Business priorities 2023

Leaders around the world are confronting with uncertainties. Over the past?few years, CEOs have found themselves repeatedly recalibrating in the wake of shock after shock. And as 2023 shapes up to be another year of uncertainty, stable ground may continue to seem elusive.

The degree of shock in the macroeconomic environment — including energy prices and the effect on?inflation, as well as?supply shocks — has taken most CEOs into a place they’ve never been before. Consumer buying behavior has also changed. During COVID-19, digital channels that had previously grown by a few percent increased by 100 or 200 percent. There are radical differences in how consumers are buying things like groceries, for example.

The significance of China’s reopening post-COVID-19 is also quite material for most companies. Multinationals employed 12 million people in China in 2020, and China accounts for 18 percent of total global GDP. Even looking at a more conservative growth forecast over the next ten years, China will add as much GDP as all of India’s 2021 GDP. So companies, and CEOs in particular, need to focus on their?mindset and approach to their business in China?and their collaboration with China.

The world is different. As a CEO right now, your job is all about prioritization:

1)???Ready for the future?

It is the ability to deal with adversity, to withstand shock, and to adapt fast. The notion of speed is very important, with the goals of winning in the market and of playing defense and offense, the flexibility to bring the supply chains.

These resilient companies also take action to preempt issues. They plan in a different way. Instead of basing plans on last year’s budget, they think about potential scenarios.

These resilient organizations put a lot of effort into the most value-driving roles and having the best talent in those roles, because with the best teams, good things happen even in tougher times.

2)???Courage as a competitive advantage?

As we engage with clients, we certainly see some people who are in a more defensive posture, meaning more focus on scenario planning, more focus on the balance sheet and on margin expansion, and more caution.

This is also a time for courage—what you feel inspired to change now. Whether it’s resource reallocation, whether it’s building new capabilities to compete in your marketplace successfully, what we would advocate is a lean-forward posture.

3)???Getting new-business building right

We need to get very close to the customers. It’s very important to understand the customer pain points that a new business will address.

Dream big. There are lots of opportunities out there for new-business building. If you don’t think a new business will be a unicorn, don’t do it.

4)???Taking on technology

When we try to separate top economic performers from less successful companies in terms of their returns to shareholders, we see that the top performers say that software they have created is at the center of differentiating themselves from the competition. About a third of them say they are monetizing that software, in some form, directly.

5)???The net-zero opportunity

CEOs should reframe the issue not as a cost but rather as an opportunity. Take an investor’s view as to where you can be an early mover in this domain. There are a lot of investments being made. There are many value pools that could create $12 trillion in opportunity by 2030—transport, electrification, micromobility, the infrastructure for electric or hydrogen vehicles, sustainable aviation, and so on. These can be positive ROI investment opportunities. This is not so much “Do I have to do one or the other?”; it’s more of an and. We can invest profitably in those areas, and we would recommend that companies get an early-mover advantage in those spaces.

6)???Talent in transformation

The first is all-around selection and advancement. On selection, we talk about moving from “pedigree to potential.” That means getting away from the classic characteristics used to assess people, like education or experience, and looking more at skill credentials—creating an interview or selection process that allows skill credentialing to be at the core. The companion to that is getting out of a mindset of months or years in roles as the basis for promotion and more into impact delivered, to accelerate the career path of somebody really making a big difference.

Second is the job itself: How does that need to change??Hybrid work?is here to stay, but how do you functionally make technologies work? How do you create a new set of cultures and norms? There’s a tremendous amount of experimentation here. Companies that lean forward into that experimentation are going to get the maximum global productivity.