Tech disruption forces CEOs to rethink leadership

Headline figures from KPMG’s Outlook 2017 survey of 1500 CEOs shows that 40% expect technology innovation to cause major disruption

More than half (52%) of CEOs want their businesses to be a disrupter, while two-thirds said they believe technology innovation is more of an opportunity than a threat, according to research by KPMG.

Bill Michael, chairman and senior partner elect at KPMG, said CEOs are struggling with the new risks their organisations face from social media, geopolitical change or cyber security.

“CEOs are struggling to adapt to this new environment. In conversations with them, ‘disruption’ is one word I hear again and again, whether that be seen as a threat or an opportunity. In reality it’s not binary: it’s both a threat from a cyber attack or a customer complaint going viral, and an opportunity from a new technology or partnership.”

Tudor Aw, UK head of technology sector at KPMG. added: “It is essential that UK companies remain quick to adopt and exploit the power of disruptive technologies – in products, marketing, manufacturing and operations."

KPMG observed a shift in the main focus of CEOs. While their modus operandi has traditionally been to deliver shareholder value, CEOs must now focus on multiple stakeholders.

“Today, there is a new imperative. A CEO must consider multiple stakeholders, each of whom has the power to significantly impact the performance of their business and its future prospects,” said Paul Martin, partner and head of retail KPMG in the UK.

The report highlighted the challenges CEOs say their organisations face relating to to regulatory compliance. KPMG also found geopolitical uncertainty was causing many CEOs to create back-up plans.

Mounting pressure facing in-house governance teams

As regulators deepen their oversight, some CEOs worry that red tape is being rolled out to reinstate broken trust in the government and the media, according to KPMG. Within organisations themselves, chief executives are frustrated at the mounting pressure facing their in-house governance teams – pressure that can come at the price of strategic opportunity.

The report highlighted Brexit and the general election results among the causes of geopolitical uncertainties UK organisations face. KPMG said geopolitics has firmly elbowed its way into the CEO’s agenda. Chief executives in the UK then have to deal with second-order effects: the weakening of the pound after the EU referendum and the subsequent rise in input costs to near-record rates, market volatility, regulatory uncertainty or the risk of losing their foreign-born workforce, said KPMG.

From a UK CEO perspective, this has meant 79% of the 150 UK CEOs questioned in the research said they now spend more time scenario-planning.

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“The challenges UK businesses face in less than two years are immense, complex and remain unknown in many respects,” said Karen Briggs, partner and head of Brexit at KPMG. “That’s why early impact assessments and scenario planning allows CEOs to stride towards the future with that bit more confidence.”

Among the more worrying statistics from the KPMG research is the fact that 42% of the CEOs surveyed said they had no plans to invest in new workforce training over the next three years, except to maintain current business needs. “Closing the book on new staff training while future growth is uncertain may seem sensible, but it risks jeopardising future opportunities,” said KPMG.

It also found 32% of UK CEOs are worried about emerging technology risks, making this a top-three concern after operational and reputational risk for the brand.

“Disruptive forces like Brexit, or advancements in technology, give companies a chance to rethink the workforce, and a way to approach developments such as the Apprenticeship Levy, in a new light,” said Briggs.

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