McKinsey & Company: Top CEOs reveal priorities for 2023
Disruptive technology, economic downturn and geopolitical issues are the three most important trends CEOs are acting on this year, according to the findings of a survey carried out by McKinsey & Company.
Asked which trends would have the biggest impact on how they lead their organisations in 2023 compared to previous years, the majority (58%) of respondents selected the rise of disruptive digital technologies in their top three.
Fifty-six per cent chose the risk of prolonged high inflation and economic downturn, while 47% highlighted the escalation of geopolitical risks as a big issue.
How did McKinsey & Company carry out its study?
McKinsey & Company’s latest CEO Excellence study saw the global consulting firm speak to 200 of the ‘best’ CEOs of the past 15 years.
This consisted of chiefs from the largest 1,000 public companies who had completed at least six years in the role, delivered strong performance and been included in ‘best CEO’ lists.
To better reflect the diversity of today’s business landscape, McKinsey & Co included CEOs from outside the 1,000 largest companies from underrepresented segments who met a high bar of performance and reputation.
Retired CEOs were asked to share the advice they are giving sitting equivalents.
As well as being surveyed on their top three trends, company bosses were asked about the specific and pragmatic actions they are taking to respond. Researchers encountered a range of both defensive and offensive actions.
CEOs taking action to deal with digital disruption
In its report, McKinsey & Company said the mindset with which CEOs are approaching digital trends could be summarised by the survey comment of one boss.
They said: “A CEO also has to be the chief technology architect. Think of the executive team – not just the chief digital officer – as owning the technology strategy of the company. There is too much at stake.”
When it comes to adapting to digital disruption, three main strategies were uncovered:
- Developing advanced analytics (62% of CEOs)
- Enhancing cybersecurity (48%)
- Automating work (45%)
Researchers wrote that OpenAI’s introduction of ChatGPT last year had “put gasoline on the already well-lit fire” of companies trying to leverage advanced analytics in order to gain a competitive advantage.
Also referenced is a letter written to shareholders by Jamie Dimon, CEO of JPMorgan Chase, who said cyberthreats post “extreme hazards to our company and our country”.
However, the plus side is of course the potential to automate work and cut down on the number of steps needed to carry out various processes.
Dealing with inflation and economic downturn
“Act early to lower costs and protect the balance sheet so that you are stronger and leaner when the economy begins to turn more favorably.”
Those the words of one CEO surveyed by McKinsey, worried about economic uncertainty.
According to previous research from the consultancy firm, companies that outperformed peers during the 2008 economic crisis cut operating costs by 1% before the downturn, while others expanded costs by the same percentage.
The best performers also reduced their debt by $1 for every $1 of book capital before the downturn.
CEOs said they planned to combat economic concerns by:
- Reducing operating expenses (76%)
- Redesigning products and services (61%)
- Reassessing strategic and economic assumptions (54%)
Geopolitical risks remain significant concern
Conflict and growing tension in countries including Russia and China have brought into focus the significant impact geopolitical issues can have on the business sphere.
CEOs are therefore planning in the following ways:
- Building robust compliance capabilities (65%)
- Creating resilience in supplier networks (62%)
- Investing in monitoring and response capabilities (56%)
“Globalisation is changing, but it’s not disappearing,” commented one CEO in McKinsey & Company’s study.
“We’re entering an era with new dynamics around China and Russia, and Africa will also play a bigger role. We need to plan for multiple scenarios and have a game plan for each contingency.”
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