18 encuesta mundial ceos

8/9/2019 18 Encuesta Mundial Ceos

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www.pwc.com/ceosurvey

A marketplace withoutboundaries?Responding to disruption

18th Annual Global CEO SurveyNew ways to compete p2/ Growth, but not as we know it p6/ What business are you in? p12/Creating new value in new ways through digital transformation p18/ Developing diverse anddynamic partnershipsp24/ Finding different ways of thinking and working p28/ The CEO agenda p34

1,322CEOs interviewed in 77 countries

78%of CEOs are concerned about

over-regulation

56%of CEOs think cross-sectorcompetition is on the rise


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New ways tocompete

Given the scale of the challenges anduncertainties that todays CEOs face in globalmarkets, its little wonder that the one must-have attribute they point to for future successis adaptability. Its clear that in 2015, disruptivechange will affect all global markets. But whileCEOs are less condent overall about the

prospects for the global economy, many believethat there are signicant opportunities for their

own business to grow in the year ahead.

Macroeconomic trends are continuing in the

direction we highlighted in last years survey.While overall, global growth prospects couldbest be described as modest, there are pocketsof greater dynamism. Mature markets particularly the US, which for the rst time in

ve years ranks above China as CEOs key

market for growth look likely to offer the bestprospects in the near term. The emergingeconomies notably the BRICS, which havebeen such powerful engines of expansion arenow grappling with political and structuralchallenges. However, underlying drivers ofgrowth, such as youthful populations and a fast-

growing middle class, make many emergingeconomies attractive prospects for the future.The challenge for CEOs, in such a fast-changingenvironment, is where to place their bets.

Its not simply economic fundamentals thatworry CEOs. Over-regulation is cited by 78% asa concern. And these concerns are not limitedto industry-specic regulations but go much

broader into trade, employment, nancial

regulations etc., with CEOs increasingly worriedabout the amount of uncertainty aroundregulation. Cyber threats have increasedmarkedly and are likely to become even more

prominent in the wake of the recent high-proleattacks on entertainment networks. The rapidpace of technological change seen as a challengeby 58% of CEOs is also highlighting a shortageof key skills that could imperil growth.

But CEOs no longer question the pace oftechnological change, as they learn to deal withit. The majority of CEOs believe that investmentsin digital technologies have created value fortheir business, and around 80% say that mobiletechnologies and data analytics are key strands

of their strategy.

The challenges thrown up by these changes areset against a competitive landscape that is alsorapidly and radically reshaping. Competition isnow coming from new and previously unseensources. A wide range of industries is beingdisrupted by regulatory changes, increasingcompetition and new patterns of consumerbehaviour. With that in mind, one-third ofCEOs say they have entered new industries inthe last three years, and more than half (56%)believe that organisations will increasingly be

competing in new sectors in the next three years.

Foreword


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3PwC 18th Annual Global CEO Survey

Dennis M. NallyChairman, PricewaterhouseCoopersInternational Limited

As well as new areas of competit ion, CEOsare also looking to collaborate more with adiverse range of partners that can provideaccess not just to new markets and consumers,but crucially, to the new and emergingtechnologies and innovation that they consideressential to achieve growth. CEOs are thereforebuilding diverse collaborative networks thatembrace not just traditional partners, but

customers, academia, NGOs and evencompetitors. Managing those networks willbe increasingly important for future success.

Diversity, too, is becoming a crucial qualityin the talent pool that CEOs must draw on tocompete. Talent diversity and inclusiveness isno longer seen as a soft issue. Its now a corecomponent of competitiveness and mostCEOs (77%) have, or intend to adopt, a strategythat promotes it.

My sincere thanks go to the more than 1,300company leaders from 77 countries who sharedtheir thinking with us. Their active and candidparticipation is the single greatest factor in thesuccess of PwCs Annual Global CEO Survey,now in its 18th year. We greatly appreciateour respondents willingness to free up their

valuable time to make this sur vey ascomprehensive and accurate as possible.Were especially grateful to the 33 CEOs whosat down with us to hold deeper and moredetailed conversations. Youll see theircomments throughout this report.

of CEOs have entereda new sector, orconsidered it, in thepast three years.

of CEOs do not think thatcooperation betweengovernments is leadingto greater movement ofskilled labour betweenmarkets.

54%

45%


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Growth

6

Time for a reboot 6

The new economicequilibrium

7

Causes for concern

Getting to grips withdisruption

9

10

We live in an era of unprecedenteddigital change the type of changethat is reshaping the relationshipbetween customers and companies,breaking down the walls betweenindustry sectors, and, by extension,prompting forward-thinking CEOs to

question the very business theyre in.

To navigate this digitally-led economy,business leaders will need to understandhow technology can improve theiroperations and bring them closer totheir customers; embrace collaborationboth inside and outside the business;and identify a rich and varied talentpool. More than anything, though,theyll have to develop a exible

vision that allows them to pinpointtheir companys strengths even astheir customers, sectors and marketschange in front of their eyes. Soundlike a superhuman challenge?

Welcome to 2015.

Contents


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2412

18

28

Competition Technology Partnerships Diversity Final words

Rethinking customer

value

A few key capabilities

12

13

The art of understanding

Once more into thesecurity breach

Identifying thepotential of technology

Whats the hold up?

19

21

2216

Go tech young man

Unlikely alliances

25

25

The right mix of talent

Easier said than done

28

31

The CEO agenda 34

Cant get enough data? 36

Soft skills 34

Meet the CEOs

Research methodologyand contacts

Credits

Notes and sources

38

40

41

42

How can you createsuccessful partnerships?

27

34



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Growth

Time for a reboot

If 2014 taught us anything its that in ourincreasingly technology-led world, no industry,no company and no government, even, isimmune from the effects of change. Take theglobal energy market, where breakthroughinnovations continued to shake up the statusquo. Or the corporate world, where a cyber

security attack had international security anddiplomacy ramications. And what about thatdigital transport start up barely four years old challenging the entire global taxi industrysbusiness model and receiving an $18 billion

valuation for its chutzpah...

Of course, digital change throws up as manyopportunities as risks. We think thats whytheres an underlying sense of optimism formany CEOs, despite the picture theyre paintingthis year of an increasingly uid and disrupted

business environment.

We asked CEOs whether they see moreopportunities for their business today thanthree years ago, and also whether they see morethreats over the same period (see Figure 1). Itsplain that business leaders see more of both.

Growth, but not aswe know it

29%see onlymore threats

31%see only moreopportunities

30%see both moreopportunitiesand more threats

61%see moreopportunities

59%see morethreats

Figure 1 CEOs see more opportunities andmore risks today than three years ago

Q: How much do you agree/disagree that there are moregrowth opportunities/threats for your company thanthere were three years ago?

Every business in todaysworld has opportunities

and threats, so the key

question for us is not to

predict whether or not

we have threats or

opportunities. [Its]

whether or not we can

be...exible enough to be

able to detect those threats

or opportunities. And of

course react to them.

Victor Kislyi

Executive Chairman & CEO,Wargaming Public CompanyLimited, Cyprus

61%of CEOs see moreopportunities todaythan three years ago


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Growth

And it isnt clear-cut which markets offer thebest opportunities. CEOs are broadly upbeatabout established markets notably the US

(see Figure 3). For the rst time since we rstasked the question ve years ago, the US has

overtaken China as CEOs most importantoverseas growth market. Its not hard to see

why. National GDP is 7% higher than beforethe crisis, and more jobs have been createdsince that period than were lost. The USeconomy has also beneted from the fracking

boom, and higher consumer spending isfuelling healthy corporate prots.

CEOs are also more optimistic about othermature markets compared to a year ago: theUK now ranks higher than Brazil; Japan is seenas a better prospect than Russia; and Australiahas moved into the top-ten. Even the Eurozone whose economy still hasnt reached itspre-crisis level and which remains a majorthreat to global growth is inspiring morecondence this year. France, Italy and Spain

have all moved up the ranks, and Germanyretains its third-place position.

Doing business in the BRICS, on the other hand,continues to be challenging as those nations

grapple with a mix of complex structural andpolitical issues. But CEOs recognise the longer-term opportunities, with all of these marketsremaining rmly in their sights.

In China, GDP growth has slowed somewhat but it remains high relative to most othereconomies. The country clearly continues tobe seen as a powerful global growth engine:CEOs are in no doubt that, when it comes tothe most important overseas markets, its stilla two-horse race between the US and China.

The IMF now estimates Chinas GDP to be biggerthan that of the US, in Purchasing Power Parity(PPP) terms. And we think China will overtakeboth the US and the EU in terms of global GDPat market exchange rates just before 2030.

In India, hopes are running high, with reform-minded Prime Minister Narendra Modi now inpower. The opposite is true for Russia, wherefalling global oil prices and Western sanctionshave hit the rouble and the economy moregenerally, raising the spectre of a steep recession.Brazil is being impacted by weak investment anda relatively high-ination, low-growth

environment. And South Africas economicgrowth has been hit by labour market disruptions.

Its not necessarily a

question of looking

at emerging markets,

but about really

understanding where

we think were successful,

and where we can be

successful...We actually

feel we can grow almost as

effectively in the mature

economies as we can in

the emerging markets.

John Neal

CEO, QBE Group, Australia

Increased production

of shale gas may provide

the United States with

the possibility of being

self-sufcient.

Economically, it may

no longer need to import

oil and the money saved

can be used for other

purposes, giving a major

boost to its GDP.

Christian Laub

CEO, Credicorp Capital, Peru

The struggle between the

US-centric and China-

centric spheres is already

underway, and the world

economy will be swayed

by this new world order.

Atsushi Saito

Director & RepresentativeExecutive Officer, GroupCEO, Japan ExchangeGroup, Inc., Japan

US

China

Germany

UK

Brazil

India

Japan

Russia

Indonesia

Australia Mexico

2015 2014

Up from

last year

Down from

last year

Same rank

as last year

38%

34%

19%

11%

10%

9%

8%

6%

6%

6%

33%

30%

17%

12%

10%

7%

7%

7%

7%

5%

Figure 3 CEOs are more optimistic aboutmature markets this year

Q: Which countries, excluding the one in which youare based, do you consider most important for youroverall growth prospects over the next 12 months?

72%of CEOs are concernedabout geopoliticaluncertainty


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Some other non-BRICS emerging marketscontinue to present growth opportunities forCEOs, however, notably Indonesia, which remains

a top-ten overseas target this year. Mexico,although less favoured than last year, is alsoa top choice, as are Colombia, Korea and Vietnam.

Despite the signicant differences in

opportunities and risks between differentemerging countries, youthful populations anda burgeoning middle class help make thesemarkets generally an attractive opportunity forbusiness. Indeed, the global emerging middleclass could constitute an annual global marketof some $6 trillion by 2021.2The challengeCEOs face is anticipating which nations offerthe best opportunity for growth, given theirfast-changing environments characterised bycomplex distribution systems and limitedaccess to market information.

Causes for concern

In addition to a challenging global growthenvironment, CEOs are grappling with a widerange of risks (see Figure 4). The top threatto business growth prospects is still over-regulation, cited by 78% of CEOs, up 6% fromlast year. National decits and debt burdens

and rising taxes also remain top threats. Butconcerns are coming from a variety of otherplaces many, for example, are anxious aboutgeopolitical uncertainty and social instability.

In fact, CEOs are getting more worriedabout almost all the threats we asked about.Concerns about cyber threats have shot upmost compared to last year and, in light of therecent attacks on gaming and entertainmentnetworks, the perceived risk will only increase.The speed of technological change and the

availability of key skills are other threats thathave seen a marked rise in concern from CEOs.

At a regional level, over-regulation and cyberthreats are of most concern to CEOs in NorthAmerica (see Figure 5). Asia Pacic CEOs are

the most anxious about affordable capital,consumer behaviours, new market entrantsand the speed of technological change. AndCEOs in Africa are by far the most worried ofthe lot, across a range of threats as diverse associal instability, inadequate infrastructure,

access to key skills, energy costs, and briberyand corruption all signicant barriers to thecontinent in realising its growth potential.

Over-regulation Availability of key skills

Government response tofiscal deficit and debt burden

78% 73% 72%

Geopolitical uncertainty

Increasing tax burden

Cyber threats includinglack of data security

Shift in consumerspending and behaviours

Social instability

Speed oftechnological change

New marketentrants

72%

70%

61%

60%

60%

58%

54%

2012 2013 2014 2015

Annual averages

72%2014

63%2014

71%2014

78%

73%

72%

Over-regulation

Availability of key skills

Government response to

fiscal deficit and debt burden

Key threats

Top three threats

Base: All respondents (2015=1,322; 2014=1,344; 2013=1,330; 2012=1,258)

Note: Only those threats asked about in each of the past four years were included in this

analysis. Those were: over-regulation, availability of key skills, government response to fiscal

deficit and debt burden, increasing tax burden, shift in consumer spending and behaviours,

high or volatile energy costs, protectionist tendencies of national governments, new market

entrants, inadequate basic infrastructure and supply chain disruption.

Average%o

fCE

Osexpressing

concernaboutthreats

47%

52%

57%

62%

Figure 4 CEOs are getting more concerned about a wide range of risks

Q: How concerned are you about the following potential economic, policy, social and

business threats to your organisations growth prospects?


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Growth

Getting to grips with disruption

Business leaders are also keenly aware thatfundamental forces of change will impact theirindustries over the long term. Megatrends suchas shifts in global economic power, technologicaladvances and demographic changes and theinterplay between them are transformingthe macroeconomic landscape. As businessesrespond to these shifts, the competitiveenvironment across a broad range of industriesis being disrupted. Rajiv Bajaj, ManagingDirector of Bajaj Auto Limited in India, seesdisruption as an opportunity to be a pioneer,to create new categories for protable growth,

saying, I dont know of any way of managing

a disruption other than to be the creator of it.

Business leaders see regulatory change as thenumber one disruptor within their industriesover the next ve years (see Figure 6).

Government policies both national andinternational are recurrent themes on thelist of CEO concerns (see Whats the hold up?on pages 1617).

Over-regulation

Geopoliticaluncertainty

Socialinstability

Global high

Global average

Global low

Availabilityof key skills

Cyberthreats

Speed oftechnological

change

North America

Central and

Eastern Europe

North America,

Central and

Eastern Europe

and Middle East

Latin America

Africa

North America

and Western Europe

Africa

Western Europe

North America

Latin America

Asia Pacific

Central and

Eastern Europe

85% 78% 98% 90% 80% 71%

78% 72% 60% 73% 61% 58%

70% 54% 49% 58% 45% 37%

Figure 5 Concerns vary by region

Q: How concerned are you about the following potential economic, policy, social and business threats to yourorganisations growth prospects?

The challenge we and

many others are facing

is that its very hard toknow when exactly the

disruption will become

so big that you actually

dont even survive

without being part of

that disruption.

Pekka Lundmark

President & CEO,Konecranes Plc, Finland

Figure 6

CEOs see regulation, competitionand customer behaviours as thetop industry disruptorsQ: How disruptive do you think the following trends will be for your industry over

the next five years?

35%

40%

39%

32%

66%

61%

61%

50%

31%

21%

22%

18%

Changes in industry regulation

Increase in number of significant

direct and indirect competitors

Changes in customer behaviours

Changes in distribution channels

Somewhat disrupt ive Very disrupt ive


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Increased competition and changes in customerbehaviours are also seen as top-three disruptiveforces. The impact on CEOs thinking is clear:those we spoke with were highly focused on the

value their companies offer, in terms of meetingcustomer needs and differentiating from thecompetition.

Some industries are, of course, undergoing

more upheaval than others (see Figure 7).Financial services industries are poised forgreatest change, based on the views of CEOsin those sectors. Regulation, unsurprisingly,is the biggest driver of change. Technologyalso plays a key role, in terms of customerbehaviours, competition levels and changesin distribution. In recent years, the traditionalnancial services arena has been upended by

new entrants in the form of supermarkets anddigital payments providers such as Apple Pay.

Figure 7 Different industries are being disrupted in different ways

Q: How disruptive do you think the following trends will be for your industry overthe next five years?

Changes in distributionchannels

Changes in customerbehaviours

Increase in number of significantdirect and indirect competitors traditional and new

Changes in industryregulation

Insurance

Banking and

capital markets

Pharma and

life sciences

Power and utilities

Entertainment

and media

Communications

Retail

Asset management

Hospitality

and leisure

Consumer

Automotive

Healthcare

69% 71% 64% 88%

54% 57% 66% 87%

59% 56% 64% 82%

42% 62% 56% 89%

64% 63% 66% 56%

50% 67% 54% 69%

59% 68% 57% 50%

50% 59% 55% 69%

53% 57% 63% 59%

57% 57% 57% 60%

52% 59% 57% 56%

37% 63% 51% 71%

Tough questions about findinggrowth in a disrupted world

What changes are you making to your growth

strategy in emerging and frontier economies

to take into account key structural and political

issues in these countries?

How is your growth strategy in mature markets

changing as these nations continue to see

economic improvements?

How widely are you looking to see how yourindustry could be disrupted? How well are you

assessing the impact of cross-sector competition,

emerging business models and new technologies,

for example?

In what ways are you using information to assist

in making strategic and risk decisions?


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Competition

In the face of an ever-growing set of concerns,the question CEOs are asking is this: How do wemanage the day-to-day business while havingthe condence and vision to explore a much

wider range of opportunities than weve everconsidered before?

Rethinking customer value

In these extraordinary times, businesses thatwant to grow protably must rethink how

they create value for customers. Operatingwithin traditionally dened demographic

segments, channels, product/service offerings,geographies or industries increasingly doesnt

work. Customers today defy classic notionsof what drives their purchasing decisions.

Customer relationships are now much moreuid: theyre moving from one-off transactions

toward broader and longer-term experiences

that can span dif ferent product and serviceofferings, channels, countries and sectors.Companies are, in short, increasingly focusedon customer problems and looking at how theorganisational capabilities that differentiatethem can be used in cross-disciplinary waysto solve those problems.

As Dong Mingzhu, President & Chair womanof Gree Electric Appliances Inc. of Zhuhai,in China, explains, We used to win marketshare by doing a better job than our competitors

with existing products. I think this is [the]wrong approach. We shouldnt care too muchabout what our competitors are doing. We needto focus on what consumers want.

The focus on customers, rather than traditionalcompetitive boundaries, is broadening theeld of competition. Indeed, forward-thinking

CEOs are increasingly questioning just whatbusiness theyre really in. Its also activelytaking businesses into adjacent or completelynew sectors. More than half (56%) of CEOsthink it l ikely that companies will increasinglycompete in new industries over the next threeyears (see Figure 8). Three in ten have entereda new sector or sub-sector in the past threeyear and 21% have considered doing so.

Its not just large conglomerates moving intoother industries. Over half (51%) of the smallerrms we polled, with revenues up to $100

million, have entered a new sector or sub-sector, or considered doing so, within the pastthree years, compared with 64% of the largestrms, with revenues of over $10 billion.

What business areyou in?

In the past, competition

was only within [the]

sector. Entry to [the]

banking sector was

highly costly and almost

impossible. However,

digital dynamics began

to undermine barriers

to entry. In this respect,competitors may emerge

from any industry, such

as technology companies,

telco, retailers, social

networks, even start-ups.

H. Faik Akaln

CEO, Yap Kredi, Turkey

54%of CEOs have entered anew sector or sub-sector,or considered it, in thepast three years


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Cross-industry moves arent a newphenomenon, of course. Corporate historyis packed with stories of companies thatshifted focus to take advantage of new marketopportunities. Nokia, for example, famouslybegan life as a paper mill. But what the digitalage has done is supercharge the opportunitiesfor business transformation and demonstratehow vulnerable companies are if they dont

understand what their customers want.

What will this shift in market strategy meanfor business as a whole? The companies thatbest adapt to meet their evolving relationship

with customers will have to embracefundamental changes in their organisationsDNA rather than approach it as a marketingand brand-positioning exercise. And, asorganisations increasingly dene their

own unique competitive spaces, CEOs mustcarefully manage how they diversify.

A few key capabilities

A desire to be close to the customer canconict with the desire for efciency and focus.

It brings increased complexity, for one thing,due to the need for customisation or to align thecustomer experience across channels, productsor industries. It also requires investment toenhance capabilities.

Companies that can successfully manage thetension between breadth and focus will be

those that use their differentiating capabilitiesas the basis for expansion. They will be thosethat diversify by extending their value chainsrather than creating new ones; those that lookat their own unique strengths to determinethe competitive spaces they can thrive in; andthose with strong coherence between theircapabilities, value proposition and portfolioof product/service offerings.

We will hire professionalcompanies to advise us

on restructuring, so that

in the next ve to ten

years [we] will become

a leading construction

material distribution

corporation, rather than

a corrugated steel

production corporation,

as we are at the moment.

Le Phuoc Vu

Chairman, Hoa Sen Group,

Vietnam

The metro train is in

itself a competitor for

the two-wheeler maker.

There is no doubt that a

metro coming up in Delhi

has in some way affected

demand for motorcycles.

Rajiv Bajaj

Managing Director,Bajaj Auto Limited, India

Figure 8

Over half of CEOsthink that cross-sectorcompetition willbecome more commonQ: How likely do you think it will be that organisations

will increasingly compete in new sectors otherthan their own, over the next three years?

56%

15%

26%

Likely

Neither/nor

Unlikely

56%of CEOs think competitionwill increasingly comefrom other sectors orsub-sectors


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Competition

Indeed, some moves into different sectors mayseem entirely unexpected, until assessed from acapabilities perspective. One example is CEMEX,

the Mexico-based cement company that hasmoved into micronance in emerging countries

and infrastructure solutions globally, drawingon strong relationship building and innovationcapabilities to do so. Another is Danaher, whichhas acquired many companies in sectors asdiverse as dental tools and environmentalmetrics. The success of these businesses is drivenby the highly effective and speedy deploymentof the Danaher Business System, a continuouscycle of change and improvement one of thecompanys key capabilities.

Theres evidence that focusing on a fewcapabilities is key to successful growth strategies.PwC studied Fortune 500 companies thatexhibited signs of long-term revenue declinessince 2009 and found successful recoverieswere closely tied to dening and rebuilding

existing capabilities.3

To be sure, however, the ability to diversify ina focused way presents signicant challenges.

There are hard decisions to be made betweenwhich of potentially numerous growth strategies

make the most economic and competitive sense.And what constitutes a coherent strategy maynot be immediately obvious when CEOs considerthe myriad ways their business could bedisrupted in the longer term.

No matter how CEOs choose to rethink theircapabilities, there are three factors theyve toldus are vital for success:

1. Creating new value in new ways throughdigital transformation

2. Developing diverse and dynamic partnerships

3. Finding different ways of thinking andworking

Tough questions about rethinking capabilities

What do your customers really value, and how do your organisations

differentiating capabilities deliver that value?

How are you learning from other industries to solve customer problems in

your own industry?

Are you considering how your organisations key strengths can be

leveraged to solve customer problems in other industries?

What business are you really in?

Companies that can effectively combine thesehighly interdependent approaches aroundsimple yet powerful value propositions will be

positioned as winners in the new competitivelandscape. A good example is Konecranes Plc,which started life as a traditional machinebuilder in Finland before broadening itsproposition to become a service company.President & CEO Pekka Lundmark says, Itsa fundamental principle in our thinking thatif you want to be a successful service company,not only a machine builder, you have to startyour service strategy creation from the customersproblem and not from your machine. And thecustomers problem is unrelated to the fact of

whose equipment they are using.

By marrying digitalisation with its machine-building business, and partnering with IT anddata networking and analytics companies,Konecranes Plc is able to meet customer needsthrough a new generation of lift ing machinerythats intelligent and networked. And, byenabling customers to track and improve theproductivity of their lif ting equipment,Konecranes Plc has transformed its operationsinto a world-leading provider of productivity-enhancing lifting solutions. The nal ingredient

for Mr. Lundmark is a widening pool of talent:I think its very clear that to be able to besuccessful in the future, in this marriagebetween IT and machine builders, theglobalisation of the economy will mean thatour workforce will be much more diverse.

In the following pages, well explore each ofthe three approaches that CEOs think can helpachieve competitive advantage.


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Competition

Technology ies aroundthe world very fast today

and so to benet fully

from it we need to make

sure that products and

systems can do the same,

with as much free trade

as possible, and barriers

as low as possible.

Olof Persson

President & CEO, The VolvoGroup, Sweden

Whats the hold up?The emerging competitive landscape revealsthe tension between the conditions needed forbusinesses to thrive and the existing frameworkof national and international standards andregulations within which they operate. Newmodels of competition cross-sector, networkedand decentralised are straining against policiesdesigned for a different world. And while globalbusinesses are more connected than ever before,geopolitical trends seem to be moving in theother direction.

David I. McKay, President & Chief Executive Ofcer

of RBC, speaks for his peers on the emergingtensions as industry boundaries transform.I hear a number of CEOs talk about, well, theregulatory barriers that we have [that] are sohigh. (Just wait till the Googles of the worldand the Apples have to comply as a bank).

But Mr. McKay warns against waiting for thatday to come. Their [technology competitors]goal is not to become a bank and walk in ourshoes. Their goal is to take our shoes and throw

them out and give a new set of shoes to thecustomer. So I think regulatory barriers buyus time, but we cant hide behind them becauseour competitors are trying to take them downor trying to build a whole new wall over here.So I think those are two critical things we haveto think about as bank CEOs and how to evolveour franchise.

Its no surprise that government policies aresuch a big issue for CEOs. This year over-regulation again tops the list of threats theyremost concerned about, and business leaderssee regulatory changes as the prime disruptivetrend in their industries over the longer term.Many CEOs are also worried about themounting tax burden. And while two-thirdsthink their governments top priority shouldbe an internationally competitive and efcient

tax system, just 20% say their government hasbeen effective in achieving this.

On the global front, freer movement of people,capital and ideas would clearly be a competitiveboon, as would the ability to simplify complexcorporate structures and operations. But CEOsare divided as to whether collaboration betweengovernments or between public and privatesector is improving the ability for businessesto compete across borders (see Figure 9).Forty-three percent, for example, see greatermovement of skilled labour between markets but45% do not believe this is the case. Its evidentthat companies are struggling to navigatethrough different tax and regulatory regimes.

Getting government and business on thesame page clearly requires collaboration ofa different sort.

Part of this is a change in mindset, startingwith the ability for business and government tounderstand each others perspectives. Businessleaders clearly accept the need for regulation,but want it to be more effective in how itsdesigned and implemented. Governments,meanwhile, understand the need for better

regulation but must deal with a legacy ofpolicies designed to address very real problemsof the past. Responding to business excesses inthe wake of the nancial crisis is a case in point:

the large body of regulations put in place atthe time were an answer to societal demandsand a means to create a badly-needed trustmechanism. Policymakers must also navigatethe tension between the need to raise revenues particularly to tackle debt and decit issues

brought on by the crisis and the desire toattract and retain investment.


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18/44

Technology

CEOs no longer question the need to embracetechnology at the core of their business in orderto create value for customers. Beyond a shadow ofa doubt, digital technologies have revolutionisedhow customers perceive value. Creating the

personalised and ongoing experiences that areincreasingly in demand requires a full view ofthe customer and all their relationships with thecompany. It requires an unprecedented level ofcustomisation, responsiveness and innovation.

Doing all this effectively just isnt possible bytinkering at the edges. Companies increasinglyrecognise that they need to recongure their

operating models and perhaps their businessmodels. And in order to do so they need toensure that theyre not only investing in theright digital technologies, but can deploy themin a smart and effective way.

As Michael Dell, Chairman and Chief ExecutiveOfcer of Dell Inc. says, The instinct when

something new shows up is to say, How dowe bolt this on to the old way we were doing itand deliver some incremental improvement?.Thats the wrong way of approaching thechallenge, he explains. What you really haveto do is rethink the problem and say, Nowthat we have all these new tools and newtechniques, how can we solve the problem

in a fundamentally different way?.

Creating new value innew ways through digital

transformation

Any company, to survive

in the current environment

and into the future, has

to be at the forefront of

technology.

Alan D. Wilson

Chairman, President andChief Executive Officer,McCormick & Company, US

Suddenly, those of us

who use the internet, for

example... are dinosaurs

compared to the next

generation. They use

mobile. I can see it inour mobile bank [where]

clients have interactions

almost every day; [in]

the internet bank [its]

maybe once a week or

once every second week.

And how often do they

actually enter a branch?

The average in Sweden

is once a year.

Annika Falkengren

CEO, Skandinaviska Enskilda

Banken AB (SEB), Sweden

[Communications

technology] represents

an enormous change in

the way we work and will

ultimately lead to shorter

stays at the hospital.

Rita Ziegler

President of the HospitalExecutive Board, UniversityHospital Zurich, Switzerland

81%of CEOs think mobiletechnologies arestrategically importantfor their business

We see that new

technology is impacting

how quickly and

efciently we are able to

drill and complete wells.

It also impacts on cost

at the end of the day.

Abdulrazaq Isa

CEO, Waltersmith Group,Nigeria


19/44


The art of understanding

CEOs are in no doubt about the role informationcan play in gaining insight about customers andhow to engage with them.

Mobile technologies have been around fordecades, but the sheer ubiquity of mobiledevices today has revolutionised customersability to obtain information. The number of

mobile phone users globally was expected tototal 4.55 billion in 2014 nearly 70% of the

worlds population with smartphone userstotalling 1.75 billion.5The volume of mobiletrafc generated by smartphones is now about

twice that of PCs, tablets and routers despitehaving only surpassed them in 20136 and ispredicted to grow ten-fold by 2019.7

Access to information has, in turn, transformedhow customers perceive value and the type ofrelationships they want to have with companies.

So its understandable that 81% of CEOs seemobile technologies for customer engagement asmost strategically important for their organisation more than any other digital tool (see Figure 10).But companies that want to exploit the powerof mobile technologies to engage customersface tough choices about how, and how fast, tomove to mobile channels and how to integratethose with more traditional channels.

Data analytics, meanwhile, has transformedthe ability of companies to access, analyse andcirculate information about their customers,and use that information to create the type ofrelationships that their customers want. Indeed,theres evidence that companies that can mosteffectively use analytics to inform demand-sidedecisions about business processes outperformthose that cant.8Small wonder, then, that 80%of CEOs cite data mining and analysis asstrategically important.

Mobile technologiesfor customerengagement

Data miningand analysis

Cyber security

Internet of Things

Socially enabledbusiness processes

Cloud computing

Battery and powertechnologies

Robotics

Wearablecomputing 3D printing

81%

80%

65%

60%

47%

37%33% 27%

61%

78%

Figure 10 Getting, analysing and using information is key to the currentand emerging technologies that CEOs see as most important

Q: How strategically important are the following categories of digital technologies foryour organisation?


20/44

Companies, however, face challenges in theirability to effectively leverage data analyticstools. For one thing theyre not using analytics

enough. Its been estimated that 23% of alldigital data generated annually would be usefulif tagged and analysed yet at present, just 3%of it is tagged and 0.5% analysed.9Then thereare issues about data quality, informationoverload and a continuing lack of trust in the

value of digital data. UK business executiveswho were polled about how they make bigdecisions, for example, ranked their ownintuition and experience, as well as the adviceand experience of others, above data and dataanalytics.10

When companies do invest in digitaltechnologies to deliver what customers want,that commitment would appear to be bearingfruit. The majority of CEOs think that digitaltechnologies have created high value for theirorganisations in areas like data and dataanalytics, customer experience, digital trustand innovation capacity (see Figure 11).

Its in the area of operational efciency that

CEOs are seeing the best return on digitalinvestment. Eighty-eight percent think value

has been created in this area, with half ofthese CEOs seeing very high value. Thetransformation of cost structures is a symptomof the digital transformation that companiesare undergoing as they align their businessand operating models to new ways of deliveringstakeholder value. Indeed, 71% of CEOs alsotell us theyre cutting costs this year thehighest percentage since we began asking thequestion in 2010.

After having put signicant funds into IT over

the years, CEOs now also want to see a strongconnection between digital investments andbusiness objectives. 86% say a clear vision ofhow digital technologies can help achievecompetitive advantage is key to the success ofdigital investments (see Figure 12). And 83%say the same for having a well-thought-out plan including concrete measures of success fordigital investments. But CEOs also know it canthappen without them: 86% think its importantthat they themselves champion the use ofdigital technologies.

Technology allows us

to gather information,

know our consumersbetter, speed up informed

decision-making, and

improve the quality of

everything we do. Our

manufacturing facilities

are computer-controlled

in ways that allow us to

make rapid production

changes according to

market needs. Our

track and trace system

capabilities prevent

product falling into the

hands of illicit traders.Our internal networking

systems keep 27,000

people in 364 ofces

around the world

in constant contact.

Its powerful stuff.

Thomas A. McCoy

President and Chief ExecutiveOfficer, JTI (Japan TobaccoInternational), Switzerland

The data is great, the

information is better, but

how you use it as leaders isthe most important thing.

Dr. Marc Harrison

Chief Executive Officer,Cleveland Clinic AbuDhabi, UAE

Figure 11

Digital investments to createcustomer value are paying off

with a positive impact for coststructures tooQ: To what extent are digital technologies creating value for your organisation in

the following areas?

44%

40%

37%

37%

40%

88%

84%

77%

72%

71%

44%

45%

40%

35%

31%

Operational efficiency

Data and data analytics

Customer experience

Digital trust including

cyber security

Innovation capacity

Quite high value Very high value

Technology


21/44

Digital technology, as well

as the changes resulting

from the disruption it

causes, is a big topic and a

big challenge for the future.However, it also creates

opportunities. Whats

important is that we

provide the right conditions

for our people to be able to

integrate the knowledge of

new digital technologies in

order to understand and

confront the challenges

created by them.

Monique F. Leroux

Chair of the Board, Presidentand Chief Executive Officer,

Desjardins Group, Canada

Figure 12 CEOs think that a clear vision and plan and their ownsupport are key to the success of digital investments

Q: How important are the following factors in helping your organisation get themost out of its digital investments?

86%

86% 83%A clear vision of how

digital technologies

can help achieve

competitive

advantage

A well-thought-out planfor digital investments,

including defining

measures of

success

You, as CEO,

champion the use of

digital technologies

Once more into the security breach

The central role of information places cybersecurity squarely on the CEO agenda, particularlygiven the series of high-prole hacks over the

past year. With vast quantities of their informationreadily accessible around the clock, customersexpect a certa in amount of privacy andcondentiality. How companies honour this will

mean much for their ability to engage with and

retain customers, and build brand value.

Yet in a recent PwC poll of consumers, 24% saidthat their trust in companies ability to protecttheir personal data had declined over the past12 months.11Cyber security incidents are nowso commonplace that the number of detectedincidents soared 48% in 2013 to 42.8 million.12In the past year virtually every industry hasbeen impacted, with many incurring signicant

costs as they seek to manage and mitigate thebreaches.13Small wonder, then, that concern

about cyber security has seen the biggestincrease of all the potential threats we askedbusiness leaders about, with 61% of CEOs citingconcerns compared with 48% a year ago.

But while we expect cyber security issues tocontinue to be a growing threat, organisationsare adapting to this new reality: CEOs seecyber security technologies as a top-threemost strategically important type of digitaltechnology for their organisation. And 53%think its very important strategically ahigher proportion than for any other type ofdigital technology we asked about.

The real benet of cyber security isnt just in

defending value. Its about creating new value byenabling the trust thats so central to doing businesstoday. Cloud technology, for example, has elevatedsecurity concerns; the key to demonstrating theClouds true value is to make it really secure. Itsencouraging, then, to see that the requisite shiftin thinking seems to be underway, with 72% ofCEOs seeing digital technologies as creating

value in the area of digital trust.



22/44

Technology

Boundaries across

industries are becoming

more and more blurred,

because computing

technology, digital

technology is having such

a profound inuence onevery industry...The next

generation of successful

companies, whether they

are transformations of

existing companies or

completely new ones that

emerge, will come at this

intersection of taking

traditional processes and

activities and completely

rethinking them...

Dr. Vishal Sikka

Chief Executive Officer& Managing Director,Infosys, India

Figure 13 CEOs see the technology sector as the main sourceof cross-sector competition

Q: From which industry or industries outside of your own do you think a significantcompetitor is emerging or could emerge?

Identifying the potentialof technology

Given technologys increasingly integral role

across business sectors, the ability to harnessit effectively is becoming a key differentiatingcapability, presenting opportunities for those

who can and threats for those who cant.

Signicant numbers of CEOs see technology

as a key v ulnerability for their organisations.Concerns about the speed of technologicalchange saw the second biggest increase of allthe threats we asked about, with 58% of CEOsexpressing anxiety, compared with 47% lastyear. The pace of change is inescapable: less

than a decade after its initial public offering,Googles revenue soared from $3 billion to$60 billion. CEOs are concerned, too, about theability of new entrants to exploit weaknessesin technological capabilities: 32% nametechnology as the sector from which signicant

competitors are emerging far more than thosewho name any other sector (see Figure 13).

Yet for companies in which technology is astrength, there are signicant opportunities for

growth. The CEOs who told us that there aremore opportunities for their business today than

three years ago are more likely than those whosee greater threats to place strategic importanceon a range of digital tools, and to have derivedhigh value from them.

Technology

32%

Retail andwholesale

distribution

19%

Communications,entertainment

and media

16%

Professionaland business

services

13%

Financial services,including real

estate

13%

Manufacturing(industrialproducts)

11%

Transport andlogistics

11%

Manufacturing(consumerproducts)

10%

Goverment andpublic services

8%

Construction

6% Agriculture,forestry, fishing

and hunting

5%

Hospitality andleisure

5%Manufacturing(automotive)

7%

Energy, utilitesand mining

11%

Healthcare,pharma andlife sciences

9%


23/44

Opportunities to leverage technologicalcompetencies are also taking companies into

other sectors. The technology industry, togetherwith the healthcare, pharmaceuticals and lifesciences industry, is the single biggest sectoroutside their own that CEOs are targeting: 15%have entered this arena, or considered doingso, in the past three years. While its mainlytechnology companies targeting other sub-sectors, companies from completely differentindustries for example banking and capitalmarkets are also looking to bring theircapabilities into the technology arena.

However, its the ability to see the opportunitiesthat technology enables that will unlock the truevalue of those investments; its not just access toincreasingly affordable tools and platforms thatdenes leaders and laggards. For example, while

nearly every organisation lays claim to being adigital enterprise, only 20% of respondents ina recent PwC survey rated their company ashaving excellent Digital IQ, dened as how well

they understand the value of technology andweave it into the fabric of their organisation.14

The time is clearly ripe for partnershipsbetween those who have technologicalprowess and those who dont.

Tough questions about creating

new value in new ways throughdigital transformation

What technologies do your customers,

partners and other stakeholders use and

value, and how do they use those technologies?

In what ways does your business and

operating model need to change to fulfil

evolving customer needs?

What are you doing to ensure that youre

investing in the right digital technologies

and using them most effectively?

How are you maximising the use of data

analytics to deliver customer value?

How are you ensuring that your information

assets are as secure as possible?


15%of CEOs who haveentered,or consideredentering, into a newsector or sub-sectorhave chosen technology


24/44

Partnerships

As CEOs increasingly focus on what theyre goodat, theyre looking to partner with others whosecapabilities could complement or enhance theirown. Fifty-one percent plan to enter into newstrategic alliances or joint ventures over thenext year the highest percentage since webegan asking the question in 2010.

The CEOs we spoke to repeatedly stressed thestrategic importance of partnerships. Theyveplayed a vital role in the development of thehybrid plug-in buses that The Volvo Grouprecently launched, for example. We didnthave the knowledge about charging stations...advance trafc management systems and...

how to integrate this in the city structures thatwe have, says President & CEO Olof Persson.We have a great product, but by partnering withthose who have that additional knowledge wecould actually get the product to market faster.

Technology is eroding the minimum requirementsneeded for a fi rm to exist. Todays nimblestcompetitors are lighter rms with simpler value

propositions, a tighter set of core competenciesand fewer assets. For companies looking tomove in this direction, partnership networkshave an important role to play in bolsteringcapabilities. This is especially the case asorganisations increasingly seek to create new

value by solving problems in more innovative ways.

Developing diverse anddynamic partnerships

At one stage our

organisation was in

18 products in the

international investment

community. What weve

found is were really good

at ve things and those are

the things our customers

are open to. They valueour expertise in those

areas; they never saw

us as great at 18 things.

So if those other 13 can

be provided by somebody

else, we would consider

partnering with them.

I think thats where [the]

point about doing all

things for all people comes

in. I dont think you can...

Ross McEwan

Group Chief Executive, RBS, UK

51%of CEOs will enter intonew alliances in thecoming 12 months

We follow that guiding

principle of focusing on

our own strengths and

growing those hard and

fast, and then partnering

in areas where we are

possibly not that good.

Theo Spierings

Chief Executive Officer,Fonterra, New Zealand


25/44


Go tech young man

Crucially, CEOs arent only partnering to expandmarkets, cut costs or share risks. Access to newcustomers and access to new and emergingtechnologies were both top reasons for partnering,cited by 47% of CEOs (see Figure 14). The abilityto strengthen innovation capabilities is alsoa key driver, cited by 40% of CEOs. Weve foundthat companies that looked to outside sources

for innovation ideas were more likely to betop performers in terms of revenue growth,protability and innovation.15

Investment partners in France and Japan havehelped Phnom Penh Water Supply Authority(PPWSA) improve their operations. Thanks totechnology and various applications, includingour software package from France, we havestreamlined our processes for issuing bills.Helping to adopt metering technology,meanwhile, has helped the Director General of

PPWSA, His Excellency Sim Sithas operations inCambodia to reduce water loss from 72% to 7%,the lowest in South East Asia after Singapore.

Figure 14

Access to newtechnologies is atop reason CEOs

want to partnerQ: What are your reasons for collaborating in jointventures, strategic alliances or informalcollaborations?

47%

47%

42%

40%

Access to new/

emerging technologies

Access to new

customers

Access to new

geographic markets

Ability to strengthen our

innovation capabilities

Note: % of respondents who ranked each option 1st,

2nd or 3rd

If you have unlimited

resources and I dont

know any company that

does you can try to go it

alone and take time and

build products. But if you

want to accelerate what

youre doing, its better

and easier with a partner

that understands the

market.

Alan D. Wilson

Chairman, President andChief Executive Officer,McCormick & Company, US

When partnering with

technology companies,

its a broader area,

including big data,

sensors, and computing.

Therefore we are

beginning to understand

how technology

companies and

healthcare companies

like Johnson & Johnsoncan collaborate and

create value.

Joaquin Duato

Worldwide Chairman,Pharmaceuticals, Johnson& Johnson, US

54%of CEOs rank access tonew technologies as their

number one reason forpartnering

Unlikely alliances

Whats more, CEOs are starting to developdiverse collaborative networks. True, moststill work mainly with more traditionalstakeholders: 69% are partnering or haveconsidered partnering with suppliers, forexample. But two-thirds are also doing so withcustomers GE and Unilever both have OpenInnovation initiatives to develop new business

ideas and ways of collaborating with customersand consumers, for example. Such partnershipscan help drive innovation, with ev idencesuggesting that the most innovative companiesco-create almost twice the proportion of theirnew products and services with customers thanthe least innovative.16

Furthermore, half or more of CEOs arepartnering, or have considered partnering, withbusiness networks, rms from other industries,

academia or even competitors (see Figure 15).

Forty-four percent of CEOs are working withstart-ups, and at least a third with governmentand NGOs. Indeed, 44% of CEOs plan to work

with their governments to develop a skilled andadaptable workforce over the next three years.Twenty-seven percent want to collaborate withgovernment to create a more competitive andefcient tax system. And almost as many will

be collaborating to develop an ecosystem thatdrives innovation.


26/44

Partnerships

53%50%

52%

37%

44%

69%

66%

52%

36%

Suppliers

Customers

Academia

Competitors

Firms from otherindustries

Government

NGOs

Start-ups

Business networks,clusters, or trade

organisations

Figure 15 CEOs are starting to build diverse collaborative networks

Q: Are you currently engaged with or considering engaging with any of the followingtypes of partners through joint ventures, strategic alliances or informal collaborations?

More diverse networks, however, create greatercomplexity. Stakeholders now wear multiplehats; customers, for example, can now be

suppliers or partners at the same time. This hasimplications for how companies think about,and engage with, their partners switchingbetween competing and collaborating withpeers for example. And it has implicationsfor how companies manage the multiplerelationships they can have with a singlestakeholder; the ability for different teamsto engage in a consistent way is becomingincreasingly important.

The ability to effectively develop and managemuch larger, more dynamic and more diversenetworks of partners will be a hallmark of successin the new competitive environment. We believethe most effective ecosystems will bring togetherestablished rms, start-ups, individuals and

networks of individuals, and public, privateand third sector organisations. Theyll utilisedifferent types of contractual arrangements,

whether short- or long-term, formal or informal.In short, such ecosystems will have the abilityto take on the role that internal businessfunctions currently play.

The power of such diverse partnerships cannotbe underestimated as a means of generatingnew perspectives and solutions. In theEuropean Union, for instance, the formation ofnew industry clusters is being encouraged as ameans to promote competitiveness abroad, withbig companies partnering with smaller ones,and businesses collaborating with governments,customers and academia.17And in emergingmarkets, with complex and fragmented routesto market, a exible strategy that relies more

on getting the right local partner and less on

control and visibility is key.18

The competitor theme is a

very interesting one

because I dont believe in

competitors, I only believe

in colleagues that act

together...to bring us more

business opportunities.

Oscar Farinetti

Founder and Creator,Eataly, Italy

If one thinks about

capability development,

leadership development,collaboration with the

world of academia and

universities is extremely

important. So its not just

about the technology [or]

expanding your service

offering, but nowadays

it includes [almost] the

whole value chain of a

company, while naturally

you need to be very good

[at] the core with ones

own competencies.

Kimmo Alkio

President & CEO, Tieto, Finland


27/44


Tough questions about developing diverse anddynamic partnerships

How are you leveraging partnerships to enhance your organisations

core capabilities?

What types of organisations are you collaborating with? Do they include

those outside your industry, or those outside the private sector?

What can you learn from your collaborative networks in order to

deliver new value to customers?

How are you ensuring that your partnerships are mutually beneficial

and aligned in objectives?

In what ways are you harnessing the power of collaborative technologies?

How can you create successfulpartnerships?

Finding innovative ways to build relationships

that are benecial for all parties is vital tosuccess. Cooperation can take on forms otherthan price as partners within a network becomemore interdependent. During the nancial

crisis, for example, Toyotas suppliers wereunable to borrow money, so Toyota did it ontheir behalf, both increasing the total valueof that ecosystem and enhancing the qualityof their relationships.

Such new systems of interaction with checksand balances will become increasingly

important, with trust being central to success.

Ultimately, the ability to harness the powerof technology for collaboration will be key tocreating and managing effective partnerships.77% of CEOs say that digital technologiesare creating value for internal and externalcollaboration. We believe the use of social media,for example, will be critical in facilitating thefree ow of information within collaborative

networks and in allowing idea generation tobecome distributed. Already many companiesuse online platforms to develop new products

and services, or to improve supply chain andsourcing relationships. Statoil and GE, forexample, created crowdsourced marketingcampaigns to fuel innovation, while Nikedeveloped a mobile app to share its sustainableproduction and material standards with thegreater design community. Having commonstandards and protocols, however, will becritical in enabling widespread collaborationusing digital tools.


28/44

Diversity

Views about diversity and inclusiveness seemto have reached a tipping point. No longer are

they seen as soft issues, but rather as crucialcompetitive capabilities. Of the 64% of CEOs

whose companies have a formal diversity andinclusiveness strategy, 85% think its improvedthe bottom line. And they also see suchstrategies as beneting innovation, collaboration,

customer satisfaction, emerging customerneeds and the ability to harness technology all vital capabilities for success in the newcompetitive environment.

The right mix of talent

Having a good mix of talent and the abilityto alter the mix depending on business needs is critical as companies look to apply theircapabilities in more innovative ways, partnersuccessfully and harness technology effectively.These approaches require people who can thinkand work in highly different ways: those whocan imagine and those who can implement;all-rounders and deep specialists; as well asthose who can lead cross-functional, cross-sector, cross-cultural initiatives. Equallyimportant are people who can adapt the way

they think and work, as circumstances require.

Finding different waysof thinking and working

We want people in the

company that havediffering ideas, differing

experiences, differing

opinions, because we

need to solve our

customers problems.

The only way you do

that in a world-class way

is to bring a variety of

people together and utilise

their collective know-how.

Diversity and inclusion

will make us that much

more competitive in themarketplace.

Denise Ramos

Chief Executive Officer andPresident, ITT Corporation, US

Cultural differences

help us progress in areas

such as governance

and innovation.

Jean Kacou Diagou

Chief Executive Officer, NSIA,Cte dIvoire

85%of the CEOs whoseorganisations havea diversity andinclusiveness strategy sayits enhanced businessperformance and

56%say its helped them

compete in newindustries or geographies


29/44


A one-size-ts-all approach wont work to get

this broad mix of talent, and companies areemploying a diverse range of strategies to nd

and develop the people they need.

Skills are at the top of CEOs talent agenda.81% say their organisations are now looking fora much broader range of skills than in the past.This is unsurprising at a time when CEOs want

to increase headcount but concerns about theavailability of key skills are at an eight-yearhigh (see Figure 16).

Smaller companies in particular are suffering:CEOs of companies with up to $100 million inrevenue are much more likely than largercompanies to be increasing headcount in 2015and also much more likely to be extremelyconcerned about access to key skills. A recentsurvey of family businesses showed that nearlyhalf were apprehensive about their ability

to recruit skilled staff in the next 12 months,and 61% saw retention of skills and talent asa key issue that must be addressed in the nextve years.19

Technological skills are especially soughtafter; 75% of CEOs think that specic hiring

and training strategies to integrate digitaltechnologies throughout the enterprise are keyto getting the most out of digital investments.As part of the increased clock speed throughnew technologies, you have to keep your eyescontinuously open and really try to learn

something new every day, says Kimmo Alkio,President & CEO of Tieto in Finland. Focusedon what Tieto calls Generation T, Alkio believestodays organisations have to think differentlyabout how we serve the young talent [and] whattype of opportunities, networking and type ofculture you need to develop as a company.

Figure 16 Half of CEOs plan to increase headcount in the coming year

Q: Do you expect headcount in your company to increase, decrease or stay the sameover the next 12 months?

decrease in headcount

(2014: 20%)

headcount will

remain the same

(2014: 29%)

increase in headcount

(2014: 50%)

50%

21%

28%


30/44

Diversity

Figure 17

CEOs are using a diverse range of strategiesto get a good mix of talent

Q: To what extent do you agree or disagree with the following statements about your organisationstalent activities?

56%

58%

52%

48%

81%

81%

78%

71%

25%

23%

26%

23%

We always equip employees with new skills through

continuous learning or mobility programmes

We look for a much broader range of skills when

hiring than we did in the past

We always use multiple channels to find talent,

including online platforms and social networks

We actively search for talent in d ifferent geographies,

industries and/or demographic segments

Agree Agree strongly

To nd the skills they need, companies are

searching in many more places. Seventy-eightpercent of CEOs told us their business alwaysuses multiple channels to nd talent, including

online platforms and social networks (seeFigure 17). And 71% said their business activelysearches for talent in different geographies,industries and demographic segments. Tappinginto the labour pool in emerging markets is

particularly important; by 2020, it s estimatedthat more than half of graduates aged 24 to35 years will be found in these countries.20

Developing the skills of the existing workforceis also high on CEOs list of priorities. Most(81%) say that their business always looks toequip employees with new skills, throughcontinuous learning or mobility programmes.Nurturing an adaptable talent pool can havereal value for the business; research indicatesthat this could unlock up to $130 billion in

additional productivity globally.21

Learning and development is a particularfocus; when CEOs were asked which aspectsof diversity and inclusiveness were specically

addressed in their companys talent strategy,this was among the top categories of responses.Indeed, US spending on corporate traininggrew 15% in 2013 the highest growth ratein seven years.22

Mobility is also increasingly important asthe availability and location of global talentchanges; a recent study shows that 89% oforganisations plan to increase the numbersof internationally mobile staff in the comingtwo years.23Mobility is also important inmeeting the needs of new workers, with over70% of millennials wanting to work abroad.24

81%of CEOs are seekinga much broaderrange of skills

Design thinking teaches

us that great productsand solutions come when

there is a synthesis of

lots of different kinds of

perspectives, and when

we are diverse we create

the opportunity for that

rich synthesis of great

perspectives. The more

diverse we are, the better

we will all be.

Dr. Vishal Sikka

Chief Executive Officer &

Managing Director, Infosys,India


31/44


Figure 18 Gender and knowledge, skills and experience are the most common dimensions addressed in CEOsdiversity and inclusiveness strategies

Q: Which dimensions of talent diversity and inclusiveness do you specifically address, or plan to address in your companys talent strategy?

33%

Gender Knowledge, skills

and experience

Ethnicity/

nationality/race

Attitude to

career/progression

Age Disability Personal quality/

mind-sets

32.4%

24.5%

8.2% 8% 7.2%

4.7%

Religion/

creed

Adaptability

1.2% 0.8%

Easier said than done

Much more, however, could be done to leveragethe power of different talent.

Gender and knowledge, skills and experienceare by far the main reference points for diversityand inclusiveness strategies (see Figure 18).But we believe whats needed are people who are

different across all dimensions for exampleother physical characteristics, life situations,experiences, perspectives and personalities.

Whats more, while most CEOs say theirorganisations are looking more widely acrosschannels, geographies, industries anddemographic segments to nd talent, only

a quarter cite access to talent as a top-threereason for partnering; even though collaborating

with a range of organisations academia,government and business networks can bea rich source of talent.

Base: 858

Note: Respondents may have highlighted more than one dimension in response to this question.


32/44

Diversity

And nearly one third of CEOs say theirorganisations dont have a strategy to promotediversity and inclusiveness, though 13% say

there are plans to adopt one (see Figure 19).Yet formal strategies can help to broaden themix of talent; CEOs who do have such strategiesin place are more likely than those who dontto hire in different markets, industries anddemographic segments, use differentrecruitment channels, search for a wider rangeof skills, and equip employees with new skills.

Identifying talent is just one piece of the puzzle.Even after being hired, employees who dont t

stereotypical characteristics for particular rolesoften struggle to succeed in the workplace. OurWomen in Work index a weighted average ofvarious measures that reect female economic

empowerment, including equality of earnings shows, for example, that while women dorelatively well in places like Scandinavia,Canada, Australia and Switzerland, they havea long way to go elsewhere in the OECD.25

Creating an environment for success meanshaving strategies to tackle such issues asunconsciously-held biases, as well as havingdecision-making processes to encourage

divergent thinking, and concrete indicatorsof progress. Here again, formal diversity andinclusiveness strategies have a role to play.

Putting measures in place to help a wide rangeof talent to succeed is important for developingleaders who can think and work in different

ways. Having such leaders has an impact oncorporate success; one study of global companiesshows, for example, that those with at least one

woman on the board delivered higher averagereturns on equity, lower gearing, better average

growth and higher price/book value multiples.26

Figure 19 Most CEOs organisations have adiversity and inclusiveness strategy but nearly a third dont

Q: Does your organisation have a strategy to promotetalent diversity and inclusiveness or have plans toadopt one?

64%

13%

17%

Yes, we have such a

strategy in place

No, we dont have

such a strategy

nor do we plan

to adopt one

No, we dont have such astrategy but plan to adopt one

We need to have ever

more people, from

the most diverse

backgrounds, as we do

not know what area will

produce the innovation

that will make a

difference for us. It can

be products, it can be

services, it can be forms

of communicating with

or understanding the

customer. Therefore,

the more diverse people

we have in terms of

expertise, age and

nationality, the better.

Roberto Oliveira de Lima

CEO, Natura CosmticosSA, Brazil


33/44


Tough questions about finding different ways ofthinking and working

How are you getting the visibility that you need to ensure that skills are

being deployed effectively in your organisation?

Are you measuring how diversity and inclusiveness contributes to your

bottom line? And assessing its impact on the capabilities you have or

need to develop?

How are you ensuring that your organisation has access to the skills it

needs now and in the future?

What strategies do you have in place to ensure that you are looking

as widely as possible for talent?

What measures of diversity are important to help your organisation

achieve its goals?

Ross McEwan, Group Chief Executive of RBS,conrms the benets of additional female

senior executives recently introduced to histeam. We have found that diversity aroundthe table has been fantastic, he says, notingthat these executives bring dif ferent points of

view, are able to come at problems from quitea different angle and deal with people issuesquite differently from the way male executives

traditionally would. If I dont have thosepeople sitting there, I dont get that point of

view, or its a lot harder to get because youhave to go outside the room to bring it in.

Yet despite the rapidly changing composition ofworkforces in general, executive ranks remainoverwhelmingly white and male. One recentstudy shows, for example, that just six CEOsof Fortune 500 companies are black 1.2% ofthe total.27Another, which analysed workforcedata for more than 1.7 million employees in

28 countries, found that although womenconstitute 41% of the global workforce only19% of executives are female.28

Theres also much more that companies cando to leverage technology in their peoplestrategies. Fifty-eight percent of CEOs thinkdigital investments have created value for theirorganisation in terms of nding, developing

and retaining talent. This, however, is fewerthan those who see value for many other areas

of their business, despite obvious benets for

both the learning and development programmesand the multi-channel recruitment strategiespursued by so many companies. And althoughmany CEOs told us two years ago that theylack critical information about their workforce,data analytics still appears to be under-used;

just 46% of CEOs this year say their companiesalways use it to provide better insight into how

effectively skills are deployed.

Overall, there seems to be a denite disconnect

between the importance companies ascribe tousing digital technologies to engage customersand the use of such technologies as a means ofengaging employees.

Those companies who do more fully leveragethe power of diverse talent are better equippedto seize business opportunities. We found thatCEOs who see more opportunities today than

three years ago were more likely than thosewho see more threats to have a diversity andinclusiveness strategy, and to have seen a rangeof benets from that strategy. Theyre also

more likely to look widely for talent, upskillemployees and use data analytics to assess howskills are being used. All this is perhaps givingthese CEOs the condence to hire, as theyre

much more likely to be increasing headcountin the coming year.


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The CEO agendaWhats needed to

compete in todayseconomy?

When asked to name the one capability thattomorrows CEO must have, strategic thinking

and adaptability were cited by an overwhelmingnumber of business leaders. Small wonder;constant change is the key characteristic oftodays competitive landscape. Megatrends, andhow companies react to them, are changing themarkets where CEOs seek growth, the range ofthreats to business and the very fundamentalsof entire industries.

In fact, to plan effectively for the near future,CEOs might also want to have a healthyappreciation of the surreal. After all, many of

those disruptive technologies didnt even existten years ago, yet today theyre allowing start-upsto dominate entire industries, customers to beimportant collaborators, and a new generationof employees to bring in new thinking that couldchange the very DNA of the companies they

work for. And theres every reason to believethat the pace of change will only accelerate.

But just how can CEOs adapt to such upheavals?

Weve identied six steps that business leaders

can take to help build success in 2015 (see box,page 35). We believe that those CEOs who candevelop the strategic focus and capabilitiesconsidered here will be best placed to win in theemerging competitive landscape. Its arguablethat these approaches wouldnt have beensubstantially different ten years ago. But whatsdifferent now is the impact of digital technologies

on virtually every aspect of business.

The transformational effect of the informationage on customer desires is fuelling the need forbusinesses to re-evaluate their capabilities andthe value they create and to leverage digitaltools to deliver what customers want.Widespread and fast-changing developments ina range of industries driven in large part bytechnological change are spurring governmentconcerns, making improved dialogue betweenpublic and private sector vital. And digital

technologies have made possible the abilityto develop and manage a workforce andpartnership network thats more diverse,adaptable and connected than ever before.

Soft skills

Ultimately, given the many new challengescompanies face in the rapidly evolving globalmarketplace, CEOs could be forgiven for

wondering if they didnt need somesuperhuman qualities to provide the bestleadership seeing around corners could

certainly come in useful.

Of course X-ray vision and future-gazing arentreally offered as Learning and Developmenttraining. So what qualities are needed tobecome the type of leader who can not justunderstand the key pointers we offer here buthave the condence to apply them effectively

throughout the business?

Final words

In todays world, which

is becoming more globaland multicultural,

whether you like it or

not, industries overlap

and penetrate each

other. If you dont

know how to learn,

you will not survive.

Alexey Marey

Chief Executive Officer,Alfa Bank, Russia

In order to identify and

learn, we clearly need

to be a more agile, fast

moving company and,

something of great

importance, we need to

search for more partners

and more entities to

work with and above

all, I think technology

plays a decisive factor

in this.

Dr. Javier Genaro GutirrezPemberthy

Chief Executive Officer,Ecopetrol, Colombia


35/44


More than anything, the CEOs we talked to thisyear stressed the soft skills of leadership. Theyspoke of the need for vision, and for agility and

exibility in decision-making. They highlightedthe importance of being curious about theirbusiness world even when sometimes theymight prefer to stick their head in the sand andhope change passes them by. Being curiousgives a CEO the insight to separate real changefrom temporary hype, and act decisively on thereal change.

Above all though, perhaps the quality CEOsmost need to master is humility. By beinghumble while leading, a CEO will be able tolisten and learn from the team they have builtaround them; theyll be able to take maximumadvantage of the diversity they are cultivatingand theyll be receptive to the insights they gainfrom new collaborations. Most important, thishumility will give CEOs the condence to pass

on what they have learnt to the next generationof leaders.

Tough questions about leadershipin todays economy

How do your leadership skills need to evolve over

the next five years or ten?

How are you ensuring that youre picking upand acting on trends as they emerge with

increasing rapidity?

How are you navigating the sea of information

out there in order to focus on the things that

really matter?

Have you got the right team around you that you

can trust to make quick decisions when required?

From whom do you learn, and how do they help

you to make better decisions?

The one attribute CEOs need in the future to

succeed, that I would place my bet on, is curiosity.

From curiosity comes learning and new ideas.

In businesses that are changing very rapidly,

if youre not curious, if youre not learning, ifyou dont have new ideas, youre going to have

a real problem.

Michael Dell

Chairman and Chief Executive Officer, Dell Inc., US

1. Focus on what youre good at

In an increasingly confusing marketplace, its crucial to identify

your organisations key capabilities, those which make it unique.

We dont think companies can manage more than three to sixtruly differentiating capabilities.

2. Re-evaluate the business youre in

Once you understand your strengths, consider the true value you give

to stakeholders. Recognise who your competitors really are including

those in different industries. Ensure theres strong cohesion betweenyour organisations capabilities, value proposition and product and

service offerings. It could be that your core strengths could excel in

a sector youve never been part of before.

3. Anticipate policy issues

Pre-empt them by self-regulating effectively. Work with government

to develop effective and balanced policies, as part of a collaborativenetwork of partners.

4. Build diverse yet aligned partnershipsConsider how partnerships could enhance your capabilities. Develop

a broad, diverse and dynamic ecosystem of partnerships that you can

adjust upwards or downwards depending on needs. And strengthencollaborations by identifying mutually beneficial outcomes.

5. Transform through digital

Understand the impact of digital technologies on your stakeholders and

the value they seek. Assess how your operating model needs to change

to fulfil new needs and desires and have a clear vision and plan forhow digital investments can help achieve these changes.

6. Develop a good mix of talent

Leverage the full spectrum of differences in thinking and working to

build a collaborative and technologically skilled workforce that can

deliver the innovation you need to compete in the new economy.

Technology

Diversity

Customer-driven capabilities

Partnerships


36/44

Final words

Cant get enough data?

Figure A CEOs are concerned about a wideand growing range of threats

Q: How concerned are you about the followingpotential economic, policy, social and businessthreats to your organisations growth prospects?

Figure C CEOs want to partner not only to expand markets but to accessemerging technologies and strengthen innovation capabilities

Q: What are your reasons for collaborating in joint ventures, strategic alliances orinformal collaborations?

Figure B Technology and healthcare are the top two industriestargeted by companies from other sectors

Q: Which industries has your organisation entered within the past three yearsor considered entering?

Over-regulation Availability of key skills

Fiscal deficit and

debt burden

Geopolitical uncertaintyNew in 2015

Rising taxes Cyber threatsNew in 2014

Consumer behaviours Social instabil ityNew in 2015

Speed of technological

change

New market entrants

2013 2014 2015 2013 2014 2015

2013 2014 2015 2013 2014 2015

2013 2014 2015 2013 2014 2015

2013 2014 2015 2013 2014 2015

2013 2014 2015 2013 2014 2015

69

72

78

58

63

73

71 71 72 72

62

70 70

48

61

42

47

58

40

46

54

49

52

60

60

Base: Respondents who stated yes

18 encuesta mundial ceos

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