How quickly things change in just a couple of years.
The latest survey of 1,201 CEOs from across the globe finds great expectations of a revived period of economic growth ahead. The survey, conducted and published by PriceWaterhouseCoopers (PwC), finds business leaders are nearly as confident in their outlook for revenue growth over the coming 12 months as in the boom years before the financial crisis. The rise in short-term confidence holds true among CEOs from all regions. Confidence in business conditions peaked at 52% in 2007, dropped to 21% by 2009, and has jumped back to 48% in the most recent survey.
The PwC report describes the current situation as a "multi-speed recovery." It's occurring at different paces across different regions, and with different challenges. As economic worries recede to the back burner, new priorities now occupy the business leaders' agendas: driving innovation, and finding the right talent to drive that innovation.
While talk of a skills shortage may appear to contradict the discouraging large pools of unemployment seen across the globe, the PwC survey says there is a looming lack of the right talent that may hinder innovation and growth across many regions:
"Hiring the best workers amounts to nothing if the firm can’t retain top talent in hypercompetitive talent markets. In high growth markets such as China, India and parts of Latin America, talent shortages are as critical as – and in some cases more acute than – the rest of the world. Businesses looking to double or triple revenue in five years in emerging markets, for example, and anticipating equivalent growth in their workforces, find that the availability of talent is often their biggest constraint."
A majority of business leaders say looming skills shortages is a big issue: Two-thirds say they face a "limited supply of candidates with the right skills," and 54% cite "challenges in recruiting and integrating younger employees." Another 52% even report they are having issues with "competitors recruiting some of your best people." Close to a third of respondents (31%) say they will be focusing on "strategies for managing talent" over the next few years, making this the leading priority, over investment decisions (28%), organizational structure (27%), and managing risk (23%).
Since 2007, PwC reports, business leaders have consistently reported that their single best opportunity for growth lay in better penetration of their existing markets. Now, enabling innovation for new products and services ranks just as high as a growth driver.
Key to moving innovation forward are Information technology, green sustainable development, and collaboration outside the organization:
- Close to 70% are investing in IT to reduce costs and become more efficient, while 54% are also funnelling funds towards growth initiatives, including emerging technologies in mobile devices, social media and data analytics. Also high on business leaders' agendas is cloud computing.
- Green, sustainable development is seen as an important part of companies' innovation strategies, the survey finds. Sixty-four percent of respondents say a key element of their innovation strategy "is to develop products or services that are environmentally friendly."
- Business leaders are more likely to be reaching outside the organization for new ideas and approaches. Thirty-nine percent of CEOs say they expect the majority of their innovation "to be co-developed with partners outside of our organization."
Where will most innovation come from? In terms of developed markets, Germany gets the highest rankings for both innovation and quality, cited by 13% and 35%, respectively. The US ranks second with 10% citing the country as a source of innovation, 18% as a source of quality products and services.
China and India get top rank as sources of cheap production, cited by 63% and 55% of CEOs, respectively. However, only three percent see China as an innovation hub, along with only seven percent for India.