Resilience breeds opportunity

In our annual KPMG CEO Outlook, we interviewed more than 1,300 CEOs across the world to see how they are managing through a complex and challenging business environment. Tested by enormous pressures in quick succession and with the potential for more on the horizon, this year we found that CEOs are confident in their companies’ resilience and relatively optimistic in their own growth prospects.

With the dramatic headlines swirling around these past few months — a global pandemic, inflationary pressures and heightened geopolitical tensions — it is encouraging to discover these shoots of optimism. Over the past few years, business leaders have learned to navigate the unpredictable on a moment’s notice and have had great success realigning their workforces, untangling supply chain disruptions, and adapting to geopolitical and economic impacts.

That ability, much of it learned in equally challenging circumstances, has helped build greater organizational resilience and agility. Six in 10 CEOs have shared that many of these global issues are deeply connected and can impact different parts of the business in different ways. And because they are happening all at once, CEOs are forced to expect the unexpected, often executing elements of a 5-year plan in only 6 months simply to keep pace.

It’s a lot of pressure, but many are already prepared with a deep focus on planning and agility. Despite more than 70 percent believing a recession will disrupt growth over the next 3 years, even more CEOs believe their organizations are built to stand up to whatever may come. Nearly 85 percent told us they are confident about their company’s growth over the next 3 years – an optimism with the same sentiment nearly a year ago, before the war in Ukraine and after the world took some initial steps into a post-pandemic normalcy.

It would be easy to question whether this is false optimism, but that would be to ignore the underlying trends uncovered in this report. Most telling is how CEO concerns have shifted from day-to-day uncertainties and are now largely focused on long-term trends. This year, emerging and disruptive technology has landed as the top risk to business growth over the next 3 years — a critical movement away from the immediate, pandemic-related concerns that once dominated our surveys.

Moreover, this pivot towards technology marches in step with ESG concerns brought on by a greater pool of stakeholders, according to the CEOs we interviewed. Unsurprisingly, demand for increased ESG reporting and transparency is growing among stakeholders with 69 percent of CEOs saying so, though eight in 10 also see their digital and ESG investments closely linked. That’s a very key insight, further cementing the linkage between purpose, profit and execution.

Everything isn’t rosy. Far from it, and these are challenging times. Many companies are reducing headcount and implementing other strategies to brace for recessionary pressures. However, resilience is about managing through the immediate while staying focused on the long-term. And it is reassuring that this almost impenetrable fog of uncertainty hasn’t obscured the long-term vision for many business leaders.

That resilience breeds opportunity, and there’s a lot of opportunity out there. Staying ahead of the technological curve, while ensuring business can continue to meet the ESG change agenda despite short term challenges, appears to be the recipe for success. Maintaining that focus on creating long-term value is what will be required to build a more sustainable future.