When PwC surveyed more than 4,400 CEOs from more than 100 countries and regions, they found that almost 75% of the world’s top executives expect a decline in growth in 2023. But in a survey conducted by PwC in the previous two years, there was a complete flip in understanding. Three out of every four CEOs have expressed optimism.
Today, CEOs are managing the tension between short-term economic pain and a long-term mandate to transform to stay competitive. Nearly 40% of CEOs think their companies will not be economically viable within a decade if they continue business as usual, according to PwC’s annual global CEO survey.
“My advice: make your company fit for growth,” said Mohamed Kande, vice president of US consulting solutions and global leadership and advisory leader at PwC, during fortune‘s CEO Leadership Series there. “What all the cost structures have to do and reinvest in growth. And that growth has to be supported by technology. That’s going to be the future.
For more than a year, Federal Reserve officials have been fighting inflation and continuously raising interest rates in an effort to slow the economy to reduce price increases. But policymakers aim to do so in a way that would ideally lead to a short-term or short-term recession, or perhaps avoid an economic downturn. The strategy has so far been quite successful, with the US seeing inflation decrease but economic growth still forecast in 2023 by observers like the International Monetary Fund.
Glenn Fogel, CEO and president of the online travel agency Booking Holdings, said the company must balance the macroeconomic environment with the future needs of the business. For Booking.com, the main focus is on accelerating technological innovation, with Fogel sharing the new buzz around AI and the ChatGPT chatbot.
“You have to have the courage to not just look at the next quarter,” says Fogel. “Travel is going to grow faster than GDP. So I always have to say, ‘Don’t worry about the short term. Let’s make sure we’re going for the long term.'”
Michael Sonnenshein, CEO at crypto asset manager Grayscale Investments, also likes to think long-term. He has been in the crypto business for nine years and says that the industry has had a lot of noise and even distrust due to the bankruptcy of the FTX crypto exchange. But he said it was a failure of the people involved, not an indictment of the entire crypto market.
“Don’t get confused by the headlines,” Sonnenshein said. He said he reminded the team to focus on what Grayscale is trying to do as an organization and that “the daily debate about crypto should not destroy the long-term confidence we have in the asset class.”
At tire manufacturer Michelin, long-term thinking also led the manufacturing giant to extend the three key levers that are the focus of its five-year plan. Alexis Garcin, president and CEO of Michelin North America, said all three—focusing on customers, accelerating the digitalization of factories, and investing in the workforce—have also reduced overall costs.
Brad Jackson, CEO of consulting firm Slalom, said many executives want a short-term recession, because it can reset expectations with investors and employees. He thinks that companies that will be successful in the future must have a broader cultural reset, focusing on their customers and employees.
“I’d like to see more awareness of long-term investing and how that impacts diversification and valuation for companies,” Jackson said. “That’s not talked about much these days.”
Although the U.S. is experiencing a short-term recession, Tata Consultancy Services North America Chairman Suresh Muthuswami says companies can cut costs to prepare for a recession, so employee engagement is not affected. He argued that moral destruction might be counterproductive.
“Technology was the last thing that got cut,” says Muthuswami, referring to conversations with clients.
Janeen Gelbart, CEO at AI-driven software leadership platform Indiggo, says leaders understand that society is always in a time of change and uncertainty will always exist. And he rhetorically asked, whose shoulder is this landing. His view: much of the responsibility rests on the shoulders of middle managers and executive leaders who have been burned out.
“We need a balance to have some quick wins, and at the same time, build our organization for the future,” said Gelbart. “The mix of transformation, innovation, and change is very difficult.”
Our new weekly Impact Report newsletter examines how ESG news and trends are shaping the roles and responsibilities of today’s executives. Subscribe here.