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A Global CEO Survey With Adaptations For Your Business
In January 2016, PriceWaterhouseCoopers released a survey of CEO’s Worldwide. Their results were a surprising list of challenges by larger, worldwide businesses. Since most businesses, and probably yours, is not a large multinational business, we’ll be applying the results of this survey to average businesses within the US and what challenges may be applied to your situation.
The World of Business Is Getting More Complex
If you are a baby boomer, and you compare your music listening experience to that of your parents, you can better understand why the business environment is so complex today.
Your parents (or grand parents) listed to records for their music enjoyment. They listened to records for almost all of their lives. If you compare that to the music listening experience of your own life, it’s a very different story. During your lifetime, you probably began listening to records. Not long after, you listened to 8 track tapes, then cassette tapes, then CD’s, then an electronic music library and now streaming music. Your dramatically different experience is happening because technology is moving at an accelerated rate. While this example is about music, the technology changes for music are equally applied to business conditions for businesses of any size and country. This is because software technology has evolved very rapidly in the last 25 years. It’s evolved so much that many business owners don’t realize the opportunity they have to move their business systems to the cloud, and in turn, take it mobile and get business productivity leaps of great measure.
One of the increasingly complex elements is taxes and regulation, inside the United States, is growing. Because of slow economic growth over the last ten years, the Federal Government has experienced a strained budget. This strained budget results in additional fees and taxes being imposed on businesses. Each state in the US is in the same situation. Business owners are experiencing new fees and taxes like never before. This drives up the cost of doing business. It’s only the beginning of higher costs when you look at more taxes and fees. If you look past the obvious, and view the not-so-obvious, there are hidden costs for every business owner. These costs are in more business expenses for accountants, lawyers, consultants and others to help with compliance and avoiding the penalties and fees resulting from non-compliance with new regulations. For example, the recent changes in our US healthcare system imposes the need for businesses to fund greater healthcare costs, and to pay experts to help them to comply.
Another complexity element is the Internet. It’s impacting business conditions by forcing businesses to leverage online sales channels to stay competitive. This Internet phenomenon is here to stay, has rapidly evolving opportunities and forever changes the buying behavior of your customers. This author is frequently hearing from many business owners, in many different industries, some of which could not anticipate an internet impact on their businesses. These industries include architectural firms, Interior design firms, home services industries and many more. All are affected in some way with both challenges and opportunities.
The Multinational CEO’s of this survey, in their measured response, indicate that 60% see more opportunities than three years ago. 66% of CEO’s surveyed are seeing more threats than three years ago. Your business should be highly aware of how these rapid changes alter your competitive landscape.
Executing a Solid Business Is Becoming More Difficult
- 45% of surveyed CEO’s say higher costs of doing business are getting in the way of their ability to meet stakeholder expectations.
- 42% of surveyed CEO’s say regulations are either inconsistent or unclear.
- 33% of surveyed CEO’s indicate a conflict between greater financial performance and stakeholder interests.
While these may be the challenges these CEO’s have, and probably you too, there are several things to think about when you face difficult challenges.
For example, you can use technology to gain greater productivity, better understand customers, and to reduce costs helps to drive significant leaps forward in a high performing business.
For example, companies are putting more effort today into clearly identifying and better managing the increasing numbers of risks they see.
For example, far more careful attention is being given to managing brands, marketing and communications, as all three are seeing dramatic shifts in both risks and opportunities.
Because of these sudden and many opportunities becoming available, innovation is now the vehicle for making the opportunities become business performance achievements.
For example, more and more companies are taking their operations mobile, and directly to their customers. In the case of this author’s firm affecting clients’ business improvements by going mobile, this meant benefits such as better understanding customers, a better professional appearance in front of customers, more information available to serve a customer, higher sales, lower costs of service and reduced overhead costs. In short, going mobile means changing both your revenue and cost structure for the better in a dramatic way.
Surveyed CEO’s say what technologies can generate the greatest returns for them:
69% - Data Analytics
65% - Customer Relationship Management
53% - R&D Innovation
50% - Social Media Communications Engagement
While these technologies may generate some great returns for multinational corporations, these same technologies can give you the same benefits, for less cost. Why you might ask? How could this be? The answer is simple: The Cloud. The cloud means lower cost by a huge margin, and in almost all cases, enables your mobile strategy.
Because of these changes in technology, and the ability to discern information you did not have in the past, more pressure is on management to better understand the technology and what the information coming from this technology means. This change also impacts the way companies engage and use their workforce.
Executives (listen up, this means you) that can make sense of changing customer behavior can make amazing business performance improvements in their organization.
Seeing The Value
CEO’s are clearly seeing the value of having the information they need and the ability to use it to their advantage and to the advantage of stakeholders.
While this is easy information when you apply this concept to a balance sheet or income statement, this may not be as easy to apply this to R&D, branding or company culture. Whichever you may want to measure, companies are finding ways to measure financial, operational and many non-financial elements of their organization. Creativity is the key here and many people are finding creative ways to measure those hard to measure items. For example:
CEO’s surveyed say:
72% measure both financial and nonfinancial information
76% say business success in this century depends on more than financial measurements
48% are seeing large changes in branding, marketing, and communications
While rapidly changing business conditions may make your head spin, you will need to stay calm and work smartly to keep a strong business position.
Many companies thrive under conditions like today, yours can too.
If you have strong vision and values, you and your leadership can get a head start. Consider including organizational change, technology adaptation or other terminology for your organization to have a culture of adaptation. Doing so will encourage your company management and staff to accept that change is welcome, expected and surmountable.
Having a clear purpose also gives your company management and staff the focus they will need to make hard and fast choices. Often, as the business conditions around a company change rapidly, people can easily lose focus of the company’s purpose. Make sure this doesn’t happen by communicating this purpose firmly and clearly.
Tighten your relationship between strategy and execution. What you do and why you do it is carefully nestled inside of how you do it. Make sure all are clearly aligned. The better you get at doing this, the more your customers will see it and be impressed by it. You may also need to determine what you won’t do as a company. Knowing what’s out of bounds for your company will prevent you from straying into this territory by mistake.
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© 2016 Rodger Stephens CPA CGMA