So claims a new survey by Mckinsey that targeted the top CEOs of the world
A new survey by McKinsey suggests that top CEOs believe that high inflation and the economic downturn are trends to watch out for with disruptive digital tech being the gamechanger in 2023. When quizzed about specific action points to tackle these signals, the respondents suggested a mix of defensive and attacking maneuvers as a powerful playbook for leaders in 2023.
When it comes to the digital technology transformations, the CEOs listed out advanced analytics, enhancement of cybersecurity and automation at the workplace as the areas that require to be part of any CEO playbook during 2023 and beyond.
Analytics, cybersecurity and beyond
Nearly 62% of all CEOs felt the introduction of ChatGPT has added thrust to an already growing list of companies looking to leverage advanced analytics for competitive advantage. Companies like beverage maker Diageo and financial services giant Sun Life have used advanced analytics and predictive analytics to personalize their customer experience.
Similarly, close to 48% felt that the world should take notice of companies like JP Morgan Chase that’s been spending billions on cyber-related changes such as infrastructure modernization, developer tools, embedding cybersecurity controls into their business and providing enhanced training to their employees on cyber vigilance.
The study quotes Morgan Stanley CEO James Gorman to suggest that tech spend going up is a good sign as it’s displacing things that employees would have otherwise done manually. About 45% of those surveyed said they believed that automatic work would continue, irrespective of the number of layoffs that these efforts appear to have engineered in recent times.
It’s about lowering costs and redesigning products
Similarly, the CEOs were clear that it was only through early action to lower costs and protect the balance sheets that enterprises could ride through the economic downturn in 2023. McKinsey research says companies that had outperformed peers during the 2008 crisis cut operating costs by 1% before the downturn, while the others expanded costs by 1%. The best performers also reduced their debt by $1 for every $1 of book capital before the downturn.
As per the survey, 76% of the respondents felt reducing operating expenses was crucial. While the tech industry felt it had already done so by shedding jobs, others looked at supply chain renegotiations, tax optimization, deferring capital spending, tightening expense policies and increasing employee productivity as some of the ways to achieve the same outcomes.
Around 61% felt that redesigning products and services should be part of the CEO playbook to tide over the challenges of 2023, especially those related to the economic slump and inflation. The CEOs feel that costs saved via reduced operating expenses could be used to improve products and services to attract new customers and retain existing ones.
Reassess and go beyond geographies
More than 54% of the respondents felt that there would be a need to reassess strategic and economic assumptions on an ongoing basis through the year. The idea is to stay nimble with a focus on agility and adaptability, specifically with relation to pricing strategies that could offset cost increases during the inflationary cycle.
The CEOs also responded to queries around growing geopolitical risks stating that building robust compliance capabilities, creating resilience in supplier networks and investments in monitoring and response capabilities need to be part of the playbook.
While 65% felt companies must build up trade compliance and improve how they scree different customers and companies, 62% of the respondents pointed to the Apple path of ensuring that components arrive in multiple geographies to assembly lines that are also cutting across geopolitical boundaries.