With the pace of change for businesses continuing to accelerate as a result of new technologies, the latest CEO Outlook report from KPMG highlights just how much chief executives in Ireland and around the world are willing to take active leadership roles when it comes to the digital agenda.
Three quarters (76 per cent) of Irish chief executives are ready to personally lead their organisations through radical transformation of their operating model, according to the survey. "One of the biggest challenges for CEOs is how to carefully weigh what they stand to lose if they don't adopt new technologies, and what they stand to lose if they adopt new technologies ineffectively," says KPMG managing partner Shaun Murphy.
In the report, Murphy describes technology as “an enabler, a disruptor and, with the threat of cyberattacks, a very significant risk.”
The question is how to strike a balance between such risk and opportunity. Former Intel chief Andy Grove famously said "only the paranoid survive", a point echoed in the report which highlights chief executives' excitement about the potential of technology, but also touches on a condition described as being "appropriately nervous" about what the future holds.
Murphy concurs, noting that “technology has the potential to leave behind those who are not transforming fast enough or those who fail to understand the implications”.
Murphy highlights data as an example of the double-edged sword that technology can often become: “Using data to learn and understand more about customers and to improve the customer experience is a natural ambition and it should help generate loyalty and profitability.”
Companies have been gathering and analysing customer data like never before, and for 68 per cent of Irish chief executives, the investments they have made in trying to personalise the customer experience have delivered the growth benefits they were hoping for – creating a personalised experience based on customer data, generating the right insights from it, and acting on these insights.
The regulatory aspect of data is an area of intensive scrutiny and change. It is no surprise that for a majority of Irish chief executives (88 per cent), protecting customer data is hugely important. But customer data remains an asset which is prone to cybersecurity attacks and privacy concerns.
“For Irish CEOs, digital innovation can create significant value across business models, customer experience and operations,” says Murphy. He notes, however, that much greater connectivity brings increasing cyber vulnerability. “Almost a third of Irish CEOs surveyed say that a cyberattack is now a case of when, not if,” he adds.
The survey also highlights the importance of how data is used. When confronted with making a critical decision based on data-driven insights contrary to their own experience, more than one third of Irish chief executives (36 per cent) have overlooked data-driven insights and trusted their intuition on occasion over the past three years.
These decisions are never solely about the numbers but how you think about what the figures tell you, according to Murphy.
“CEOs look at data – often in great depth,” he adds, “but then they may challenge it to understand the data quality, they follow their instincts around risk taking and ultimately – and this is a real test of leadership – they apply their own judgment.”
The KPMG CEO Outlook also highlights how traditional ways of predicting growth are evolving with technology. Growth is a quantitative measure of revenue or profits but can also include newer metrics such as employee engagement or customer satisfaction. In this regard, Murphy notes the report's findings that social media is an increasingly valued "listening post" for chief executives and their teams.
Meanwhile, chief executives’ confidence in the macroeconomic environment is not translating into ambitious growth targets. The majority of chief executives in Ireland (72 per cent) anticipate top line growth of less than 2 per cent in the year ahead.
Hiring plans also reflect that sense of realism. Two thirds of Irish chief executives (68 per cent) predict headcount growth of less than 5 per cent over the next three years. In addition, many are cautious about going ahead with wholesale hiring of new skills into the enterprise with almost two thirds (64 per cent) saying they will not hire new skills until growth targets are met.
This caution reflects concerns about wider volatility, ranging from Brexit and potential for protectionism in other markets and the challenge of taking advantage of new technologies, according to Murphy. “Ireland is well placed in many respects, but we are not immune to world events and our CEO survey reflects that cautious optimism,” he says.
“CEOs recognise that most organisations still depend on traditional revenue streams,” he continues. “As they seek out new growth areas, they recognise that traditional sources will decline and need to be replaced. CEOs are playing an increasingly critical role in driving innovation and growth by challenging the status quo in their organisations to stimulate new thinking and promote innovation.”