You can sit there going ‘woe is me, this macroeconomic environment is terrible’ or you can use it as time to restructure what you're doing for when that upswing comes.Read Chris' interview
CEOs are determined to drive transformative change in the face of persistent challenges and growth concerns, with a focus on their own catalytic role, investments in necessary skills and technology, and the rise of generative AI (GenAI).
A heightened focus on the need to truly transform their organisations is dominating the business plans of UK CEOs. They are feeling the pressure of ongoing economic turmoil and expressing concerns about both the growth prospects and long-term viability of their organisations. Many are taking personal responsibility for creating the necessary change to drive growth alongside meeting now vital commitments on climate and trust.
The need to not only create change, but to deliver fundamental reinvention of their business model is highlighted by the one in five UK CEOs (21%) who say their organisation will not be economically viable within 10 years on its current path - a statistic barely changed from last year (22%). Confidence in their prospects for growth this year is also down, from 48% expressing strong confidence in their growth prospects last year to 42% this year.
Furthermore, many CEOs are not expecting a challenging UK economy to offer an organic uplift. While sentiment is improved from a deeply concerned outlook last year, nearly two-thirds of UK CEOs still expect the UK economy to either remain stagnant (27%) or decline (35%) this year (combined: 62% compared to 90% last year). And while 39% believe the UK economy will pick up, there is far more confidence in the global economy (61% expect growth).
That creates the need for a major intervention from UK business leaders to kickstart growth. Years of dealing with constant disruptions have given them reserves of resilience they will need to draw upon, as the level of change required is significant and must be more all-encompassing rather than iterative.
Chris Hollowood, CEO, Syncona
21%
of UK CEOs say their organisation will not be economically viable within 10 years on its current path
53%
of UK CEOs are taking personal responsibility and sponsoring transformation within their organisation
More than half of UK CEOs (53%) are taking personal responsibility for driving change, and they are also making significant investments in accelerating and elevating the changes their organisations are making - from appointing dedicated transformation leaders (21%) and teams (35%) to reallocating capital to transformation projects (38%) and raising additional funding for them (24%).
The importance of the CEO being more involved in driving necessary change is emphasised by the biggest barriers to reinvention. A quarter of CEOs cited a lack of financial resources as a major inhibitor of reinvention plans, with the same proportion citing competing operational priorities.
Marco Amitrano, Managing Partner and Head of Clients and Markets, PwC UK, says: “A transformative step change is needed to break a cycle of surviving, but not yet thriving for many organisations. CEOs have been dealing with incredible disruptions for years, from macroeconomic and geopolitical disruptions to industry-specific challenges around regulation, changing customer behaviour and decarbonisation. Those challenges aren’t going away and the changes that CEOs have made to date are clearly not allaying concerns about where growth is coming from. Growth is the priority and as such CEOs are taking greater personal ownership of their organisations’ transformation activities.”
“Change needs to be an organisation-wide effort and must therefore be led from the top, to ensure it gets the budget and backing needed,” adds Amitrano. “CEO sponsorship sends a clear message to the business about the importance of a more all-encompassing business model reinvention, as does the creation of dedicated teams and leadership to deliver a level of change that is elevated above standalone functional transformations.”
Rachel Corp, CEO, ITN
Digital transformation is in all of our strategic discussions. I drive it and I champion it, because I believe in it.Read Rachel's interview
Barry O'Dwyer, CEO, Royal London
The CEO needs to understand the data strategy and how we will use data to improve the customer offer. It is now so central to where we're taking the company, I have to be close to it.Read Barry's interview
The role of reinvention
Growth strategy is the clear number one driver of transformation plans for UK CEOs, followed by related benefits of increased productivity and expanded offerings. And with other drivers such as net zero high on the list, it’s clear the greatest benefits of transformation will be systemic. But systemic benefits require a systemic approach.
What’s driving transformation?
Katy Dowding, CEO, Skanska UK
The need for agility in business models is going to continue and the organisations that will survive are not necessarily the ones who can predict the future but the ones who are able to respond to new futures as they emerge.Read Katy's interview
Change can still happen at a contrasting pace in different areas of the business as challenges and opportunities dictate, but ‘baking-in’ the ability to adapt at an organisation-wide level can complement and accelerate functional transformations.
For example, many CEOs are investing in transformation projects in sales and marketing (78%) and in customer service (66%). This will help create a closer connection to customers, when CEOs say they are putting up prices (59%)
But while those investments may be higher priority, they should not be done in isolation. A single view of the customer and the ability to provide customers with real-time information on orders and fulfilment, for example, could prove transformative in other areas of the business. Similarly, greater insight into product availability and logistics can help drive supply chain and sustainability transformation.
Where are CEOs focusing their transformation plans?
Note: CEOs could select multiple responses to reflect having concurrent or consecutive projects recently completed, running and / or planned.
Pano Christou, CEO, Pret A Manger
I’ve seen organisations get punch-drunk in decision making because they spend so much time in the weeds of data. A balance of experience, intuition and data is the sweet-spot.Read Pano's interview
To join up all these areas of change, organisations must invest in the foundational technology infrastructure and data strategy of their business. Tellingly 87% of CEOs say they have recently completed or are currently running, or planning, at least one transformative IT project, and more than three-quarters (76%) say they will invest in cloud infrastructure and data and AI this year. (Read: Which way now for organisations at a cloud crossroads?)
Rachael Hampton, Cloud Transformation Leader for Private Sector Clients, PwC UK, says: “Cloud provides the foundational platform to reliably collect data from sources right across an organisation, its supply chain and wider logistics networks. Collating and analysing that data will inform smarter and more consistent decision-making, as well as powering specific benefits such as greater customer insights, cost out or more robust reporting in support of net zero transformation. It can also become an entry point to enable GenAI. This isn’t about driving individual changes in different parts of an organisation, it’s about creating a basis for ongoing agility and change whenever and wherever it is needed.”
Lynne Baber, Sustainability Practice Leader, PwC UK, says: “Getting the numbers right is crucial to effective net zero transformation and robust sustainability reporting. Without it, organisations are blind to their progress. The insights experts can derive from carefully structured data, paired with the right technology, will help accelerate their decarbonisation plans, while proving progress to stakeholders. Ultimately, effective transformation can help deliver the transparency needed to build trust and drive awareness and action on sustainability organisation-wide.”
However, some CEOs admit the need to balance commercial performance in challenging times, doesn’t always sit comfortably with their net zero transformation plans, with more than half (56%) saying their efforts are inhibited to some extent by concerns about lower returns on climate-friendly investments.
“Doing the right thing for the business and planet do not have to be mutually exclusive,” adds Baber. “The cost of inaction also cannot be discounted, but it can feel like a very difficult balancing act. That’s why reliable data is so critical to objective decision making and creating meaningful and measurable change.”
Scott O'Neil, CEO Merlin Entertainments
We have to be able to adapt and have the technology in place to be agile, but we’ve pretty much started at ground zero.Read Scott's interview
Andrew Heath, CEO, Spectris
We have put sustainability at the heart of our strategy and that has resonated really well with all stakeholders, and notably our investors.Read Andrew's interview
Access to vital skills
A greater focus on technology brings into sharp focus an issue that has been a perennial concern in recent years.
The question of skills, and particularly the shortage of technology skills, is top of mind. The majority of UK CEOs (78%) report some extent of skills shortage within their organisation, and 68% specify a lack of tech capabilities in inhibiting their ability to transform.
Despite concerns about the economy, the commitment CEOs are showing to step-change transformations means they are more likely to increase their headcount than reduce it this year. Nearly half (48%) intend to increase their headcount, compared to just over a fifth (21%) who expect to decrease it.
UK CEOs are also focused on improving the bench strength of talent and capabilities they have within the organisation with investments in upskilling and retaining the people they have. And where they cannot recruit or train employees quickly enough, or in significant enough numbers, they will look to partner or even acquire. (Read: Transacting to create value and accelerate transformation)
However, retaining talent post-acquisition cannot be taken for granted.
Natalie Nash, People in Deals Leader, PwC UK, says: “Deals are a mechanism to acquire critical skills at speed, but retaining in-demand skills is not as straightforward as many might think. To retain talent and business critical knowledge, leaders and employees must see themselves as crucial to deal success, not as an afterthought. Traditional retention approaches are no longer enough to satisfy curiosity about what other companies might offer. The way in which leaders manage the change, the way people are treated and the approach to environmental and social factors are all now just as important as the money in the bank. Key talent will always be employable, regardless of market conditions.”
Alice Altemaire, CEO, Mobilize Financial Services
We do a lot of upskilling, and we have many people in the tech team now that have come from other roles. That's working very well.Read Alice's interview
How CEOs are accessing vital skills
67%
of CEOs are recruiting for key skills and capabilities
62%
are investing in retaining key staff
51%
are investing in reskilling/upskilling current workforce
24%
are partnering with companies who can provide essential skills, capabilities and intellectual property
16%
plan to acquire companies who can provide essential skills, capabilities and intellectual property
Prasun Shah, CTO, Workforce, PwC UK, says: “Upskilling the incumbent workforce to bridge skills gaps has been an increasing area of focus in recent years. But one thing that’s caught everybody’s attention this year is going to make it all the more critical. GenAI has put the knowledge and experience of the workforce into the spotlight, making it a key mechanism to create and unlock sustainable competitive advantage. This is because a great many of its benefits relate to augmenting the work people do, and that means upskilling the people who have the domain expertise. Similarly, many of the risks surrounding GenAI can be mitigated by ensuring people with that domain expertise remain in control of the inputs and outputs of the technology.” (Read: Is the answer to the skills crisis staring businesses in the face?)
The rise of GenAI
The rapid emergence of GenAI has created a palpable excitement this year - as well as a degree of fear and uncertainty in some quarters. But from a standing start, where CEOs may have had little awareness of the technology this time last year, many are in a position where their organisations are embracing it.
Where CEOs are on their GenAI journey
53%
of UK CEOs expect GenAI to improve their own efficiency
42%
of UK CEOs have already adopted GenAI across their company
38%
have already changed their tech strategy to embrace GenAI
Joey Jegerajan, CTO Consulting, PwC UK and EMEA, says: “GenAI has exploded onto the CEO agenda. Its potential, from enhancing productivity to driving growth through the development of new products and services, means it has a major role to play in how CEOs can achieve their objectives. But creating long-term value will require a complete boardroom effort which CEOs must navigate. It demands serious investment in skills and culture, risk and governance, as well as cloud and data infrastructure. However, used well and used responsibly, this technology can help drive business model reinvention at a time when transformation is an urgent priority and other innovations have not kickstarted the growth CEOs want to see.” (Watch: Four essential steps to create value with GenAI)
The benefits CEOs expect from GenAI in the next 12 months
The speed at which GenAI has emerged and moved up the CEO agenda highlights how responsive organisations must now be to create competitive advantage. Nearly two thirds (64%) say they expect to reskill most of their workforce within the next three years to capitalise on GenAI and a similar number (66%) believe GenAI will increase competition in their industry within the same time frame.
But CEOs are also aware that for all its transformative potential, GenAI is not without its risks, from bias to so-called ‘hallucinations’ where entirely erroneous answers are provided. (Read: GenAI: Which industries and sectors have the greatest potential for value creation?)
Are CEOs alive to the risks of GenAI?
This comes at a time when CEOs are already sensitive to the wider risk of cyber threats to their increasingly tech-powered businesses. One in five CEOs (20%) say they feel highly or extremely exposed to significant financial losses resulting from cyber risks over the next 12 months.
Chris Oxborough, Responsible AI Leader, PwC UK, says: “There are risks with GenAI, as there are with any technology and given the pace of adoption we’re seeing with GenAI, all CEOs should be ensuring they and their teams are aware of those risks, so they can manage them. The key here is ensuring teams are alive to the risks and maintaining a ‘human in the loop’ approach, where judgement, ethics and domain expertise are applied to mitigate the threat of issues such as bias and hallucinations.”
Zahra Bahrololoumi, CEO, Salesforce UK and Ireland
We get the AI we deserve. AI will exacerbate and propagate poor data, bias, toxicity, lack of data control. If left unchecked and unguarded.Watch Zahra's interview
A confident outlook
While the need to transform is being felt as strongly as it was last year, the focus CEOs have on tackling it feels like a step change.
It is also creating greater confidence in the long-term outlook - 61% of UK CEOs say they are very confident or extremely confident about their prospects over the next three years - nearly a full 20% higher than the 12 month outlook they have expressed.
It is clear that with the right strategic approach, long-term value can be created from investments in skills, dedicated transformation teams and leadership, and the technology infrastructure powering transformation and tools such as GenAI. (Read: The rise of the Chief Transformation Officer)
One of the more intriguing questions for CEOs to explore in the coming year therefore will be just how much value.
Tina Marron-Partridge, Enterprise Transformation Partner, PwC UK, says: “CEOs have become accustomed to dealing with challenging uncertainty, but the rapid pace of technological change creates a more positive kind of uncertainty. CEOs know there is an important role for GenAI within their business and for advanced cloud and data technologies, but nobody can fully know yet exactly how the systems running truly transformative businesses will be configured, or exactly what the greatest upside potential will be. Those realities and outcomes are there to be defined by business leaders who act quickly, boldly and most strategically.”
CEO interviews: Exclusive insights from UK business leaders
Explore what leading UK CEOs have to say about their business plans and priorities.
Alice Altemaire
Mobilize Financial Services
Chris Hollowood
Syncona
Rachel Corp
ITN
Scott O’Neil
Merlin Entertainments
Katy Dowding
Skanska
Barry O'Dwyer
Royal London
Andrew Heath
Spectris
Pano Christou
Pret A Manger
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