Nearly 40% of CEOs surveyed in Singapore and globally believe their companies will not be economically viable in the next decade if they continue on their current path, according to Pricewaterhouse Cooper’s (PwC) 26th Annual Global CEO Survey.
PwC says this “stark datapoint” underscores a dual imperative facing CEOs today — the need to manage short-term external risks to drive profitability in order to survive, while simultaneously transforming their business to thrive in the longer term.
Over October and November last year, PwC surveyed 4,410 CEOs, of which 36 are based in Singapore, with interviews conducted across the global regions of North America, Western Europe and Asia-Pacific.
Marcus Lam, executive chairman of PwC Singapore says: “Business leaders in Singapore increasingly need to balance dealing with near-term threats and rising costs, and the pressing need to reinvent their businesses to stay relevant and viable. CEOs that are ready to embrace and drive change would be best positioned to help their companies survive and even thrive.”
The Singapore findings of the survey also show that close to nine in 10 of CEOs surveyed in Singapore believe global economic growth will decline over the next 12 months, with this pessimism felt more strongly by Singapore business leaders (89%) than their global counterparts (73%).
Globally, PwC says this is the most pessimistic that CEOs have been when asked about the global economic growth outlook since the accounting firm began asking this question 12 years ago. Markets and financial services leader Sam Kok Weng notes that the “heightened sense of pessimism” from Singapore CEOs “stood out” compared to their global counterparts.
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“While this is not surprising given Singapore’s open economy, it will take more than re-evaluating operating models and cutting costs to survive and thrive in a world that continues to change at a relentless pace. Businesses will need to take an inside-out approach to identify new value propositions that are unique to them that are powered by their capabilities,” adds Sam.
According to the CEOs surveyed, companies will see multiple direct challenges to profitability within their own industries over the next 10 years. Nearly 70% of CEOs surveyed in Singapore and 56% globally believe changing customer demand or preferences will impact profitability. This is followed by changes in regulation, labour or skills shortages and technology disruptions.
On regulatory changes as a direct challenge to profitability, tax leader Chris Woo says: “With impending changes such as the Global Anti-Base Erosion (GloBE) rules — also commonly referred to as the global minimum tax regime — gaining momentum, the survey results certainly capture business leaders’ concerns on the impact impending changes have on their business.”
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“Now that Singapore has announced its plan to implement the GloBE rules and a domestic top tax from 2025, a countdown clock needs to have been started for the affected businesses in Singapore, and that they will need to ensure they have the right strategy, technology and data as well as capabilities to get ready,” he adds.
PwC says the survey suggests that if organisations are to remain viable in the long term, they must invest in change and transformation to reinvent their businesses to stay relevant for the future. Technologically, more than three quarters of organisations say they are investing in automating processes and systems, deploying technology such as the cloud, AI and other advanced technology and implementing systems to upskill their workforce in priority areas.
Greg Unsworth, digital business and risk services leader, explains: “No organisation can afford to stand still in the face of emerging disruptive technologies. The question for many leaders now is how they can anticipate, prepare and develop appropriate plans for the future.
“This year’s survey results illustrate the vital importance of fundamentally transforming a company's strategic direction, business model and operations to respond to shifting markets and customer expectations. The adoption of new digitally enabled business models and optimisation of technology across organisations will be key enablers for change for many businesses,” says Unsworth.
Engaged, empowered organisations also move faster, innovate more readily and collaborate more effectively to get things done, according to PwC, which adds that this year’s survey suggests some warning signs and areas of opportunity.
For example, around two in 10 CEOs surveyed say leaders in their company often or usually make strategic decisions for their function without consulting the CEO. Meanwhile, over a third say their company often or usually tolerates small scale failures. More optimistically, nearly nine in 10 say the behaviours of employees are often or usually aligned with their companies’ values and direction.
Torn between the demands of short-termism and long-term transformation, just over half of CEOs surveyed say they are primarily consumed with driving current operating performance, rather than evolving the business and its strategy to meet future demands. If they could redesign their schedules, CEOs say they would spend more time on the latter.
“It is indeed a very challenging time for CEOs, they must reimagine how their businesses can continue to stay relevant and at the same time, tackle immediate issues such as fast-changing customer demands, rising costs, supply chain disruptions and talent challenges,” days consulting leader Charles Loh. “CEOs must formulate their business-led digital transformation agenda, prioritising digital innovation initiatives, speed to value projects and upskilling the workforce."
