CEOs report early productivity gains from Generative AI and rising payoffs from investments in sustainability. The challenge is to increase scope and speed.
Some CEOs are moving rapidly to capture the growth and value-creation potential inherent in the defining forces of our era. They’re investing in generative artificial intelligence (GenAI), addressing the opportunities and threats posed by climate change, and reinventing their operations and business models to create value in new ways. Yet many others are moving slowly, constrained by leadership mindsets and processes that lead to inertia.
This latter group has two options: either accelerate their reinvention efforts or bet on hope – hope that with just a few tweaks today’s operating and business models will continue to deliver results even as AI and the transition to a low-carbon economy create set value in motion across the economy.
Chapter 1 Two defining issues: AI and climate change
Early returns on GenAI
- More than half of CEOs (56%) say that GenAI has increased efficiencies in
how employees use their time, while around one third report increased revenue (32%) and profitability (34%). - Expectations about the impact on profitability for the year ahead are similar
to last year with about half of CEOs (49%) expecting an increase. - In terms of the impact on jobs, 13% of CEOs say they reduced headcount
over the last 12 months because of GenAI, yet a slightly higher percentage
(17%) report increased headcount.
Chapter 2 Business as (un)usual
Outlook and threads
- Almost 60% of CEOs expect global growth to improve in the 12 months ahead, up from 38% last year and 18% two years ago. They also remain broadly confident about their company’s outlook for revenue growth and headcount.
- In terms of near-term threats, macroeconomic volatility and inflation remain top concerns globally, albeit with significant geographic variations.
The great reconfiguration
Almost 4 in 10 CEOs say that their companies have started to compete in at least one new sector in the last five years. Of these, about 1 in 3 CEOs report at least 20% of their revenue has come from new sectors. Among the sectors attracting most new competitors from other industries are business services, health services and consumer markets.
Chapter 3 Continual reinvention
When making strategic decisions, only about half of CEOs usually include information that could contradict the investment hypothesis. Similarly, about 60% of CEOs usually judge strategic decisions based on outcomes, not the quality of the process. Higher quality decision-making processes are associated with higher profit margins.
Only one in three CEOs have a high degree of trust in having AI embedded into key business processes. CEOs who trust AI reported higher gains from the GenAI over the last
12 months and expect higher gains from the technology in the year ahead.
Conclusion
This year’s survey confirms that some CEOs have already asked these questions and, in partnership with their top team and board, have started to develop coherent answers. The challenge for this group is to maintain momentum while remaining acutely aware of the interplay between macroeconomic conditions, geopolitical reconfigurations and other threats that could yet derail progress.
For CEOs who have barely begun to address these issues, it is not too late. But such CEOs are, without question, falling behind. Playing catchup starts with making a concerted effort to develop a systems-level view of how customer needs and the competitive environment are changing. Then comes execution: a clear set of reinvention priorities, powered by high-quality decisions and at-scale resource reallocation, sustained by bounded optimism about what tomorrow could bring.
PwC’s 28th Annual Global CEO Survey
Reinvention on the edge of tomorrow
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