Two-thirds of global CEOs say that agility is the new currency of business and that if they don’t adapt, their business will become irrelevant.
Indonesian CEOs are confident of continued growth over the next three years despite the rising technological, environmental and economic challenges they face. But in their pursuit of growth, CEOs globally need to be agile or become irrelevant.
According to the fifth KPMG International Global CEO Outlook, 10 percent of Indonesian CEOs are confident that their topline revenue growth will be more than 10 percent over the next three years while 80 percent say it will be less than 2 percent, said Tohana Widjaja, Managing Partner of KPMG Indonesia.
“Indonesian CEOs are still confident of growth but only 10 percent are confident of achieving 10 percent growth in their topline revenue primarily because the majority of Indonesian CEOs are undertaking business transformation of their organizations,” added Tohana.
Globally, just over half of CEOs are confident they will succeed but are realistic, with 53 percent projecting cautious three-year growth of up to 2 percent (down from 55 percent in 2018). As with 2018, they are also maintaining a positive three-year growth outlook for the global economy, although this has slightly fallen from 67 percent to 62 percent over the last 12 months. This confidence is also shown by their commitment to hire, with 36 percent of CEOs projecting to add more than six percent to their workforce in the next three years.
But while CEOS are optimistic of the future and their own growth prospects, they are anxious about geopolitical volatility and cyber threats. CEOs are therefore increasingly focused on building the organizational resilience needed to master disruption and maintain momentum.
While 94 percent of CEOs are confident in their own business’ growth prospects, only 62 percent feel the same way about the global economy.
“A successful CEO now needs to be an agile CEO,” said Bill Thomas, Global Chairman, KPMG International. “Succeeding in a world of volatility and uncertainty requires different leadership skills, particularly in large, multi-national organizations. It’s no longer a question of simply defending your position and using scale to maintain competitive advantage. Today, CEOs need to be comfortable disrupting their business models by forging new strategic partnerships, considering alternate Merger & Acquisition (M&A) strategies and increasing the skills of their workforces.”
With technological innovation now driving growth, most Indonesian CEOs (70 percent vs 84 percent globally) believe a fail-fast culture is required in today’s marketplace, in which lessons from failures are learned quickly, yet only 40 percent (globally 56 percent) say that kind of culture is in place in their organization.
Indonesian CEOs are also more cautious in the use of cloud technology with only 30 percent more confident about the increasing use of cloud technologies in their organization, compared to 78 percent of their global peers. Interestingly 90 percent have concerns about migrating all their business data to the cloud.
“Embedding Artifical Intelligence (AI) and new technologies in a long established organization is a challenging task and CEOs will need to take the front seat in driving technology enablement in their organizations,” said Irwan Djaja, CEO of KPMG Siddharta Advisory.
Irwan added that this provides Indonesian organizations with a unique opportunity to upgrade their digital capabilities to take advantage of Indonesia’s fast growing digital economy.
Cyber continues to be high on the CEO agenda, despite falling from the second highest risk last year to fourth this year. In 2019, a larger group of CEOs (69 percent vs 55 percent in 2018) say a robust cyber security strategy is critical to driving trust with key stakeholders and most (71 percent) view information security as a key factor in their broader innovation strategy. Indonesian CEOs also shared this view.
For many CEOs, M&A presents the best opportunity to upgrade digital capabilities with pace. A proactive M&A strategy is on the agenda for 84 percent of CEOs who have a moderate or high M&A appetite for the next three years. Driving this appetite is the ability of M&A to transform a business model faster than organic growth.
When asked to prioritize between buying new technology or developing their workforce to improve their organization’s resilience, CEOs globally favored technology two to one (68 percent vs 32 percent) with Indonesian CEOs have higher percentage (80 percent vs 20 percent). “Half of Indonesian CEOs are of the view that it is challenging to find the talent they need”, explained Tohana.
Artificial intelligence (AI) is on the minds of CEOs, yet only 16 percent have implemented AI and automation programs. A further 31 percent are still at the pilot stage, while 53 percent admit to undertaking a limited AI implementation. Yet 65 percent of CEOs believe the inclusion of AI and automation will create more jobs than it eliminates.
Continues Bill, “All together, this year’s survey is telling us that we’ve entered a new era of leadership. Agility comes from balancing a CEO’s instinct with having confidence in what the data is telling you. Strategic decisions require data that has bias removed. It’s no longer enough to seek “big” data, instead CEOs must use technology to uncover quality data. Only through this will they create the organizational resilience to drive growth.”
To view additional information about the study please visit www.kpmg.com/CEOoutlook. You can also follow the conversation @KPMG on Twitter and Instagram using #CEOoutlook.
Head of Clients and Markets
Now in its fifth year, the KPMG CEO Outlook provides an in-depth three-year outlook from thousands of global executives on enterprise and economic growth. Each year the report builds upon answers from previous surveys to help ensure a consistent yearover-year view of the global economy. It also includes new and changing questions to capture CEOs’ outlook on trending topics in the market.
The 2019 survey covers 1,300 CEOs in 11 key markets (Australia, China, France, Germany, India, Italy, Japan, Netherlands, Spain, UK and US) and 11 key industry sectors (asset management, automotive, banking, consumer and retail, energy, infrastructure, insurance, life sciences, manufacturing, technology, and telecommunications). The survey has also covered the view of 10 Indonesian CEOs from various industries.
A third of the companies surveyed have more than US$10B in annual revenue, with no responses from companies under US$ 500M. The survey was conducted between 8 January and 20 February 2019.
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