Running a global business is poised to become even more complex during 2016 and U.S. CEOs are more leary about revenue growth than last year, according to a new survey.
Only 33 percent are very confident in revenue growth during the next 12 months compared to 46 percent at this time in 2015, according to PwC’s annual U.S. CEO Survey.
“We’re struggling with demand growth to drive things forward and we’re in a period that’s going to be tough,” said John Christmann IV, CEO of Apache Corporation.
For one thing, CEOs have concerns about the Internet, with about 88 percent of CEOs are concerned about cyber threats.
“Although the open internet has many positives in terms of advertising, CEOs I consult with feel that no matter how much money they are investing in cyber security and firewalls, they feel that they are still in constant danger of being hacked,” said Karissa Thacker, an industrial psychologist and advisor to CEOs. “Updating the system company-wide doesn’t seem to work for long because hackers continually find ways to break the security wall.”
That’s because the world is advancing rapidly. Some 78 percent of CEOs are concerned about the rapid pace of technology change compared to 61 percent of CEOs internationally.
“The biggest change in our business is the amount of real-time information we are getting from consumers and customers,” said Mark Hunter, CEO of Molson Coors Brewing Company. “The challenge is to make sense of that information—to process all of the data to understand its implications—and to connect in a real-time way with the consumers and customers. That’s probably the most volatile thing that we’re seeing in our markets.”
From drones and 3-D printing to self-driving auto technology and artificial intelligence, CEOs say they need adequate infrastructure to innovate.
“The solution is adapting more quickly, which requires more frequent strategic planning,” said Karissa. “It used to be three to five years, but now I advise my CEO clients to revise at least quarterly if not monthly their overall strategic plan because the world is changing so quickly.”
Other areas of CEO concern include regulation, which is at a seven year high with ome 65 percent fearful of over-regulation compared to 35 percent in 2010.
“Whether it’s the Treasury or the Department of Justice or the SEC or the Federal Trade Commission, every one of these groups is looking at us in a more scrutinized fashion,” said Timothy Walbert, CEO of Horizon Pharma. “For our part, we just have to make sure that we are following the letter of the law throughout and, even with that, know that you’re going to get a lot more questions than you did before and accept that as the new way of doing business.”
About 60 percdent see the world moving towards regional trading blocs, according to the study, and the downside to regional and bilateral pacts is an increased complexity in operating across borders. “I think the second big part that’s transforming the world economy is this emergence of regional and bilateral trading systems,” said Ajay Banga, CEO of MasterCard.
There are more than 100 free-trade projects in Asia Pacific alone. The Trans-Pacific Partnership (TPP) includes the U.S., Japan and 10 other Pacific Rim economies.
“Now you need a strategy for China, Europe, the U.S. and Latin America in terms of where your growth is coming from and how to deploy your resources,” said Mark Vergnano, CEO of The Chemours Company.
