Business leaders turn to technology for value creation as the race to reinvent heats up

Tuesday, 16 January 2024

Business leaders turn to technology for value creation and productivity as the race to reinvent heats up: PwC Australia CEO Survey

• Globally, three out of five CEOs surveyed believe Generative AI will significantly change the way their company creates, delivers and captures value in the next three years, although CEOs in Australia see cybersecurity and spread of misinformation as a greater risk than their overseas counterparts. 

• CEOs in Australia recognise the need for transformation, but many are not moving fast enough. 

• Most Australian CEOs surveyed (85%) believe if their company maintains the status quo, it will be economically viable for more than 10 years, compared to just 53% globally. 

• Australian companies are relying on existing products and services for most of their revenue, with only 26% of local CEOs attributing more than a fifth of sales to new products and services, compared to 42% globally and 49% in the Asia Pacific region. 

Australian business leaders are eyeing technology as a means to create value and increase productivity, yet PwC Australia’s 2024 CEO Survey reveals many are pursuing business model reinvention at a slower pace, and with less urgency, than their overseas counterparts. 

In the 27th annual edition of the landmark report, results show a majority (85%) of Australian CEOs surveyed believe their business would exist ‘as is’ in more than 10 years time, greatly differing from the global trend, where almost half of overseas CEOs (45%) do not believe their business will be viable in a decade without reinvention.

PwC Australia CEO Kevin Burrowes said now is the time for leaders to reinvent their business and seek new sources of value in response to disruptive forces within their industries and shifting consumer preferences. 

“What is clear from this year’s survey is that innovation is essential for companies to keep a competitive advantage and remain viable. Businesses in Australia need to move at pace when it comes to reinvention and new value creation,” Mr Burrowes said. 

“The CEOs surveyed in Australia are reliant on existing products and services, while their global counterparts are increasingly turning towards new revenue opportunities. However, there are actionable steps CEOs can take today to accelerate reinvention. This includes business model transformation, managing the risks and opportunities presented by climate change, investing in people, and embedding technology such as generative AI. 

“Now is the time for companies in Australia to speed up their business model reinvention,” he said. 

This reinvention imperative comes at a time where, globally, CEOs are more optimistic about growth prospects, with concerns about inflation and macroeconomic volatility falling. 

Around the world, the proportion of CEOs who believe economic growth will improve over the next 12-months has more than doubled year-on-year. The survey, which interviewed 4,702 CEOs across 105 countries and territories, found that 38% of CEOs are optimistic about global economic growth prospects over the next 12-months, up from 18% in 2023. Despite ongoing conflicts, the proportion of CEOs who felt their company is highly or extremely exposed to geopolitical conflict risk fell 7 percentage points (to 18%).

While the trajectory is positive, confidence is fragile as megatrends including technological disruption – exemplified by generative AI – and the climate transition converge. 

The AI opportunity 

CEOs overwhelmingly see generative AI as a catalyst for reinvention that will power efficiency, innovation, and transformational change. Nearly three-quarters of global CEOs (70%) believe it will significantly change the way their company creates, delivers, and captures value in the next three years.

In Australia, many companies rely on AI-enabled services and platforms to run their business, but far fewer are yet to apply generative AI at scale. Australian CEOs remain more wary of cybersecurity risk (78%) than the global trend (64%), and slightly more concerned about the spread of misinformation (63%) than CEOs globally (52%). 

However, Australian business leaders also see significant unrealised potential to achieve operational efficiencies from generative AI, including employees' time at work (67%) and revenue (41%).

PwC Australia’s Artificial Intelligence Leader, Tom Pagram, said generative AI has the potential to unlock a new wave of value from automation. 

“In the current economic environment, business leaders are primarily focused on using technology like generative AI to drive efficiency and cost-savings, however, there are also significant opportunities for companies to leverage generative AI for top-line growth by transforming business models, differentiating products and services, improving customer and employee experience, and for driving an uplift in quality, safety and risk management,” he said. 

CEOs report progress on climate priorities

As CEOs establish priorities, many are seeing the climate transition as an industry disruptor containing distinct opportunities in addition to risks. Nearly one-third of global CEOs expect climate change to shift the way they create, deliver, and capture value over the next three years - up from less than one-quarter who said as much regarding the past five years.

In Australia, the CEOs surveyed believe they are ahead of the curve when it comes to incorporating climate risk into their financial planning (78% compared to 45% globally) and improving energy efficiency (93% compared to 75% globally). However, to meet growing stakeholder expectations, companies will need to cooperate through ecosystems that transform whole value chains. 

Companies primed for an uptick in deal activity 

This year’s survey shows Australian CEOs are primed for deals, with one-third planning to make three or more acquisitions in the next three years. This comes after a quieter period in M&A activity, with the data revealing companies have instead been seeking to enhance capabilities through strategic partnerships (59%). 

“Despite a period of reduced M&A activity and some uncertainty ahead, the survey shows there is appetite by Australian business leaders to pursue deals and enhance their strategic partnerships,” Mr Burrowes said.  

-Ends-

Notes to Editors: 

About the 27th Annual PwC Global CEO Survey 

PwC surveyed 4,702 CEOs across 105 countries and territories from 2 October through 10 November 2023. The global and regional figures are weighted proportionally to country nominal GDP. The industry and country-level figures are based on unweighted data from the full sample of 4,702 CEOs. In Australia, we received 27 responses from leading CEOs representing the following sectors; financial services; private equity; energy, utilities and resources; retail and consumer; telecommunications, media and technology; health and education; industrial manufacturing and automotive.

The full findings can be accessed on pwc.com.au/ceosurvey, and the interviews can be found at strategy-business.com/inside-the-mind-of-the-ceo.