Dispatch from Davos: Volatility

Corporate leaders in Davos see the same threats and share the same concerns about economic growth that PwC found in our just-released 19th Annual Global CEO Survey. Everything from China’s economic turbulence to domestic security concerns to regional wars is influencing their outlooks.  And they’re asking themselves, in a fragmented world that’s fragmenting further, how can they not only survive but thrive?

At a high level, CEOs are worried about volatility on many fronts.  They don’t expect global economic growth to improve in the next 12 months. They think there are more threats to their business growth today than there were three years ago.  And, they see trends promising a less predictable and more competitive landscape: more nationalism over political unions; multiple rules of laws over a single, global rule of law; and momentum shifting toward regional trading blocs over a single set of rules for global trade.

To stand out in this environment, companies will need to be great at both strategy and execution. How can you do that?  Answers are in Strategy That Works, a book based on the study of 14 successful companies.  It outlines five acts of unconventional leadership that help companies bridge the gap between strategy and execution. Implementing these five acts will help prevent business leaders from falling into such common traps as the growth treadmill (chasing market opportunities without the capability to win) or relying on reorganizations to drive change.

Another trap discussed in the research is cutting costs across the board and inevitably starving key capabilities.  The authors tell the story--through case studies--of how these companies invested in their key capabilities and created more capacity to support their value propositions.  Notably, 68% of CEOs told us they’re planning cost-reduction initiatives in the coming 12 months.  Will they focus too much on immediate demands or will they invest further in the capabilities supporting their companies’ core offerings?

I look forward to sharing more insights from my discussions with leaders in the days to come.