Annual CEO Survey highlights technology and strategic alliances as high priorities in growth strategies as CEOs navigate the rapidly changing environment
Toronto, ON (Jan. 21, 2015) – According to the 18th Annual Global CEO Survey, newly released by PwC at the World Economic Forum in Davos, Switzerland, Canadian CEOs are responding to general market and business uncertainty by developing a more diverse range of partnerships with other organizations and stakeholders. In fact, a significant majority (80%) expect to enter a strategic alliance or joint venture over the next year, compared to 51% globally. Cyber-security is the top business threat facing Canadian businesses today.
Economy, policy and cyber-security seen as threats to Canadian businesses
Canadian leaders are feeling worried, but not alarmingly so, with a slight majority (57%) saying there are more threats to their business today than three years ago. Respondents are most concerned about over-regulation (73%), the government response to the fiscal deficit and debt burden (70%), increasing tax burden (68%) and geopolitical uncertainty (68%).
Nearly two-thirds (64%) of Canadian leaders surveyed also identified cyber-security as a threat; however, this figure is substantially lower than in the US. where 86% of surveyed CEOs considered cyber-security a serious threat.
In general, Canadian CEOs were more optimistic on just about every threat (business, economic, political) than their global counterparts, with the exceptions of access to affordable capital and the speed of technological change.
Partnerships and strategic alliances key growth strategies for 2015
Compared to CEOs globally, Canadians are developing a more diverse range of partnerships with other organizations and stakeholders. For example, 55% are partnering with suppliers (33% globally), 41% are actively engaging with non-government organizations (20% globally) and 39% are working with government (23% globally). Canadian CEOs are using these partnerships to access new customers (50%), strengthen innovation capabilities (45%) and access new geographic markets (39%) and talent (36%).
A significant majority (80%) of Canadian CEOs expect to enter a strategic alliance or joint venture over the next year, which is not only higher than the global average of just 51%, but also an increase over the expectation of Canadian respondents last year (67%).
Almost one-third (30%) of Canadian leaders are looking to undertake a domestic M&A this year (17% last year).
Canadians looking to new regions for growth
While 38% of global respondents still consider the US to be the most important country with which to achieve growth, Canadian CEOs are less focused on their southern neighbour than they have been in the past, with only 50% considering the US very important to their growth (compared to 69% last year). The UK has also become less important as a market for growth, falling to 16% from 25% in 2014.
Many Canadian CEOs have turned their attention to China, with 36% saying it is very important to their growth prospects, compared to 24% last year.
CEOs pulling up their digital bootstraps
The digital age is here to stay. Canadian CEOs consider mobile technologies to be critical for customer engagement, with 84% citing this as a key consideration. Other important digital solutions include data mining and analysis (75%), cyber-security (75%) and socially enabled business processes (64%).
Leaders are also recognizing their own responsibility to improve digital performance, with 85% believing that they personally need to champion digital strategies.
Diversity a key strategic driver, but Canadians lag behind in ‘outside the box’ hiring
It’s relatively good news on the employment front, as a slight majority (57%) of Canadian CEOs expect to hire in 2015 (50% globally) – up from 42% last year.
About two-thirds (66%) of Canadian CEOs said their company has a diversity and inclusion strategy, with another 9% planning to develop one. Of those with diversity and inclusion strategies in place, respondents identified a number of benefits, including attracting talent (85%), strengthening brand and reputation (79%), serving customer needs (72%) and enhancing overall business performance (72%).
Canadians are lagging behind in finding new ways to attract talent, with only 59% saying they actively search for talent in different geographies, industries and/or demographic segments, compared to 71% of CEOs globally.
“Canadian CEOs recognize that the business landscape is rapidly changing,” said Bill McFarland, Senior Managing Partner and CEO, PwC Canada. “With competition coming from new places, CEOs not only need to keep up, but stay ahead and they understand they can’t do it alone. They are looking to new business models – finding the right partnerships, collaborating in new ways – to ensure they can meet those challenges to grow and outperform competitors. A key enabler is digital innovation, which is changing the way customers, employees, shareholders and suppliers interact with business.”
“Despite a generally rosier view of the future than their global counterparts, Canadian CEOs recognize that business is not without its challenges and shocks to the business environment require resilience and adaptability. Embracing an evolving world is the key to growth and success,” added McFarland. “Finding and developing talent is a key priority for CEOs – new skills and expertise are needed more than ever. This presents an important opportunity for Canadian businesses, which need to look for new ways to access and benefit from a diverse talent pool.”
Global highlights from the survey
- Overall, respondents are less optimistic about global growth prospects with 37% of CEOs worldwide thinking global economic growth will improve in 2015, down from 44% last year. Only 17% of CEOs believe global economic growth will decline, but this is more than twice as many as a year ago (7%). Likely due to ongoing political turmoil, Russian CEOs dropped from the most confident in 2014 to least confident this year.
- Globally, CEOs rank the US as their most important market for growth in 2015, placing it ahead of China for the first time since this question was added five years ago. Overall, 38% of CEOs say the US is among their top three overseas growth markets, ahead of China (34%), Germany (19%) the UK (11%) and Brazil (10%).
- Digital technology has completely changed how companies do business. Mobile advancements are seen by 81% of CEOs as most the most important technology important to their company, followed by data mining and analysis (80%), cyber security (78%), socially enabled business processes (61%) and cloud computing (60%). Some of the reported benefits of digital technologies include operating efficiency (88%), data and data analytics (84%) and customer experience (77%).
For PwC’s 18th Annual Global CEO Survey, 1,322 interviews were conducted in 77 countries during the last quarter of 2014. By region, 459 interviews were conducted in Asia Pacific, 455 in Europe, 147 in North America, 167 in Latin America, 49 in Africa and 45 in the Middle East.
The full survey report, with supporting graphics, can be downloaded at www.pwc.com/ceosurvey. Copies are also available from the media contacts including related charts and information graphics to help illustrate your stories.
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