Precipice or launch pad? Growth ambitions put CEOs on the verge of generational change

A window of opportunity

The survey finds 98% of UK CEOs expect to make material changes to their business or operating model this year. Their motivations are both proactive and reactive.

It is clear CEOs are feeling the pressure of intensifying challenges. Some 34% believe their business won't be economically viable within 10 years on its current course — up from 21% last year. But the pursuit of growth and new opportunity is also a clear motivation.

There appears to be a window of opportunity in which CEOs must instigate bold actions to capitalise upon opportunities and create a future-ready business.

In previous years, even as CEOs have faced significant challenges in the present day, they remained confident about their longer-term prospects, in the shape of their three-year outlook on revenue growth. However, since the pandemic, there has been a growing undertow dragging at the confidence of CEOs as the rate of change they experience has accelerated. Over the course of the past four cycles of the PwC CEO Survey, confidence in that three-year outlook has dropped from 71%, to 64%, to 61% and now sits at 57%.

This diminishing of longer-term confidence suggests CEOs are increasingly aware their future is more dependent than ever on taking bold actions today. 

Marco Amitrano, Senior Partner, PwC UK, says: “This could be a defining moment for CEOs, where their situation is either a precipice or a launch pad. They can stay rooted to the spot, battling this year’s challenges, seeking incremental gains but remaining on the precipice edge, or they can take a leap forward to a different future.”

As such, there is a need to commit to a bolder long-term vision, and take significant, tangible steps towards it. But given the accelerating challenges CEOs face today, the path to that long-term vision must be shaped with agility in mind, and the ability to anticipate and adapt for multiple scenarios.

Workforce as a catalyst for growth

Significant change will only succeed if there is a workforce primed and ready to make it work, with the right structure, culture and skills in place. CEOs must align their business roadmap for change with a plan to develop, acquire and motivate the talent needed.

Phillippa O’Connor, Chief People Officer, PwC UK, says: “The interdependencies between business strategy and workforce strategy are greater than ever. CEOs need a multi-faceted plan to deliver skills and capabilities when and where the business strategy requires them. That will mean a combination of build, borrow, buy and ‘bot’, and organisations must balance those components to create a coherent path to change.”

Alongside a multi-faceted approach to workforce strategy, CEOs should look to data to analyse their organisation, assess the skills and capabilities in place and understand how people can be used in more sophisticated, flexible ways, as and when needs change.

“Implementing such an approach requires a cultural shift for many organisations,” adds O’Connor.

The role of the CEO as leader and figurehead, articulating and embodying that culture, is more important than ever. More than half of CEOs (54%) are personally sponsoring transformation projects. But they cannot lead the charge alone, given the twin pressures of increased magnitude and accelerated timelines. Nearly a third (31%) have appointed a dedicated transformation leader within their business, while the same proportion have created a dedicated transformation team.

But the CEO will remain the ultimate arbiter on business-defining decisions. A focus on connecting short-term actions with longer-term outcomes also means CEOs are far more likely to judge decisions based on outcome rather than process (80%), and there remains room for intuition in the boardroom, with 29% saying they rely on intuition at least half of the time when making decisions.

A GenAI ‘reality check’ doesn’t dim appetite for technology

UK CEOs remain committed to technology investments and the role technology will play in creating change — 61% are investing in technologies such as Artificial Intelligence (AI) and Generative AI (GenAI), cloud, data and analytics to drive transformation.

However, to deliver truly transformative impact, CEOs will need to fully commit to a bold long-term vision. As with their workforce and wider planning, that vision may need to shift over time but CEOs should take aim with an ambitious vision and set about making their own future.

That will require CEOs backing their technology investments to succeed at speed and scale. A quarter of CEOs say they currently struggle to get emerging technology projects beyond proof of concept.

The greatest barrier to emerging technology adoption is perceived to be skills, followed by a lack of understanding of return on investment (ROI).

This highlights the extent to which CEOs must tackle workforce and technology transformation as a connected challenge — developing the skills but also the culture and behaviour needed for tech-powered success. It also underscores the need for an approach spanning multiple time horizons given the time lag between investing in a technology and seeing widespread adoption and return on investment.

One technology yet to deliver on mighty short-term expectations is GenAI. Last year, the 27th Annual UK CEO Survey found 45% of CEOs expected GenAI to increase both revenue and profitability within 12 months. However, this year the majority say they've seen little to no change to profitability (79%) or revenue (78%) resulting from their use of GenAI.

Where GenAI has had the biggest immediate impact is on efficiency, as people find tasks they can now do more quickly. But such examples will not deliver the scale of change many anticipate, and most still expect in the longer-term. Similarly, opportunities have been identified, across every industry, to create value with GenAI — but these are not yet creating topline growth as organisations are building the skills, culture and capabilities required.

Umang Paw, Chief Technology Officer, PwC UK, says: “CEOs need to keep building the AI muscle within their organisation. There is an incredible engine there to drive growth, but it will require a range of real-world enablers to generate value at scale. This is a business project, a change management project, not just a technology project.”

CEOs have now recalibrated their expectations, with 36% saying they expect GenAI to increase profitability this year.

“CEOs have to be clear which use cases can deliver a return on investment and communicate to stakeholders when and where that ROI will be seen,” adds Paw. “That might be through productivity and quality gains this year, delivering ROI on the bottom line. In parallel they could be working to a two-to-three year timeline to deliver ROI at the topline through new business models, products and services.”

GenAI is just the latest technology to chart a course through hype and disillusionment, and an accompanying need to recalibrate expectations. Just as CEOs need to assess how much change their workforce can bear within what timescales, so they must set expectations around GenAI based on the speed at which critical enablers such as skills, behaviour, processes, governance, and strategy can change.

A watershed moment for business and the economy

If CEOs can successfully take a transformative leap towards long-term growth and sustained resilience, the impact on the UK economy will be considerable.

When surveyed towards the end of 2024, UK CEOs expressed optimism about the UK economy, with 61% anticipating UK economic growth this year — up from 39% last year. However, there is no room for complacency, with warning signs across the economic landscape as 2025 gets under way.

The survey reveals the UK has already grown its standing on the world stage, according to global CEOs. It has risen from fourth place last year to second, behind only the US in terms of destinations where global CEOs plan to invest capital expenditure: 14% said the UK, compared to the US (30%), Germany (12%) and India (7%).

This provides a strong foundation as the new UK Government sets out its plans to drive economic growth, in the shape of its Industrial Strategy.

“The UK is in a relatively strong position and aligning the Government’s plans for growth with the conditions businesses need to deliver essential transformation will only strengthen that position,” says Carl Sizer, Chief Markets Officer, PwC UK. “The UK is already among the world-leaders in sectors such as financial services, healthcare, pharma, renewables, technology and media and entertainment. We have world-class universities and enviable social and political stability.”

“But across our CEO survey we are seeing this need for a bolder future vision,” adds Sizer. “It’s vital the private and public sectors collaborate to not only create a more favourable environment for business but to get behind opportunities to make the UK even more competitive on the world stage and even more attractive to global businesses and investors.”

A key component in creating that environment for businesses to thrive is regulation. The survey found regulatory change is the most common threat cited by CEOs (47%) who believe their business will not be viable within 10 years. 

“The right regulation is good for business, good for investor confidence and good for trust in our markets,” says Sizer. “But it’s essential it keeps pace with change, in all areas, from AI to sustainability, and doesn’t hamper responsible growth and innovation.” 

Another area where collaboration between the public and private sectors can make a material difference to long-term growth is developing a skills pipeline. A lack of skills was cited as a threat by 28% of CEOs who believe their business won’t be viable within 10 years.