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Agility, resilience, climate change and customers are among the top issues on the minds of Australian CEOs, according to the findings from KPMG’s 2019 Global CEO Outlook. They’re confident about local economic prospects, but less so about the global economy, and have digital transformation in their sights.

Australian CEOs confident about the future

Australian CEOs are more upbeat in their outlook than their overseas counterparts, with more than half (58 percent) ‘very confident’ about their company’s prospects over the next 3 years, according to KPMG’s 2019 Global CEO Outlook. This is a significant rise from 22 percent in the 2018 survey.

Their confidence extended to prospects for the country as a whole, with 44 percent ‘very confident’ about growth prospects for Australia, compared to 20 percent in 2018.

But Australian CEOs expressed much less confidence when considering the global economy compared to their overseas equivalents. Just 38 percent were either ‘very confident’ or ‘confident’ about growth prospects for the global economy over the next 3 years – compared to 63 percent of overseas CEOs.

Global CEO Outlook 2019: Australian perspective – Confidence infographic

Despite the current economic uncertainty...Australian CEOs are still upbeat about their prospects. We surveyed them earlier this year, and while there has been a slowing in the economy since then, there is still a measured confidence among Australian business leaders looking ahead over the next three years.

Gary Wingrove, CEO, KPMG Australia

Agility

A large majority (80 percent) of Australian CEOs agreed with the statement ‘acting with agility is the new currency of business – if we’re too slow we will be bankrupt’; and two thirds agreed that ‘our growth relies on our ability to challenge and disrupt any business norm’.

There was an increase from 2018 in the number of CEOs admitting that ‘we need to improve our innovation processes and execution’.

Australian CEOs seemed to be coming to terms with disruption. Nearly two-thirds said that rather than waiting to be disrupted by competitors, they were now disrupting their sector, compared to one third last year.

More Australian CEOs than global (44 percent to 31 percent) believed they would see significant return on their investments in digital transformation over the next 12 months. For artificial intelligence, 14 percent of Australian CEOs believed ROI would be within a year, and 24 percent within 3 years. For robotic process automation, just over half thought they would see payback within 3 years.

On the question of whether companies had a ‘safe to fail’ culture, 80 percent said they wanted their employees to feel free to innovate without worrying about negative consequences, yet only half that number actually felt their organisation had such a culture.

Resilience

More than two-thirds of Australian CEOs believed they were responsible for ensuring a seamless connection between the front, middle and back offices to improve customer and brand experience.

A similar majority said they were personally leading the technology strategy and were actively transforming their leadership team to enhance the company’s resilience.

On headcount, 86 percent of Australian CEOs believed their people numbers would increase over the next 3 years: most by less than 5 percent, but 28 percent of respondents thought by 6-10 percent. This was slightly lower overall than overseas CEOs.

Global CEO Outlook 2019: Australian perspective – Resilience infographic

Climate change

Environmental/climate change risk was seen by Australian CEOs as the number one threat to their organisation’s growth (28 percent), up from second place last year. It was also in top place for global CEOs (21 percent).

In terms of environmental issues, climate change risk is a particularly important topic for Australian CEOs. Shareholders want better disclosure on GHG emissions, and Australian regulators are also demanding clear risk management plans on climate change. This is now regarded as a foreseeable risk which has to be mitigated.

Adrian King
Global Chair of Sustainability, Climate Change &
ESG Services, KPMG

Emerging/disruptive technologies was the second biggest threat for Australian CEOs (top in 2018) and globally. In third place, on 16 percent, was operational risk, which doubled its response from last year.

Overseas CEOs nominated ‘a return to territorialism’ in third place, as Australian respondents had a year ago.

In terms of geo-political risk, Australian CEOs were more worried about the ongoing US/China trade war than Brexit – a reverse of overseas CEOs’ views.

Australian CEOs were also notably more wary of expanding into markets that form part of the Belt & Road Initiative than their global counterparts.

Global CEO Outlook 2019: Australian perspective – Climate change infographic

It is not surprising Australian CEOs are very concerned about the ongoing US-China trade tensions – our own research has shown the potential damage this could cause us. Global supply chains, multi-country production processes and the importance of services exports all add to the complexity of how a trade war could play out in practice today.

Dr. Brendan Rynne, Chief Economist, KPMG Australia

Customers

Two-thirds of Australian CEOs agreed that their companies could ‘significantly improve our understanding of our customers’. Half admitted that, to date, their investments to personalise the customer experience had not delivered the hoped-for growth benefits.

Two-thirds said that protecting customer data was one of their most important responsibilities, to allow the business to grow the customer base in future.

Technology

Sixty-eight percent of Australian CEOs agreed they are more confident about increasing the use of cloud technologies in their organisation. But 58 percent agreed that they have concerns about migrating business data to the cloud.

A solid 44 percent are piloting, and 48 percent are beginning implementation of the automation of their processes.

When it comes to cyber risk, 42 percent agreed that becoming a victim of a cyber-attack is now a case of when and not if, but 76 percent said they are ready for when it happens.

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Partner in Charge, Climate Change & Sustainability

KPMG Australia

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