Prosperity under adverse circumstances
The survey shows that the COVID-19 crisis has shaken managers' confidence in the growth of the world economy. Today, the majority of business leaders in Ukraine (78 percent ) and about one third of respondents around the world (32 percent ) say that they are less confident in the prospects for global growth in the next three years. Similarly, 79 percent of Ukrainian business leaders are less confident in the prospects of long-term growth in the national economy than at the beginning of the year.
However, both in Ukraine and around the world, business leaders show more confidence in the future of their own companies: just 34 percent of Ukrainian business leaders, and 17 percent around the world, say that they are less confident about the future of growth in their own business. Business leaders are undoubtedly more confident about the prosperity of their companies as they have more control and access to the levers of influence in this area. In Ukraine, 72 percent of respondents expect their organisation's profits to grow to some extent over the next three years.
Accelerating digital growth
Interestingly, business leaders are more confident in their own businesses‘ growth prospects over the coming 3 years. In part, this is because they have greater control over the levers that will determine this growth. One of the most critical levers they can control here, and a major growth driver, is digital acceleration. With commerce increasingly taking place online because of factors such as physical distancing, companies are having to rethink what customers want and how to deliver it. In Ukraine, over a third of respondents said that the pandemic had accelerated digital transformation with the best results achieved in the area of operational digitalisation (39 percent), and design of new digital business models and revenue flows (36 percent). Respondents acknowledged that progress had accelerated during the pandemic.
We have found that 36 percent of managers in Ukraine, and 75 percent of managers worldwide, believe that the pandemic has accelerated the creation of uninterrupted digital customer service. The dynamics affecting digital technologies in all areas.. Worldwide, progress has been even more intense: 80 percent of respondents report that the pandemic has accelerated digital transformation, the most successful of which has been the digitalisation of operations. 30% going so far as to say that this progress has sharply accelerated putting them years ahead of where they expected to be.
When we asked leaders in Ukraine to name the biggest problem they faced amidst increasing digital transformation, it turned out to be a "lack of capital to accelerate progress" — with 22 percent of Ukrainian leaders reporting this to be an issue (compared with only 7 percent of respondents from elsewhere in the world). According to leaders around the world, the biggest challenge is to focus efforts and investment in areas that will become promising in the future, while avoiding areas that may only be experiencing a short-term positive response to the pandemic. Therefore, the biggest challenge in accelerating digital transformation, according to 33 percent of company executives around the world, is the "lack of understanding of future operational processes." Companies need to understand whether COVID-19-related changes (such as changes in consumer behaviour) imply a continuing trend or if they are simply the result of a temporary pandemic effect. In Ukraine, 14 percent of managers acknowledged the "lack of understanding of future operational processes" as their main challenge.
According to the respondents of our survey, the biggest threat to business in Ukraine in 2020 is regulatory risk. Last year, managers considered talent risk a priority. This risk remains on their radar but has shifted to fourth place.
As business leaders plan their path to long-term growth, they recognise that there have been new challenges to contend with during lockdown. A potential second wave of COVID-19 in their key markets would likely deepen these concerns, with further adverse consequences in terms of retaining key employees, hiring talent, and keeping their workforces productive.
Since the beginning of the pandemic, talent risk around the world has risen in the rankings and is now recognised as the greatest threat to business; overtaking disruption to the supply chain, the threat of a return to territorialism, and environmental climate change risk. In terms of major strategic threats, supply chain risk ranks second around the world and fifth in Ukraine. Leaders agree that building resilient, flexible supply chains — ones that can withstand shocks and offer the agility to pivot to new opportunities — will be critical for organisations to drive growth and build a competitive advantage post-COVID. Leaders are aware that increasing territorialism — which now ranks third in terms of risk — could make the transfer of goods both more difficult and more costly.
Managing talent risk requires managers to focus on both their urgent needs and long-term perspectives. Business leaders around the world today are aware that human capital will be the key to both long-term growth and the development of an organisation capable of prospering in the new post-COVID reality.
A new digital generation of employees will be needed to meet the changing needs and behaviours of customers. As a result of increasingly automated production processes, advanced training and retraining will be crucial for continued employment and employee efficiency. People’s willingness to constantly learn and their ability to adapt will become increasingly important. An extremely important step will be the development of new curricula and their virtual presentation.
The pandemic and the transition to remote working have demonstrated the efficiency of virtual interaction between people. Managers will have to make complex personnel decisions and prioritise their investments in either technology or talent.
With the development of analytics, artificial intelligence, process automation, and the Internet of Things, the companies of the future will be completely different: simplified, digital, and with a completely different workforce. There will be fewer employees but they will have new skills needed for this new working environment.
We found that today’s business leaders are taking bold and ambitious steps towards digital transformation. When we asked business leaders around the world which area they invest in more — technology or talent — 67 percent said they were investing more in new technologies, while only 33 percent said they were investing more in the further development of staff skills and capabilities. In Ukraine, the distribution of this investment differs: 59 percent of business leaders surveyed said that they prefer to invest in the development of human capital rather than in the acquisition of new technologies.