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The 6 priorities CEOs care most about

Dan Beck Profile picture for user danbeck May 11, 2016
Workday's Dan Beck reads the runes of several studies by leading consulting companies to distil six critical CEO priorities every business must focus on

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What do CEOs care most about? It’s a critical question for business leaders throughout any organization. We set out to uncover the answer by studying several recent CEO surveys by leading consulting companies.

We identified six critical priorities, and addressing each of them requires contributions from across the organization. That’s why CEOs are looking to their lieutenants — CFOs, CHROs, CIOs, and other executives who drive major decisions — to understand and act on these priorities.

While this list is by no means exclusive, here are six leading priorities we identified as high focus areas for CEOs:

Finding growth

Growth is a high priority for most CEOs. According to the KPMG Global CEO outlook survey, the majority of CEOs surveyed said growth was even more important than achieving cost efficiencies.

The IBM Global C-suite Study found that CEOs of more successful companies are highly focused on growth, including launching new products or services, finding new business models, cultivating deeper customer relationships, pursuing innovation as a long-term strategy, expanding geographically, and creating deeper ecosystems. As an example, according to KPMG, two-thirds of CEOs said they expect international operations to bring in more revenue over the next three years.

Yet while traditional growth strategies still lead the way, the study found inorganic growth strategies are on the rise and will continue to fuel M&A activity. Nearly half of the CEOs surveyed anticipate they’ll make at least one acquisition in the next three years, according to KPMG. Meanwhile, the IBM study reports that two-thirds of CEOs are looking at “novel, non-traditional forms of growth.”

Taking on risk

CEOs see danger in just maintaining the status quo. To achieve growth, CEOs believe they need to be more aggressive about taking on risk. In fact, according to KPMG, one in three CEOs think they are not taking on enough risk as it relates to their growth strategies.

Competitive threats from both new market entrants and established competitors are compelling CEOs to have more appetite for risk, including finding ways to move more quickly into new product and services areas and regions. In many cases, the risk of standing still may be greater than the risk associated with change.

Managing regulatory changes

Managing regulatory changes — including corporate tax rates, environmental regulations, and financial reporting — is a major concern for CEOs, which makes it a big priority. In the KPMG study, regulatory concerns ranked as the second-most important topic for CEOs, only after global economic growth.

PwC’s 19th Annual Global CEO Survey found over-regulation as the top concern among 79 percent of CEOs who responded. IBM, in its study, found regulatory concerns to be the No. 3 external factor on the minds of CEOs. And it’s not getting any better: PwC reports companies are predicting a more diverse set of global regulatory regimes and requirements in the future.

Leveraging technology

CEOs report that technology is a critical differentiator, regardless of what industry or segment they work in, according to the IBM study. Mobile, social, and cloud technologies were cited as those having the greatest impact on their enterprises. In the KPMG study, CEOs cited disruptive technology as the third-most important issue facing their companies. In addition to opportunities, CEOs are concerned about disruptive technology from competitors upending existing business models.

More than two-thirds of CEOs surveyed by PwC view data and analytics as technologies they need to adopt more broadly — and that will drive the most benefits. Still, CEOs haven’t fully mastered how to best make use of data to drive business outcomes, and report they’re looking to their teams to leverage information to make better decisions. According to PwC:

Winners in the innovation game . . . will be those that harness technology and innovation to deliver products and services that are cost-effective, convenient, functional and sustainable.

Technology is the avenue to reach additional markets, gain market and customer intelligence, and better engage with talent, and CEOs look to technology more for finding growth than cutting costs.

Pursuing innovation

CEOs report that transformational innovation within their own companies must be a high priority, especially in an environment where new market entrants can quickly rise up and challenge existing business models.

IBM found that 58 percent of market-leading CEOs pursue disruptive innovation, not purely incremental improvements. According to its study, “pioneers aren’t simply tweaking existing products and services; they’re reinventing their firms.” These CEOs also value agility and experimentation, and are more willing to accept failure as a precondition to success.

Increasingly, transformations need to happen simultaneously across multiple parts of the business, requiring organizational agility, a willingness to change, and embracing innovation as a core competency. CEOs view innovation as a long-term strategy, not a short-term way to 'fix' parts of the business.

People and culture

CEOs cite hiring the right talent as a priority. In the KPMG study, 78 percent of CEOs said they expect to increase headcount over the next three years. Yet they also worry about finding the right skills, and potentially having to retrain existing teams to develop new talents.

Yet to get the right people attracted to their organizations, CEOs realize culture must also be a priority. According to the KPMG study:

Having a purpose that employees can align to, providing the skills and opportunities to learn and grow, and building an inclusive culture are all critical to attracting and retaining the best talent, which in turn helps drive innovation initiatives that drive the business forward.

Culture can also impact the bottom line. Suppliers and customers are looking at how companies behave in the wider social context, and will make business decisions based on a broader set of criteria than traditional metrics of functionality or cost, reports KPMG.

Next steps

Putting the focus on six critical areas — growth, risk, regulatory management, technology, innovation, and people and culture — impacts a broad range of teams throughout an organization. C-level executives, and those who report to them, need to examine the weaknesses and strengths within their organizations, identify opportunities to make a difference, and then take the necessary steps to help their organization’s CEO execute on these leading priorities.

In future posts, we’ll dive more deeply into the role that the CFO, CHRO, and CIO play in helping address these challenges.

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