05/25/2016

Can your data champion convince your CEO?

Author: Dan DiFilippo, Global & US Data and Analytics Leader Dan_DiFilippo

As CEOs work to anticipate customer needs amid a torrent of data, they value analytics more than ever. According to PwC’s 19th CEO Survey, when CEOs were asked which connecting technologies deliver the greatest value on stakeholder engagement, they chose analytics more often than other connecting technologies including relationship management (CRM) systems, social listening, and online collaboration tools.

This growing reliance on analytics puts the chief data owner – whether it is the Chief Data Officer, the Chief Analytics Officer, or another person, in a powerful position. It’s also a difficult one. CEOs are willing to listen. But, the chief data owner needs to do more than talk. They need to show and tell data stories in a coherent and compelling way.

Sensors, artificial intelligence (AI) and predictive analytics now empower chief data owners to extract insights that can alter business outcomes in extraordinary ways. But translating insight into action often requires buy-in from the CEO.  And while CEOs value analytics, they still rely on their gut. Convincing them to take action on insights that may be counter-intuitive is tough.

The new breed of data champion CEO's top technologies for customer engagement- Dan DiFilippo

Successful businesses are nurturing a new breed of data champion who is a master translator of data. This requires skills that go well beyond technology alone. Business acumen, superior communication skills, knowledge of tools and technologies, and the ability to gain the trust of the business are critical. In the analytics realm, we need a shift similar to the CIO’s transformation from an IT-centric function into an orchestrator of business services. CIOs needed to turn their attention away from plumbing and wires toward empowering the business with technology to drive competitive advantage. Today’s data champions need to focus less on columns and rows, and more on bringing complex insights to life for busy CEOs.

Many of our clients are gaining a foothold in nurturing new data champions.  Here are three characteristics that define the role:   

  • Focus on the problem, not the data: Today’s CEOs are under pressure to solve complex problems and exploit opportunities before their competitors do. They care little about data for data’s sake. Today’s data champions need to keep the business objective in mind or risk going down a data rabbit-hole. From the outset, data champions should ask “What do we want to achieve?” and “What data do we have to help us get there?”

 One of our commercial airline clients wanted to reduce non weather-related downtime. To achieve this, they looked at data from sensors embedded into engines to help predict equipment failure. But the data from the sensors didn’t enable the predictive capability that they expected. In light of their business objective, the airline augmented the sensor data with data from manual logs maintained by mechanics and pilots. The combination of unstructured data from the aircraft combined with the unstructured data from the logs enabled the airline to gain a better view into performance and reduce down-time.    

  • Take an outside-in view: Gone are the days when CEOs can rely solely on information within the walls of the enterprise. Data owners also need to look outside the business for new data sources and insights. We see digital innovation emerging from unconventional places like incubators, university labs, and open source projects. Don’t be afraid to forge new relationships with non-traditional players. This way, the CEO gets the big picture as well as a steady stream of innovative insights.
  • Ditch the spreadsheet: Data owners who walk into the CEO’s office with a 40-page spreadsheet probably won’t be back for a second meeting. New visualization tools, predictive analytics, and AI can bring data to life in ways unimaginable only a couple of years ago. Data champions need to understand new tools and be prepared to illustrate key insights in a compelling way. Be ready to stand by your data and insights, particularly if they go against the CEO’s gut. Too often, major insights are discounted before they are understood. I am still disappointed that 52 percent of CEOs say they have discounted data that they didn’t understand, according to PwC’s Global Data and Analytics Survey: Big Decisions™®. Even when delivered effectively, CEOs may still fall back on their gut, but they’ll do so from an informed position.

As data is now at the center of everything we do, CEOs will continue to place greater emphasis on analytics. I am struck by the fact that the other connecting technologies in our CEO Survey, like social media, CRM, and online collaboration tools are either data-driven or have data at their core. To take full advantage of all that data and analytics can offer requires a mindset shift and a new breed of data champion. I’d like to hear what steps you are taking to ensure your data champions are prepared for the journey ahead.  

 Dan DiFilippo is PwC's Global Data and Analytics Leader and the Senior Relationship Partner for a Fortune 40 client. Dan has responsibility for delivering PwC's data and analytics talent and capabilities, applications, products, and services for our clients across all of PwC businesses. Read more

 

05/20/2016

If all Chinese were to switch to electric vehicles...

Author: Jan Willem Velthuijsen, Chief Economist, PwC Netherlands  Jan Willem

Suppose that the Chinese government decides today to install solar panels throughout the Gobi desert and to allow only electric transport in the cities from now on. In addition to addressing the smog problem, they would also be dealing with the demand for energy. This decision would make a difference of two million barrels of oil production a day and would therefore have an even greater impact on the global economy.

It all sounds a bit like the man in the street thinking out loud, but oil companies might do well to consider the consequences of a shift in economic power toward Asia, the only continent where car use is increasing.

These are challenging times in any event for the oil and gas industry. Falling oil prices and excess supply are resulting in plummeting profits for major companies, which are now opting mainly for short-term solutions. They have announced mass redundancies and have already postponed projects worth more than USD 300 billion. Those facts appear in the PwC publication ‘New energy futures’ about the future of the energy sector. 

That publication makes clear that the energy transition is gathering pace and that companies must not focus exclusively on low oil prices. Megatrends are transforming the oil and gas industry at unprecedented speed. This makes finding the way ahead increasingly difficult. Everyone in the industry knows what will happen on the energy market in the next five years. And everyone knows that thanks to new technologies, alternative energy sources such as solar and wind power will be used far more in fifteen years’ time. The period at issue is the ten years in between, which is precisely the period for which major companies must now draw up their investment plans.

But just try doing that given the current turbulence on the markets and the price fluctuations. And let’s not forget a government that is increasingly interfering with the energy supply and consumers who want to make their own choices. At PwC, we have mapped out that uncertainty along two paths, which has yielded the four scenarios presented schematically below.

CEO_Insights-02_Jan Willem

If I have to make a prediction, I would say that energy users will increasingly determine demand and that demand will mainly be green. Under pressure from society, both individuals and retail companies will wish to reduce their environmental impact. They will increasingly abandon the use of fossil fuels, so the demand for such will therefore be reduced.

The result will be that more expensive oil resources will no longer be needed. Countries that can continue to supply cheap oil – Iran, Iraq and Saudi Arabia – will be the winners and will keep going in the short term. Countries like Canada and Brazil, where oil extraction is far more expensive, will face a tougher future.

That transition will be very gradual rather than sudden. According to current expectations, renewable energy sources and nuclear energy will expand fastest up to 2040 (representing 6.7 and 2.3 percent of the compound annual growth, respectively), but the demand for fossil fuels will still be 75% of the total (as opposed to 80% now). Up until then, gas will increasingly be a transitional fuel.

Depending on the role played by governments, this transformation may be more rapid. If the agreements made by government leaders in December at the climate summit in Paris are actually implemented, the growth of renewable energy sources will accelerate. In that case, I expect more rapid advances in disruptive technologies, particularly as regards traffic and transport.

And if a government decides to allow only electric vehicles in major cities in the future, the demand for oil may fall very quickly.

Jan Willem Velthuijsen is managing partner of PwC Strategy & Economics in Amsterdam since 1999 – specialised in macroeconomics, finance, strategy & risk, market and demand analysis, competition & regulation economics, econometrics, modelling and complex valuations. In 2013 he became Chief Economist of PwC Europe. In that function he is responsible for PwC’s thought leadership and research. Beside his work at PwC je is professor of Economics at the Rijksuniversiteit Groningen and director of the international Executive Masters Finance & Control for the Energy Industry, running modules in Groningen, Doha, Houston, Moscow and Rio de Janeiro.

05/16/2016

Global Investor Survey 2016: CEOs and investors share goals but must communicate better

Author Richard Sexton, Vice Chairman, Global Assurance RS pic

Each year, PwC’s CEO Survey gives a unique glimpse into the minds of business leaders: their priorities, fears, opinions, and plans. But what about the investors who provide these CEOs with the capital to run their companies? Do they share similar views on the threats and opportunities on the horizon? And do their views on how companies create value align or clash with those of CEOs? In a companion to this year’s CEO Survey, we decided the best way to find out was to ask them.

What did we find?

The result, our 2016 Global Investor Survey, includes the responses of over 400 investment professionals from around the world. We asked them the same questions that we posed to CEOs in our 19th Annual CEO Survey, and they answered in the context of the companies they invest in or follow. I was struck by the differences of opinion our survey revealed.

Investors, for example, are paying more attention to issues that require businesses to operate in a more socially responsible way – CEOs may be surprised to see how much attention some investment professionals are paying to issues related to the environment and society, and certainly beyond financial profit. They want businesses to do the walking as well as the talking – and are checking up on this. The CEO Survey suggests that business leaders think the market will punish them if they incur additional short-term costs adopting new practices that take into account social responsibility issues. But the importance accorded to these issues by investors suggests that the market is more receptive than CEOs might think.

Barriers

Doing well by doing good?

Another of the biggest differences in opinion was the clarity with which company leaders and investors saw the purpose of business overall. CEOs were split in their views on whether companies exist to generate a financial profit, from which value flows to a range of stakeholders, or whether by meeting the needs of a range of stakeholders they would in turn create a profit. Investors on the other hand were clear. In their minds, the value created by a company (for example, income equality, a skilled workforce and more positive environmental impacts) flows from profit first. Since, in theory, investment professionals and CEOs have the same goals, this may be another area where clarity of communication (about the company’s activities and plans, as well as between the two parties) may be key.

Enhancing engagement

These differences and others (such as CEOs being far more confident about short-term company growth) suggest that, perhaps, CEOs aren’t communicating well enough about how they will continue to succeed in a difficult and changing environment.

The findings from this year’s survey will help in this regard - enhancing companies’ engagement with the investment community and helping them to understand what’s behind their investment goals. But communication is a two-way street: investors in turn must be willing to do their part to create a more open and productive dialogue with the companies they follow.

I want to thank all the business leaders and investment professionals who gave their time to complete our surveys and share their opinions with us – without your generosity our research would be far less robust.

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.

05/10/2016

Why government and business must tackle big social issues together

Author: Nigel Wilson, CEO, Legal and General N_Wilson_One_Day_RT

Looking at societies across the world, we’re seeing the ongoing homogenisation of customers, coupled with widening differences in how countries are responding to the post-global financial crisis world. That’s creating a lot of political unrest and changes in law and regulation – which are making it more difficult for companies to compete and succeed globally, despite a huge amount of unfulfilled latent demand from the increasingly homogenous consumer. 

Along with all the noise from politics, regulation and other factors, there’s still an excessive focus by politicians and business on the very short term. I think we have to turn that around and get people thinking for the longer term.

Why? Because this short-term focus has allowed the 1%, or the 0.1%, to do tremendously well through all the technological innovation and growth that we’ve seen.  But the lower two-thirds of society haven’t done so well – and that’s why, for instance, median wages in America haven’t really risen for the last 30 years.  That has to change going forward, and we need a different model to create a fairer society. Nigel_Wilson_Top 3 concerns for CEOs - economic, policy, social, env

To help make this happen, and enable people to develop more successful businesses, I think we need the political, regulatory and media intermediation to work better, so that businesses are actually seen to be trying to do the right things from a societal point of view. And one encouraging sign we’re seeing is a greater willingness among politicians – in both local and central government – to engage more closely with business. 

This is a big change. Business effectively ignored politics for 30 years, assuming that the right political solutions were being developed. But coming back to these issues, we’ve now found that the society that’s being created isn’t necessarily the one we’d all envisaged, and has a much larger degree of unfairness than we expected. 

So, what can we do to help address the big issue and create a fairer society? A number of things spring to mind: like improving long-term care for elderly people, and reducing friction costs within the financial services industry so people can have bigger pension pots going forward. I would like to see the regulators, the politicians, and ourselves having much more constructive collaboration around these big society issues, looking forward 10, 20, 30 years.

The underlying issue is that government and business are currently focusing on the short-term problems, not the longer-term ones and how to resolve them. In my view, we all need to work together to change this. And the time to start is now.

05/04/2016

All change: making the connection

Author: Malcolm Preston, Global Sustainability Leader Malcolm Preston

Our 19th CEO Survey gives us a snapshot into how CEOs are thinking about a multitude of issues, sustainability being just one. Every year, the context business operates within evolves and changes, demanding agility from CEOs as they adjust and adapt to stay in business and stay competitive.

It’s this wider business context  that interests me. A key theme for this year is the relationship between CEOs and their wider stakeholders (84% of CEOs say they are expected to address wider stakeholder needs) perhaps reflecting a shift in business models from shareholder centric to encompass a wider group of stakeholders. This is at a time when there is unprecedented inter-governmental agreement to tackle major world issues – the Global Goals ratified last year cover issues that have a significant impact on individuals, communities and the environment.

CEOs will no doubt be a driving force behind achieving these new Global Goals, whether it’s through complying with the new regulation that will follow or aligning their own business ambitions with the goals. This global commitment to longer term outcomes is a unique opportunity for CEOs to think about their decision making and strategy through a new lens - one that considers, as well as the usual financials, the value of their contribution to society and their impact on the Global Goals actually being achieved.

 

CEOs admit they are feeling the pressure to address wider stakeholder needs but, perhaps surprisingly, many view it as a profitable approach (52% of CEOs say creating value for wider stakeholders drives profitability). I believe this is where business is seen at its very best, when it brings scalable and profitable solutions to market that benefit society and business performance simultaneously – it’s a win:win situation.

I’m hopeful that this continues to be the direction of travel. If CEOs continue to listen to their customers (and why not, as 90% of CEOs say that their customers have a significant impact on their business strategy) and continue to recognise in growing numbers that their customers have increasing expectations of them (27% of CEOs say their customers seek relationships with organisations that address wider stakeholder needs, rising to 44% in five years’ time), then I am convinced it will be. In my mind, it’s clear that CEO’s see the bigger picture and are mindful of the need to understand and report on their impact - they recognise how interconnected their business is with society, the environment and government.

Malcolm Preston is Global Sustainability Leader for PwC, and leads a team of some 700 sustainability and climate change experts. Malcolm has a view on all aspects of sustainability from climate change to reporting, to supply chains to international development, and specialises in Total Impact Measurement & Management. Read more.

 

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.