levels for their own organisation’s prospects between last
year and this year (about 25%) was significantly smaller than the plunge in 2009
(when it fell more than 50%), but larger than in any other of the past 15 years.
There were exceptions: CEOs in Africa, Brazil, China, Japan and the Middle East
are about as confident in their growth prospects as they were last year—and, in
general, CEOs are more confident about their three-year revenue growth prospects
compared to the shorter term, which we also asked them about. Still, the
near-term revenue outlook is weak, particularly for CEOs in the real estate and
private equity industries, who are feeling the effects of rising capital costs
and tightening liquidity conditions.

Download chart

The dramatic, year-on-year shift in CEO sentiment begs a natural question: has
inordinate optimism a year ago been replaced by excessive pessimism? After all,
CEOs are people, too, and just as susceptible as the rest of us to recency
effects and other cognitive biases that a vast body of behavioural economics
research has shown to be pervasive in individuals.

Your next move: create history in the boardroom. Boards of directors, while also
human and therefore subject to bias themselves, can be part of the solution for
CEOs. PwC’s corporate governance centre has highlighted a range of approaches to
combat bias in the boardroom, such as soliciting views through independent
consultation or questionnaires, structuring discussions to consider overlooked
possibilities (for example, by asking, ‘What do our competitors hope we will
do?’ and ‘What do they fear we might do?’), and assigning a “devil’s advocate”
role for critical discussions. Another technique, described by Nobel laureate
Daniel Kahneman in this video, is to hold a special meeting about a critical
decision, framed by the leader as follows: ‘Assume that we made the decision we
are now contemplating. It is now a year later. It was a disaster.… Write a brief
history of that disaster.’


5. HOW DO YOUR RESILIENCE AND YOUR WORKFORCE STRATEGIES FIT TOGETHER?



In response to near-term economic challenges, CEOs say they are taking actions
to spur revenue growth and cut costs, without delaying strategic M&A
initiatives. Interestingly, although 52% of CEOs say they have already begun
cutting costs, just 19% are implementing hiring freezes, and 16% are reducing
the size of their workforce. This stands in stark contrast to what we heard from
CEOs back in October and November of 2008, when about twice as many told us they
anticipated near-term headcount reductions.

Download chart

The survey data suggests CEOs aren’t laying people off, in part, because of
their recent experience with employee attrition, which surged over the past year
or so in many markets, a phenomenon that’s been referred to as the “great
resignation.” For the most part, survey respondents appear to believe that those
elevated churn rates will continue, with more CEOs saying they will rise than
predicting they will fall. CEOs in the United States were an exception; more
than half of US CEOs expect decreased attrition over the next 12 months.

Download chart

Your next move: retain top talent. If, as many CEOs anticipate, the war for
talent remains fierce, even amid deteriorating economic conditions, keeping
workers happy and engaged will be a mission-critical priority. Separate PwC
research suggests that leaders do have levers to pull when it comes to employee
retention: flexibility, fair pay, fulfilling work and the opportunity to be
one’s authentic best self at work are critical determinants of employee
decisions about whether to stay or go. Creating conditions for progress against
forces like these can help CEOs influence future churn rates. It’s not easy, of
course: ‘We all have significantly more to do to work in different ways to align
with the expectations of millennials and generation Z,’ Wendy Clark, CEO of
global marketing and advertising network Dentsu International, told us in a
recent interview. ‘The “great resignation” is a reappraisal of leadership. It is
a great reckoning on how we’re leading our companies and whether we’ve really
thought about the lived experience of working at our companies.’


6. AS GEOPOLITICAL RISKS RISE, WHAT NEW CONTINGENCIES ARE YOU PREPARING FOR?



World events have elevated the importance of geopolitics, and have made
themselves felt in myriad ways, including in influencing leaders’ perspectives
on the global economy itself. CEOs in Brazil, Canada, China, India, Japan and
the United States are more optimistic about the short-term growth prospects of
their own countries than those of the world as a whole. The growing emphasis on
national interests over global ones represents an acceleration of trends that
have been underway for some time, as the post–Cold War consensus of open markets
and frictionless global trade has broken down. An exception is major economies
where the second-order effects of geopolitics are hitting home hardest. As CEOs
in France, Germany and the UK prepared for a potentially dark, cold winter, they
anticipated growth in their home markets would lag the global economy.

Download chart

CEOs who say they are exposed to geopolitical risk are taking action, with
nearly half increasing their investments in cybersecurity or data privacy,
adapting supply chains or adjusting their geographic footprint. Cybersecurity is
a particular area of emphasis for larger companies exposed to geopolitical
conflict, while smaller ones are focused more on diversifying their product and
service offerings.

Download chart

Your next move: make supply chains resilient and responsive. Recent PwC
experience has highlighted a set of smart moves to improve supply chain
performance. Job one is scenario-planning for a wider range of disruptions—not
just the immediate impact of extreme events but also their cascading
ramifications throughout the supply chain. Leaders are also creating AI-enabled
supply chain control towers—connected dashboards of data, key business metrics
and events personalised to decision-makers across the business’s ecosystem. The
control tower enables organisations to understand, prioritise and resolve
critical issues in real time—by, for example, shifting resources from one part
of a supply network to another.

Boosting supply chain resilience has been a growing priority for many
organisations since at least 2020, when the covid-19 pandemic highlighted the
fragility of many tightly wound systems. As Éric Martel, CEO of Bombardier, said
in a recent PwC interview, ‘If one person was looking after 20 suppliers prior
to covid-19, today we have one person for every five suppliers. Fortunately,
we’ve been able to limit the number of potential problems, which in the past
have included parts scarcities and shortages of skilled technicians. There will
always be some issues that we didn’t see coming, but it’s more manageable if we
have two or three problems instead of 300.’


7. HOW MUCH TIME AND MONEY ARE YOU INVESTING IN THE FUTURE?



To navigate the dual imperative defined by our first six questions, CEOs must
perform a balancing act that starts with their own calendars. We asked CEOs how
they split their time between a range of priorities, including driving current
operating performance; adapting the business for the future; spending time with
customers; engaging with employees; and interacting with investors, the board
and other external stakeholders. Driving current operating performance consumed
the biggest share of CEOs’ time. If they could redesign their schedules, CEOs
told us, they would spend more time evolving the business and its strategy to
meet future demands.

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The balancing act extends from the CEO’s calendar to the allocation of corporate
resources. Technology investments are a top priority: around three-quarters of
companies are focused on automation, upskilling, and deploying advanced
technologies such as AI. Drilling down into the underlying rationale for those
investments, roughly 60% in each category is focused on reinventing the business
for the future, and 40% is concentrating on preserving the current business.
That 60/40 ratio was remarkably consistent across the full spectrum of
investments—another reflection of the balancing act CEOs are striving to strike.

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Your next moves: develop ambidexterity. To understand what this balancing act
looks like in practice, consider the experience of the Indian engineering and
construction firm Larsen & Toubro (L&T), which is combining technology and
sustainability to capitalise on opportunities associated with climate change.
‘There are two ways to look at sustainability: either be perplexed and stay away
or be excited and take action,’ CEO and managing director S.N. Subrahmanyan told
us in an interview. ‘We chose the latter.’ L&T has a huge component of its
business in hydrocarbons, but it is also pivoting to new fuels such as green
hydrogen. ‘We are looking at green hydrogen not only as a fuel of the future,
but also as a business to invest in and develop. In addition, with our expertise
in different solar technologies, we have emerged as a global technology player
for setting up solar plants,’ Subrahmanyan said. ‘Last year, we were awarded a
turnkey EPC [engineering, procurement and construction] contract to design and
build Saudi Arabia’s largest solar plant. At full capacity, this plant is
expected to generate enough electricity for 185,000 homes and offset up to 2.9
million tonnes of carbon emissions a year.’


8. HOW CENTRAL ARE YOU TO YOUR COMPANY’S REINVENTION?



To reinvent their business while navigating near-term operating challenges, CEOs
need the help of their people—C-suite leaders, middle managers and frontline
employees alike. Engaged, empowered organisations move faster, innovate more
readily and collaborate more effectively to get things done. For CEOs hoping to
enjoy such benefits, this year’s survey suggests some warning signs, and areas
of opportunity. Forty-three percent of global CEOs said that leaders in their
organisation don’t often encourage debate and dissent. Fifty-three percent said
their leaders don’t often tolerate small-scale failures. And 76% said their
leaders don’t often make independent strategic decisions for their function or
division.

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Numbers like these suggest that in many organisations, the conditions aren’t in
place for managers and employees to run on their own towards major new
opportunities or to independently spot and respond to disruptive threats.
Business reinvention will be a full-contact sport for CEOs and their top teams
during the years ahead, and the data suggests that a special kind of leadership
will be required because deep change is possible only when individuals at all
levels adapt and grow. CEOs need to double down on setting a shared vision,
empowering people to make decisions, and being visible champions for change.

Your next move: decentralise project-level decisions. Organisational empowerment
and autonomy are important contributors to effective corporate resource
reallocation, which is a critical lever for leaders seeking to drive major
change in business direction. Recent analysis of data from PwC’s 25th Annual CEO
Survey showed that not only was resource reallocation, in general, a major
determinant of corporate performance, but smaller scale, project-level resource
reallocation (initiating investments in new projects, doubling down on promising
ones and killing low-potential initiatives) contributed as much as the larger
scale moves (such as acquiring or investing in businesses) that CEOs typically
lead. CEOs can stimulate project-level dynamism by encouraging innovation and
small-scale risk-taking, discouraging excessively centralised approval
requirements for small-scale initiatives, and devising “kill switches” to ensure
that small-scale projects don’t get out of control.


9. WHAT KIND OF ECOSYSTEM ARE YOU BUILDING?



The diversity and complexity of today’s business challenges are placing a
premium on the ability to collaborate across the boundaries of the corporation.
To get a window on these dynamics, we asked CEOs how they forge
partnerships—with whom and to what objective. The results show that companies
work with a wide network of collaborators, and that those relationships are most
often struck to create new sources of value. Addressing societal issues such as
climate change was more often a goal of collaboration with non-business entities
such as NGOs and government agencies.

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Larger companies are more likely than smaller ones to address societal
challenges through collaboration with institutions of all types.
Business–government collaboration towards societal ends is especially prevalent
in Africa, Asia and the Middle East, and in the energy and power and utilities
sectors.

Your next move: commit to collaboration. PwC’s work in ESG strategy
development suggests that organisations are best able to create business and
societal value in tandem when they tackle partnering and ecosystem building with
rigour and sophistication. CEOs need to commit their organisations to an ESG
identity and focus area, and make the commitment real. This often involves
mapping the interests of critical ecosystem partners; identifying the
combinations of talent, technology, processes and insight that those partners
can provide; building trust through reciprocity; and nurturing a corporate
culture that embraces collaboration across traditional institutional lines.

We’ve seen numerous examples of these principles delivering value. Neste, an oil
refiner and marketer based in Finland, has built an ecosystem around a
partnership with McDonald’s in which one company collects McDonald’s cooking oil
and another transports it to Neste, which processes the material into diesel
fuel that it sells to a trucking company partner. Mytilineos, a 114-year-old
family-owned Greek conglomerate that produces metals and power, is collaborating
with the Greek government and the European Commission on an initiative in which
electricity-intensive industries will finance up to 4 gigawatts of new renewable
energy sources. Mytilineos also leads metallurgical research programmes at the
European level, working with both industrial and educational partners. ‘We
believe innovation should be pursued collaboratively because in that way it is
undoubtedly more productive,’ said Evangelos Mytilineos, the company’s chairman
and CEO. ‘I believe we truly embody the cliché that if you want to go fast, go
alone, but if you want to go far, go together.’


TRUST, LEADERSHIP AND THE C-SUITE CONVERSATION 


Trust helps institutions and individuals “go far together”—and win today’s race
while running tomorrow’s. Advanced analysis of data from last year’s CEO Survey
uncovered a statistically significant relationship between customer trust and
financial performance. Survey data also suggested that trusted companies had a
long-term orientation; they were more likely to have made net-zero commitments
and to have their compensation tied to non-financial outcomes, such as employee
engagement and gender, race, and ethnicity representation.

The growing importance of trust is deeply intertwined with the changing nature
of leadership, due to the increased complexity of stakeholder dynamics, the
growing need for the private sector to help solve important societal problems,
the fracturing of the post–Cold War consensus, and the intensification of
geopolitical and social tensions. CEOs have had front-row seats for, and often
been participants in, these shifts, to a greater degree than many of their
direct reports. Explicit dialogue with top management teams about the leadership
implications of these forces may help CEOs strengthen and unleash the power of
the C-suite, allowing CEOs time to focus on the future, which our survey data
indicates CEOs want. We hope the nine questions posed by this year’s CEO Survey
enrich that conversation, so it empowers leaders and their organisations to push
past the status quo, envision progress and reinvent themselves for the world
they are helping to shape. 

Click here for survey methodology

To see insights from the Germany CEOs click explore

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THE LEADERSHIP AGENDA

Sharp, actionable insights curated to help global leaders build trust and
deliver sustained outcomes. Explore our latest content on the global issues
affecting organisations today from ESG to value creation, technology and cyber
to workforce transformation.

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GET IN TOUCH

For questions about the data, including additional cuts, contact the CEO Survey
research and analytics team.

For media inquiries, contact Ryan Stanton.







FURTHER READING


EMPOWER TO TRANSFORM

The December issue of strategy+business highlights three key moves leaders can
make to ensure that their workforce is a driver of transformation.


THE CEO’S ESG DILEMMA

An increased focus on ESG issues presents CEOs with a new challenge: can their
company perform well for investors and pursue an ESG strategy at the same time?


GLOBAL INVESTOR SURVEY 2022

Investors say sustainability is a priority for companies, but financial
discipline and transparency in ESG and sustainability reporting are needed.


CLIMATE CHALLENGE = CLIMATE OPPORTUNITY­­

This issue of strategy+business looks at three daunting climate challenges and
highlights ways for companies to meet them—and spot unexpected opportunities.­




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