Old-style strengths, new-style challenges
This year, 60% of the participants in PwC’s 19th Annual Global CEO Survey were from private companies. In our private companies’ edition of the survey, Old-style strengths, new-style challenges, we look at the results from the private company sector through the three interrelated perspectives of progress, perceptions, and people.
The business environment has never been more complex, or more volatile, but private companies are very confident about their prospects. In fact, 81% of private company CEOs believe their company will grow its revenue during the coming year.
CEOS are more confidant about the long term growth prospects, with 91% seeing growth over the next three years. In the next twelve months, they believe this growth will come primarily from the US (37%), China (31%), and Germany (19%), the same three countries which dominated in our previous two surveys.
Private company CEOs want to continue to be as competitive and efficient as their publicly listed peers, and 65% intend to implement a cost-reduction initiative in the next year.
There are risks that need to be managed – and for private company CEOs the top three risks are over-regulation (where 43% are extremely concerned); exchange rate volatility (37%) and an increasing tax burden (32%).
Regarding business threats, private company CEOs are most concerned about the availability of skills (33%), bribery and corruption (27%), the pace of technological change (23%), and shifts in consumer spending and behaviour (22%).
Family-run companies, in particular, have a business model built on trust, personal relationships and strong values, and as stakeholder expectations change this could become a significant competitive advantage.
91% of private company CEOs say customers have a high or very high impact on corporate strategy and they’re making changes in the way they develop new ‘ethical’ products and services in response to changing stakeholder expectations - 74% are doing this to some extent and 27% are making significant changes.
Strategy is changing, as is the definition of ‘success’. The majority of private companies have made changes to their organisation’s purpose to address wider expectations - 66% have done this in the last three years, and 43% say they have always had a purpose that includes the broader impact they have on society.
75% of private company CEOs agree that business success in the 21st century will be redefined by more than financial profit, and this will need new definitions of success, and new approaches to reporting to measure and monitor these new criteria.
As a top priority, family businesses rank suppliers more highly than the average (58%, versus 48% overall), which probably reflects the fact that they often have personal relationships with their business partners, some of which can date back many years.
It’s more important than ever to find, develop, and retain the right people, with the right mix of skills and creativity and in our survey, 73% of private company CEOs were concerned to some degree about the availability of key skills.
In the new business landscape, innovation is no longer just a ‘nice to have’. Companies with a focus on innovation used to be the clear leaders in their field, but the pace of change is now so fast that every company will have to innovate or die, and sustainable competitive advantage will be about an organisation’s capacity for constant reinvention: not just its business model, but its products and services, and its route to market.
As more millennials enter the workforce they bring new skills with them – not just a familiarity with digital technology, but a more flexible approach to work. By 2020 they will make up around 50% of the global workforce. They see careers as portfolios of experiences rather than a ladder to be climbed in one organisation, and hence only 18% plan to stay in their current role for the long term.
Millennials want to be proud of their employer – to feel their company’s values match their own, and that they’re doing work that’s worthwhile. Hence private businesses - like public ones – agree that in five years’ time top talent will prefer to work for organisations which have values which are aligned to their own (66% versus 69%).
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