Over the last 12 months, CEOs have become “risk on”, ready to pivot from stabilisation to new investments in growth and transformation — with appetite particularly pronounced for digital-led transformation focused on fundamental changes to the operating or business model, a major new survey by EY reveals.
The global EY CEO Imperative Study 2021 was published today (March 30). It was based on interviews with over 300 CEOs from the Forbes Global 2000, and revealed that 61% plan to start a new and “comprehensive” transformation initiative in the next 12 months, while 68% plan major investment in data and technology in the next 12 months: music to the ears of Chief Information and Technology Officers and their peers.
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Andy Baldwin, EY Global Managing Partner – Client Service, noted that after battening down the hatches during calendar 2020, the focus of a majority of CEOs is now firmly on investment and transformation. He said: “The past year been trying for everyone and CEOs have had to make tough decisions by reviewing portfolios and projects to balance the long-term growth prospects against immediate shareholder expectations.
He added: “Technology has been the common denominator for most organization’s resilience amid the pandemic. Interestingly, the traditional and analogue businesses, that were initially struggling at the start of the crisis, have accelerated the adoption of new digital technology and led the spend on tech and data. We are now seeing more of a hybrid business model as CEOs continue seek to plan for any future partial or full lockdowns. As vaccine roll out programs start to bring hope that we may be turning the tide, we are now seeing businesses shift their focus to assess how they can ‘win-in-turn’ and this is driving investment plans over the next 12 months.”
Only 34% of CEOs told EY that their companies enjoy customer trust related to data, however; a challenge that could limit growth and stall transformation efforts. Despite this troubling gap, 88% of respondents believe that the use of data science to anticipate and fulfill individual customer needs will be a main differentiator in the next five years; while 87% of respondents say delivering data-driven experiences will drive competitive advantage.
With institutional investors doubling down aggressively on ESG requirements across their portfolios, perhaps unsurprisingly CEOs — in the energy and manufacturing sectors particularly — were keenly attuned to climate risk and the “circular economy”. Some 91% overall meanwhile said new business models will increasingly incorporate aspects of the circular economy, while 80% of CEOs responding to the EY CEO survey agreed that their organisations will take “significant new steps to take ESG responsibility inside their operations.”
EY’s Baldwin noted however that while the research highlights that CEOs are willing to transform, EY’s own data found a clear gap between intention and execution particularly when it comes to long-term value and ESG. He said: “Given the sense of urgency around these issues is only increasing, CEOs will come under greater regulatory and reputational pressure to operate differently. Leaders need to follow through their public commitments with action to demonstrate they are taking the bold steps needed to drive long-term value and change.”