04/14/2016

The four ‘S’s: Insights for family business CEOs from the Next Gen survey

Author: Henrik Steinbrecher, Network Middle Market Leader Henrik St.

This is the second time we’ve run a survey looking exclusively at the next generation of family business leaders. Our first one in 2014 looked at the challenges they face in terms of gaps, specifically: a credibility gap, a communications gap, or a good old-fashioned generation gap. This time round, the focus is on expectations – the expectations they have of themselves, their business, and the wider world, and the expectations the current generation have of their successors.

So what does this Next Gen Survey add to that mix? Let’s look at the four ‘S’s: skills, scale, succession and stakeholders.

The first is skills. How do the current generation ensure their next gens get the right skills and experience? We firmly believe that next gens work somewhere else first, but what’s new in this survey is the number of next gens who are starting with a short stint at the family firm, following that with a longer spell at another business, and then finally returning to the family firm in a more senior role. Those first few months – often straight from university or as an internship – give the next gens a priceless insight into the reality of working ‘for the family’, and help both them and their parents decide what skills they will need and how best to gain them.

The second is scale, in its widest sense – from growing the business internationally, to developing new products and services, to expanding into completely different sectors, perhaps as a parallel venture. The next gens we spoke to have huge ambitions, and the energy to implement them. The challenge for them – and for their parents – is to forge a new future while respecting the past. In other words, protecting what previous generations have built, while making the changes the 21st-century business landscape will demand. In many cases this is about preserving the firm’s values and ethos, because these are what give the firm its heart and identity, rather than a particular product range or even a brand. The family firm – more than any other – is about the how even more than the what. Blog image_PwC_PC_France_Marseilles_MB_219

 The third ‘S’ is succession. This is a theme that’s as old as the concept of a family business, and is only getting more challenging as the pace of global change accelerates. As a firm, we’ve spent a lot of time on this – both with clients, helping them manage that transition, and in our Family Business Surveys, discussing how best to approach it, the pitfalls to avoid, and the advantages of long-term planning. The most important thing we’ve learned is that succession is a process and not an event: it needs to be prepared for carefully beforehand, and managed sensitively afterwards. Existing leaders will often want to continue their involvement in some way, and we’ve found that most next gens value their input. The key is to find a way to transition the business which gives parents the chance to contribute (but not control), and the new generation the freedom to succeed.

And finally, this year’s survey highlights the need for next gens to see their wider family as ‘stakeholders’, especially in long-established businesses with a lot of family members involved. This year’s PwC’s Annual Global CEO Survey looked in depth at external stakeholder expectations, and how all businesses – public and private – are addressing those expectations, and factoring them into their corporate strategies and everyday decision-making. CEOs of family firms face all those same issues, but they also have a crucial extra dimension to manage, which is the wider family. The fact that many more next gens are worried about the potential for family conflict this year, compared to 2014, proves what a hot-button issue this is. This is an area where the current generation’s experience and understanding of relationships could be vital – in fact the support they can give here could well be the single most important ‘S’ of all.

Read the full report here.

Henrik leads the Middle Market business for PwC globally, focusing on owner-led, private, family controlled and entrepreneurial companies. He’s particularly focused on family and owner led businesses, advising them on how to address strategic issues relating to the owner's agenda. 

 

04/07/2016

Breaking and bettering tradition: a fresh approach to reporting in a challenging era

Author: Richard G. Sexton, Vice Chairman, Global Assurance RS pic

CEOs want to communicate better. And they want to communicate very different things and more things too. It seems like a tall order when some sceptics say that companies aren’t yet getting their core communication – the financial report – right.

PwC’s 19th CEO Survey told us that CEOs are keen to talk more clearly to their stakeholders about their investment in and success with innovation (48%), their business strategy (54%), their impact on wider communities (44%) and their organisation’s purpose and value (59%).

This is what I would describe as ‘softer’ information. The desire to better communicate and measure this kind of information is indicative, I think, of leaders’ developing view that in a low trust environment, it is not only your investors that really matter. Of the CEOs interviewed, 76% believed that business success in the 21st Century will be defined by more than just financial profit. 

In practice this means that leaders are looking more closely at their company’s effect on, for example, their employees, the environment and levels of trust in a given market. Then they are using that data to inform their strategy. Chart

But this kind of ‘soft’ information is relatively new – we’ve had decades to formalise the way we talk about and understand financial information.   So how can CEOs build the same kind of confidence in non-financial information?  Especially when in this day and age, the majority of value in global corporates resides in intangible assets.

Do CEOs wait then? Do they wait for standard setters to come up with frameworks for measuring the things that are beginning to matter more? Or do they innovate themselves? Do they try to come up with their own approach to measuring and providing comfort over the information they think is important for running and explaining their business?

I strongly recommend that businesses begin to innovate, taking as their guide (but building on) some of the many developing frameworks today – from the Sustainability Accounting Standards Board, from the International Integrated Reporting Council and from the Global Reporting Initiative.

The businesses who explain the way that they create value now and aim to endure in the future are probably the same businesses who will find it simpler to raise capital, engage with their employees, invest accurately in technology and build trust with society. And the ability to build trust in what appears to be a period of sustained volatility will almost certainly separate the high performers from the also-rans. 

Richard Sexton is Vice Chairman; Global Assurance, an appointment he took up on 1 July 2013. In this role, he focuses on further building the PwC network’s global assurance practice with particular emphasis of quality and regulatory matters, trust in the profession, and broader financial markets. Read Richard's full biography.

04/06/2016

Strategy that works: Book addresses bridging the gap between company strategy and execution

Author: Dennis Nally, Chairman, PwC International Ltd. Dennis Nally

Many executives concede their need for a better coordinated strategy; their company’s capabilities don’t support the value they seek to create.  As they succinctly put it: “There is a lack of connection between where the enterprise aims to go and what it can accomplish.”

The PwC book “Strategy That Works” provides practical insights into companies that bridge the gap between company strategy and execution. The central argument: winning companies align around a few differentiating capabilities–and deliberately integrate them.  Authors Paul Leinwand, Cesare Mainardi and Art Kleiner call these companies coherent, referring to the alignment of three strategic elements:

  • A value proposition that distinguishes a company from other companies;
  • A system of distinctive capabilities that reinforce each other and enable the company to deliver on this value proposition; and
  • A chosen portfolio of products and services that all make use of those capabilities.

Useful chapters such as ‘Commit to an Identity,’ ‘Translate the Strategic into the Everyday,’ and be ‘Bold and Unafraid’ are all supported with examples from winning companies like CEMEX, Haier, IKEA and Natura. 

I found the chapter ‘Put Your Culture to Work’ to be of particular interest, as it relates to an initiative underway at many organizations, including PwC. As the authors’ state: “When strategy and execution are closely aligned, the culture provides the support that individuals within the enterprise need to find their own personal connection with the overall strategy.” Culture shouldn’t be taken for granted and it should be directly linked to your capabilities systems. At PwC that’s paramount, and exactly what we’re trying to do.

This is just one of instance of the many insights shared by leaders interviewed in ‘Strategy That Works.” While closing the strategy-to-execution gap can be challenging, they clearly and convincingly demonstrate how this translates into a significant asset for their organization. Strategy-that-works

‘Strategy that Works’ is a valuable tool for those looking to better understand and bridge the difficult strategy/execution gap. I believe this book is likely to be among the best business leadership and strategy publications of 2016. I invite you to explore more:

About the authors

Paul Leinwand is Global Managing Director, Capabilities-Driven Strategy and Growth, at PwC’s Strategy&. Cesare Mainardi is a leading thinker on business strategy who served as CEO of Strategy& until July 2015. Art Kleiner is the editor-in-chief of PwC’s award-winning management magazine Strategy+Business.

Dennis Nally leads the global network of PwC firms. He has extensive experience serving large multinational clients in a variety of industries, principally focusing on technology and life sciences. Dennis is also a frequent speaker and guest lecturer on issues affecting the professional services profession and the global capital markets. Read Dennis Nally's full biography.

03/29/2016

How technological advances empower social changes

Author: Ian McCaig, CEO of First Utility Ian McCaig (approved)

PwC’s 19th Annual Global CEO Survey confirms that a consistent theme of the survey has been the impact of technological change as a driver of business disruption and growth. I spoke with PwC about the benefits I think technology is having on society.

With the pace of technology change having such an immediate impact on the energy industry, it’s understandable that we focus on what we need to do today, and push considerations about tomorrow’s world a little further down the agenda. But as an industry, I think it’s very important to keep longer-term developments in mind. And that involves thinking about more than just technological advances. We need to consider wider social trends and changes that will influence how, by whom and where new kinds of energy products and services will be needed. For example, what might we be able to develop for people who own electric vehicles in future?  We need to start building a clearer picture today of what those needs might look like to make sure that we plan for the future effectively. That’s because the tipping point for much wider adoption may come sooner than we think – and as an industry we need to be ready for it so we can help our customers make the most of all the new possibilities electric vehicles promise.

We also need to think about the underlying social and demographic trends that are reshaping our populations and economies, the new requirements they’ll create and the type of things that we might be able to do in future to address them.  For example, in many developed economies an ageing population is expanding fast and living longer.  How could we use the technologies around connected homes to meet the needs of those people and those who care about them? That could cover anything from intelligent appliances that advise on their efficient use to alarms that alert us when the temperature in a house drops below comfortable or safe levels.  Or how about connected appliances that let us know that someone who’s living alone and may be growing more vulnerable hasn’t used their cooker, opened their fridge door or used their washing machine for days on end? Impact of technology

By thinking about these technologies from a different, socially-aware, perspective we can find new ways to really help secure and look after people. At the same time we can empower them to live independent and dignified lives for as long as possible.

But it’s only by tapping into these broader social changes, and looking at what’s actually happening around us, that we can identify what people care about and how can we then build the technology that will enable progress.  We hear, for example, a lot about the Internet of Things (IoT). Most of those discussions focus on how intelligent and smart the technology is.  But what is less prominent is a consideration of how we can connect all these devices and appliances in configurations that will really benefit people.  But I think, in the energy industry, we have a responsibility and real incentives to think a little further out.  So that means considering what we might be able to achieve with the technology developments people are talking about today. We need to be thinking about the very real and important applications that we’ll be capable of delivering in five, eight, ten, fifteen years from now, taking energy supply as our starting point for an extremely exciting – and valuable – journey ahead.

03/10/2016

Adapting to a brave new world: what PwC’s Annual Global CEO Survey tells us about the private company sector

Author: Henrik Steinbrecher, Network Middle Market Leader Henrik St.

PwC’s  Annual Global CEO Survey is one of our most important pieces of thought leadership, providing a barometer of how some of the world’s most important executives are reacting to trends in the global economy, from the issues that worry them, to the opportunities that excite them. For a few years now, they’ve been telling us how the world is changing – how the global megatrends are affecting their sector, and how they’re having to adapt their own business to this brave new world. As part of this, the 2015 survey looked in particular detail at stakeholder perceptions: what different audience groups expect from business now, and what companies are doing to respond to these new demands, and the new channels they’re using to do that.

60% of the 1,400 survey respondents this year were privately owned, in one form or another, so it’s a sizeable and influential group, covering some of the world’s largest and most successful businesses.

So what did private companies tell us, and how did that differ from the CEOs of publicly listed firms? The first thing that struck me and my team was how similar the private and public answers were, and this reflected a broad consensus across most types of business, whether looked at by sector, by ownership, or by size. CEOs across the world are clearly facing similar risks and challenges, and can see many of the same opportunities.  From internal issues like being more innovative and attracting talent, to all those wider external trends, like climate change, geopolitical shifts, and the digital revolution. Whether risk or opportunity, these challenges demand agile new approaches, and different ways of thinking and working.

There are some differences, too, in what’s preoccupying public and private companies, and even though some of these were quite subtle, they do provide an interesting insight into the way the ownership structure can affect corporate strategy and objectives. Private companies, for example, often have a slightly different set of priorities when it comes to funding, and some can find it harder to access the capital they need to grow internationally and finance new technology. The latter, in particular, is no longer just a nice-to-have but an essential investment for the future. 30329_CEO_Priv_Co_Data_v1_GF0103-03 Customers and Clients

What’s also becoming clear, especially in the context of rising stakeholder expectations, is that private companies have their own special set of advantages. As the world gets bigger, trust is more important than ever before, and private and family-owned businesses have built their success on the strength of their relationships with partners, customers, employees, and communities. In other words, many are ahead of the game here, and need to capitalise on that. Private ownership offers some other important benefits, which could be exploited more fully in some cases, such as flexible decision-making, freedom from a short-term reporting cycle, strong values, and the sort of authenticity that both consumers and young talent find very attractive.

That’s what I find most exciting about this year’s survey results: the real story, I think, is that private companies are realising the value of their special business model, and using those deep-rooted old-style strengths as a platform for success in our brave new 21st century world.

 

Henrik leads the Middle Market business for PwC globally, focusing on owner-led, private, family controlled and entrepreneurial companies. He’s particularly focused on family and owner led businesses, advising them on how to address strategic issues relating to the owner's agenda. 

 

03/08/2016

International Women’s Day: promoting international career aspirations

Author: Dennis Nally, Chairman, PwC International Ltd. Dennis Nally

As part of International Women’s Day, PwC is excited to launch our Modern mobility: Moving women with purpose study focused on gender inclusive mobility programmes. At PwC, we believe supporting the international career aspirations of women is an important part of the solution to achieving gender equality.

Diverse teams deliver better decisions and more creative solutions. We also know that companies actively capitalising on underutilised talent demographics win in the marketplace. Where we tend to struggle is identifying effective interventions and accelerating the pace of change.

Over a decade ago, in looking to create a network-wide diversity strategy, we interviewed our most senior female leaders. Without exception they had one thing in common: a mobility experience.  In some instances that involved moving through a series of industry groups, sometimes it meant rotations in different business units; most often it was a significant geographical move or international assignment. All our senior female leaders cited these experiences as instrumental in helping them gain broader perspectives and advancing their careers. And I can tell you anecdotally that the same is true for most leaders in the PwC network.

Our recent female millennial research highlighted that female millennials are more highly-educated, career confident and ambitious than previous generations and are entering the workforce in larger numbers. Their demand for mobility has also never been higher. While 71% of female millennials want to work outside their home country during their career, women account for a meagre 20% of current international assignees. Our Modern mobility: Moving women with purpose study probes this disconnect and includes the combined insights of 134 global mobility executives and 3,937 professionals from over 40 countries.

The good news is that there are ways to overcome the barriers unearthed in this study – some can be tackled quickly, others will take time.  Let me share a few key findings.  

Mobility brand and strategy matter

To attract, hire and develop female talent, organisations must develop a talent brand that incorporates international experiences. Here at PwC, international exposure is a critical part of our employee value proposition. I invite you to have a look at PwC Germany’s international internship programme Stairway. It was built specifically for outstanding students who are open to new challenges in an international and intercultural working environment. It’s just one of the many ways we incorporate international mobility in our talent brand.

Right data analytics needed to explode stereotypes

Organisations don’t have a good enough understanding of their employees’ willingness and readiness to be internationally mobile. Equally, employees don’t feel international opportunities are transparent. To meet business needs, develop talent and become a world-class international employer, organisations need to have a better understanding of both needs and talent.

Incorrect assumptions, for example that women with children don’t want to go on assignments, create barriers to increased levels of female mobility. In fact, this research highlights that 41% of the female respondents who told us they want to undertake an international assignment are parents, compared with 40% of men.

By having the right data analytics in place – including who’s eager to move – companies can create more gender inclusive mobility. At PwC we use our data to tell us where we are and where we can do better. For example, we know that early opportunity for international exposure is highly valued by our millennial talent. So we are more focused on enabling those early opportunities. For the past six years, at least 44% of our long-term assignments below manager level have consistently been female, with over 1,317 female talent deploying to, and from, 95 countries.

Equal-opportunities-[V2]

Resolving diversity disconnects

While 60% of multinationals are employing mobility to develop their succession pipeline of future leaders, only 22% are actively trying to increase their levels of female mobility. Furthermore, only 22% of global mobility leaders say their mobility and diversity strategies are aligned. These findings highlight a number of critical diversity disconnects that must be resolved.

CEOs and their leadership teams must lead the effort to increase awareness – providing women with the critical experiences required to progress their career, including opportunities such as an international assignment. Global mobility, diversity and talent management professionals need to collaborate in support of international people strategies.

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At PwC, I sponsor a diversity mandate focused on embedding diversity and inclusion throughout our network. Ensuring alignment among our talent, mobility and diversity strategies is key to ‘embedding’. We also have a leadership framework, the PwC Professional, where global acumen is one of the five critical attributes. From Day One, people joining our firms understand the importance of a mindset that transcends geographical and cultural boundaries – whatever their grade level.

Some final words for business leaders reading this. On this International Women’s Day – and beyond – I encourage you to take action as businesses: Enhance mobility opportunities to leverage the full spectrum of your talent – female and male. And, as individuals, I invite you make a difference by supporting the HeForShe campaign.

Find out more about our international mobility research at www.pwc.com/movingwomenwithpurpose.

Dennis Nally leads the global network of PwC firms. He has extensive experience serving large multinational clients in a variety of industries, principally focusing on technology and life sciences. Dennis is also a frequent speaker and guest lecturer on issues affecting the professional services profession and the global capital markets. Read Dennis Nally's full biography.

 

03/03/2016

Technology, transparency and transformation

Author: Bharti Gupta Ramola, Markets Leader, PwC India Bharti ramola

Technology is reshaping many products and markets. Is it also changing the outcomes business leaders focus on and how they define success?

Technology is a major game changer today. PwC’s 19th Annual Global CEO Survey tells us that CEOs recognise the impact of evolving technologies and the benefits that can accompany their effective and strategic utilisation in terms of products and markets. When asked about the global trends most likely to transform wider stakeholder expectations of businesses in the next five years, 77% of global CEOs and 80% of CEOs in India cited technological advances in their top three.

Technology creates transparency…

But with better technology has come more transparency. The rise of the Internet has made information easily accessible. Simultaneously, social media has reduced the distance between a company and its diverse groups of stakeholders, opening up the field for direct and constant interaction.

Alongside that, reliance on data for growth is only increasing. Seventy-eight percent of the CEOs surveyed in India and 68% globally revealed that data and analytics is the connecting technology they think generates the greatest returns in terms of engaging with stakeholders.

Which connecting technologies do CEOs think generate the greatest return in terms of engagement with wider stakeholders?

Kunal Bahl, Co-Founder and CEO of Snapdeal, India comments: ''One of the advantages and the banes of our existence is the fact that we have access to so much data, data about usage pattern, data about consumer behaviour, data about shopping and transaction behaviour, spends behaviour. We have so much data. And while it's great because it enables us to make only data-backed decisions … we get very, very uneasy when we take decisions which are not data-backed.''

…and facilitates transformation

In this rapidly changing and connected world, an interesting question to focus on is whether greater transparency and scrutiny are also changing how business leaders define their goals. Personally, I was fascinated by the fact that over half of the CEOs surveyed are making significant changes to how they use technology to evaluate and cater to changing stakeholder expectations. Closer to home, fully two-thirds (66%) of Indian CEOs reported that they are making a significant change to the ways in which they deploy technology to deliver on wider stakeholder expectations. Technology, for them, has become a preferred facilitator for organisational transition.

So are companies today increasingly aligning themselves with not just customers but a wider group of stakeholders? Going by our survey results, organisations do appear to be redefining their purpose based on the expectations of society as a whole, the government and regulators, investors, employees, the media, supply chain partners, among others. Of the CEOs surveyed in India, 70% stated that their purpose centres on creating value for wider stakeholders, and 54% believed that doing so enables them to be profitable.

Bharti Gupta Ramola is the Markets Leader for PwC India and a member of the India Leadership Team. Prior to her current role, she was the Deals Leader for PwC India. Bharti has also led the Infrastructure, Government & Utilities & Energy Sector Advisory for PwC India and was a member of PwC’s Global Diversity and Inclusion Council. In her personal capacity, Bharti serves on the boards of BASIX and Srijan, two of India’s leading organisations promoting livelihood development. She has been Chair of the Board of PRADAN.

02/29/2016

Why can’t CEOs sleep at night? Cybercrime.

Author: Dennis Nally, Chairman, PwC International Ltd. Dennis Nally

Our 19th Annual Global CEO Survey, launched at the World Economic Forum in Davos, portrayed a gloomy outlook for business, with CEOs voicing concern about geopolitical uncertainty and slowing economic growth. Yet in speaking one-on-one with business leaders, it's the third key concern – cybercrime – they view as the most immediate threat to their business.

The reality in 2016 is that most economic crimes, to some extent, have gone digital. The paradox being, of course, that so have many business opportunities. New digital connections, tools and platforms, enable companies to interact with customers, suppliers and their people in real time – more quickly than ever before. Yet CEOs worry that each digital opportunity is vulnerable to a deceitful action that can severely limit – or even destroy – that potential.

To be frank, they should be. Our Global Economic Crime Survey released last week revealed that the incidence of reported cybercrime among our respondents has risen sharply this year, jumping from 4th to 2nd place among the most-reported types of economic crime. Note: the word ‘reported.’ While over a quarter of respondents said they had been affected by cybercrime, 18% told us they didn’t know if they had. And due to the stealthy nature of these crimes, many of the 56% who said they weren’t affected may well have been compromised without ever knowing it.

GlobalEconomicCrimeSurvey_CombinedSocialGraphic_2In another recently released PwC study, the Global State of Information Security Survey 2016, the number of 2015 corporate cybercrime incidents stands at 59 million – most likely a fraction of the true figure. Corporate cybercrime has seen double-digit growth over the last 5 years. Breaches originating from cloud-connected devices jumped by 152% in 2015 compared to a year earlier. With the continuing rise of the Internet of Things, we can expect the number of breaches to accelerate. And cybercrime losses can be heavy: 7% are greater than $1 million.

At PwC, we believe responsibility for addressing cyber threats begins at the top. Yet, our Global Economic Crime Survey reports that less than half of board members request information about their organisation’s cyber-preparedness. That may be part of the reason why only 37% of the surveyed organisations have a cyber incident response plan. And when an attack does occur, too often organisations seem to be leaving the first response to their IT departments, without adequate intervention or support from senior management.

Let me share two tips from our global cyber security team:

  1. Adopt a data-driven approach to cybercrime. This can shift cybersecurity away from perimeter-based defences and enable your organisation to put real-time information to use in ways that can help predict cybersecurity incidents.
  2.  Work with others. Many organisations tell us external collaboration allows them to share and receive more actionable information from industry peers and improved their threat awareness.

To conclude, business leaders need to treat cyber-readiness as an organisational and a leadership stress test. Better understanding and focusing on cybersecurity will help the business confidently leverage digital opportunities while substantially reducing – but never completely eliminating – the digital threats.

Dennis Nally leads the global network of PwC firms. He has extensive experience serving large multinational clients in a variety of industries, principally focusing on technology and life sciences. Dennis is also a frequent speaker and guest lecturer on issues affecting the professional services profession and the global capital markets. Read Dennis Nally's full biography.

 

02/17/2016

What successful business leaders need to do in the face of change

Author: Robert Swaak, Vice Chairman, Clients and Markets  Robert Swaak

I’m just back from Davos and have had a chance to reflect on what I heard out there. Time and again, the business leaders I met spoke about the complexity of the business environment facing their companies. Add to that increasing worries about slowing growth, China’s volatile stock markets and heightened geopolitical risk, and you’ve got a business landscape that’s tricky to read and even trickier to navigate.

Many of the clients we’re servicing across the globe are in the midst of reporting on last year and setting out their plans for 2016. In these complicated times, getting those plans right is a particularly tall order, if our recent CEO Survey findings are anything to go by.

The same, only different

Looking at the results by industry, I was intrigued by the differing approaches CEOs are taking, depending on the competitive environment of the sectors in which they’re operating. Sure, they’re all making changes to find growth in this complicated operating environment; but the focus of their energy differs quite a bit by sector.

Take the question we asked about the changes CEOs are making in response to changing stakeholder expectations. Looking at the data, it’s clear that no industry is immune to the need to make changes across a number of areas.

To what extent are CEOs making changes in the following areas in response to changing stakeholder expectations?

That said, if you dig a bit deeper into individual industries, there are some interesting differences in emphasis, for example:

  • CEOs at the helm of insurers and banks are most likely to be making change to how they define and manage risks in response to changing stakeholder expectations.
  • CEOs of pharmaceutical companies are making the most significant changes to how they develop ethical products and services and how they manage their brand and communications (along with CEOs in consumer products companies).
  • And, it’s not surprising that many companies CEOs are reporting that they are changing how they minimise social and environmental impact of their business operations, with CEOs in energy, power and utilities companies most active in this area.

Susan Lloyd-Hurwitz of Mirvac Group expresses the change imperative like this: “I think almost every part of Mirvac is changing and every business should be constantly evolving. If you are not changing, you are not keeping pace with what’s happening in the broader society and the expectations that people have of you. So, we’re changing in how we interact with our customers. We’re changing in how we use technology. We’re changing in how we use our own premises to drive our own business performance. We’re changing in how we train and develop our people. So there is almost constant change throughout the business to try and strive for excellence and a better result for our customer all the time. So, change is everywhere.”

Keep it simple, keep it focused

Of course, making change stick is not going to be easy. CEOs in most sectors cite the additional cost to doing business and unclear or inconsistent standards and regulations as the major barriers to getting this done.

I think it’s about keeping it simple and working out where to focus leadership time to deliver the transformation required to meet the changing expectations of customers and other stakeholders. Take a look at what CEOs from a variety of industry sectors are focusing on over the next 12 months in our CEO Survey industry snapshots on our website.

I’d welcome your view: where are you focusing your energy this year?

Robert Swaak is Vice Chairman, Clients and Markets. In this role he oversees PwC's global markets through regions and industries. Read more

02/11/2016

Why government and business really do need to work together

Author: Nick C Jones, Director of PwC’s Public Sector Research Centre Nick

As the snow settles after the launch of PwC’s 19th Annual Global CEO Survey in Davos, one of the key issues remains how government and businesses can work better together to deliver the outcomes that both they, and citizens, want and need. As Professor Klaus Schwab noted in an interview ahead of the opening of the annual WEF meeting: “the need for cooperation btw governments and non-public actors has never been as great as it is now." 

So why is it that tensions abound between companies, who believe they can be trusted to do the right thing, and governments that aren’t so sure?

The regulations that governments are trying to enforce are intended to be in the best interests of the public, in their roles as consumers or employees. But they can involve reforms, penalties or higher taxes for business that result in higher costs - including those that result when business doesn’t have enough clarity about how regulations should be interpreted and implemented. These costs, in turn, are likely to be passed onto customers in the form of higher prices.

This no doubt contributes to the near universal frustration of CEOs in PwC’s 19th Annual Global CEO Survey that over-regulation is a threat to their company’s growth, and why 42% cite unclear or inconsistent regulations as a barrier to responding to changing customer expectations.

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What’s more, increasingly divergent political and legal systems around the world make it harder for multinationals to comply with rules or standards in their countries of operation without falling foul of their home country’s laws.

But viewing government through a combative lens is unlikely to help companies in the long run. For one thing, government and regulators have a big impact on companies, with 69% of CEOs citing them as highly influential on business strategy. And, despite their complaints about government interference, many companies expect the state to provide considerable help, whether it’s improving workforce skills and education or the infrastructure needed by any modern economy.

As both business and government navigate changing public expectations, they’re going to need each more than they might think. In the end, businesses want to create the best value they can for customers, and doing that increasingly means creating the best value they can for society at large. These are the same goals that government shares – a win-win.

For business, understanding why regulation is there in the first place, rather than focusing only on interpretation and compliance can help ease the stand-off. Regulations are often first introduced in response to a market failure or to embed good business practice in legislation.

Recognising the spirit of what government is trying to achieve can help businesses pre-empt the need for regulation by establishing core principles and values to guide decision-making. It paves the way for active alignment with government goals and programmes in order to help shape them and improve their effectiveness. Such actions will also serve to rebuild trust with regulators.

On the other hand, more recognition is needed by government of the extent to which regulation can create additional burdens and costs which need to be weighed against societal benefits. Meanwhile, if business expects constant legislative change, a climate of uncertainty will threaten investment, national growth and competitiveness.

What’s really needed is smarter regulation that’s proportionate, accountable, consistent, transparent and targeted. Streamlining public sector processes through digitization - and involving business in the co-design of implementation - can also go a long way toward enabling this process and easing the compliance burden for companies.

Nick C Jones is the Global Director of PwC’s Public Sector Research Centre and has authored, and contributed to, reports on a wide range of public services issues. He sits on PwC’s Global Government and UK Government and Public Sector Leadership teams and is also a member of the Editorial Team for PwC’s Annual Global CEO Survey, commenting on the relationship between business and government.