KPMG’s 2020 CEO Outlook finds the CEOs of the world’s largest organizations contemplating a new reality amid the global COVID-19 crisis. Nordic CEOs’ embrace of purpose and values, coupled with trust in their countries’ growth prospects, positions Nordic CEOs on the right path to recovery from the pandemic. They “do their part” by accelerating the use of technology and staying alert about supply chain and cybersecurity risks, all while attempting to better prepare their companies for the very uncertain future.
This spring has brought us both challenges and new insights. A key objective for companies at this point is to focus on how to best meet the transforming needs in the market. At KPMG we are constantly developing our digital offering and we are noticing a clear demand for advisory services and support around digital and supply chain solutions to secure frictionless deliveries and value chains. The current challenge, across all industries and sectors, is to aim efforts and investments in the most value-adding areas, while maintaining cyber security.
Nordic CEOs sharing the pain
For Nordic CEOs, the outbreak of COVID-19 has clearly intensified their focus on purpose. Purpose helps CEOs understand what needs to be done to meet the needs of stakeholders such as employees and communities. As the pandemic struck, Nordic CEOs put purpose at the center of their response, much more than CEOs globally did. For example, almost all Nordic CEOs (96%) say that purpose provides a clear framework for making quick and effective COVID-19 related decisions, compared to 77% of CEOs globally.
This increasingly personal and emotional connection to purpose during the pandemic reflects the fact that CEOs face the same health and family challenges as their people and communities when it comes to COVID-19. Although fewer Nordic CEOs have been personally affected by the pandemic than their global counterparts (29% vs 39%), their reaction have been stronger and more empathetic. Nordic CEOs were more likely (85% vs 56%) to indicate they had changed their strategic response to the pandemic as a result of their personal experience. Nordic CEOs are also more willing to share the financial pain as well, as over 70% have made changes to their own compensation as a result of the crisis. The biggest group of Nordic CEOs, 41%, are planning to forfeit their 2020 bonuses compared to 18% of CEOs globally and only 6% in the U.S.
Majority planning to downsize office space
As the focus on purpose, the future of work too is strongly transformed by the pandemic. A vast majority of Nordic CEOs (92%) are planning to downsize their office space, a decision that will ultimately impact how many people will continue to work remotely. Nordic CEOs are also committed to building on their current use of digital collaboration and communication tools; a majority see many positive aspects of the digitally driven remote work environment.
How the pandemic is impacting the working world (Nordic CEOs):
Confidence has shifted
In addition to near-term crisis response, CEOs are looking to the future to position their businesses for long-term growth and prosperity. Nordic CEOs had very high levels of confidence when it came to economic growth at the beginning of the year. In early 2020, their levels of confidence were higher on all counts of growth prospects than CEOs globally. Three-fourths or more expressed confidence in the growth of their company, industry, country and the global economy.
Since COVID-19 however, Nordic CEOs’ perspective has diverged from global CEOs. Nordic CEOs now express increased levels of confidence in the growth prospects of their countries but have less confidence in the growth of other areas, like the global economy.
CEOs with increased confidence in the following over the next 3 years, compared to the beginning of the year. Nordic CEOs vs. CEOs globally:
Source: KPMG 2020 Nordic CEO Outlook Special Edition, KPMG International.
Rapid acceleration in the Nordics
A key growth lever is digital acceleration and the pandemic has increased our reliance on technology. With commerce increasingly taking place online and employees working remotely, companies have been accelerating their digital transformation efforts and implementing digital technologies for employees, partners and customers alike. The speed of acceleration has been remarkably faster in the Nordic countries where many more CEOs believe they are now years ahead of where they expected to be (compared to CEOs globally who mostly believe they’re only months ahead). The challenge now is to focus efforts and investment on the areas that generate most value and to maintain cyber security resilience.
The digitization of operations and the creation of a next-generation operating model
The creation of new digital business models and revenue streams
The creation of a seamless digital customer experience
Supply chain – top risk to growth
Nordic CEOs’ perceptions of the top risks to their organizations’ growth over the next three years changed dramatically during the pandemic. Their biggest concern revolves around their supply chains being able to weather future world disasters. Supply chain risk is now the top perceived risk (21%), while at the beginning of the year, only 2% of Nordic CEOs were concerned about it.
Fifty-four percent of Nordic CEOs (compared to 67% globally) say they have had to rethink their global supply chain given the disruptive impact of the pandemic. While CEOs globally (32%) think more about meeting changing customer needs, the biggest group of Nordic CEOs (23%) are rethinking their supply chains to become more robust in the event of a natural disaster.
Results in this report are based on two surveys of CEOs conducted in 2020 about the challenges and opportunities facing their businesses in light of the COVID-19 pandemic.
One survey, conducted in July, surveyed 315 CEOs globally from major markets (including the United States, Australia, the United Kingdom, France, Canada, China, Japan and Italy) as well as 24 CEOs from Nordic countries (split evenly across Denmark, Finland, Norway and Sweden).
The other survey, conducted in January and February, surveyed 1,251 CEOs globally (from the same major markets above with the addition of India, Germany and Spain) plus an additional 100 responses from the Nordic countries about their outlook for the next few years.
In both surveys, all CEOs represented companies with annual revenues of at least $500 million and came from major industries, including retail, financial services, life sciences, energy, technology and manufacturing.