Author: Henrik Steinbrecher, Network Middle Market Leader
Changing the way you’ve always done business is hard, but it doesn’t require superhuman powers.
This year’s private company view from the 18th Annual Global CEO Survey gives a clear message that sticking to business as usual will put private companies at a distinct disadvantage.
Nearly 60% of the 711 private company CEOs we spoke to told us they face more threats to revenue growth today than they did three years ago, yet a similar number see more growth opportunities than before.
Pain and gain is the reality of this high-stakes operating environment where competition is more intense, customer demands are rising and the speed of change is faster. Uncertainty is the only certainty and private company leaders have a greater appreciation that they must do more to thrive in this riskier, but potentially more rewarding world.
So, what’s the best way forward? And where to start?
Keeping your company relevant means having a greater innovation focus combined with robust resilience measures to weather shocks that could derail your plans. CEOs see a whole range of threats that are beyond their control, such as over-regulation and skills shortages. But, by being adaptable and rethinking risk, they can increase their competitive capabilities to better cope.
Playing it safe won’t cut it. Companies that pursue growth must take on risk. But, by making no changes to their risk approach, this could pose the greatest risk of all. Risk management should go hand-in-hand with innovation strategies and should be viewed as a core enabler of growth, if done well.
In our private company view, we show how private companies must embed risk assumptions in corporate growth strategies to build resilience. But the challenge is understanding the wide range of threats in front of a company to be able to respond and react appropriately. The risk landscape is, by nature, an unpredictable and hard-to-control beast.
This year, we found over half of private company CEOs think it’s likely organisations will increasingly compete in new sectors; with nearly a third saying their company entered a new industry during the past few years.
It seems innovation is winning through and many CEOs see disruption as an opportunity to be a pioneer. As one of our interviewees, Rajiv Bajaj of Bajaj Auto Limited said so well, “I don’t know any way of managing a disruption other than to be a creator of it.”
The winners will be those companies that are able to anticipate change and are willing to be disrupters themselves – either in their approach to market, in their products and services, operating models, talent plans or in their willingness to change strategy - or even sector - to chase new opportunities. But even with this willingness, will governance structures give private company leaders enough agility to disrupt business as usual for this new world order?
There’s a lot for private company leaders to think about. It’s a challenging time that’s equally as exciting. Despite feelings of uncertainty about the global economy, private company leaders feel confident about finding new ways to create value and grow. Anything but business as usual is how they’ll get there.
See our report and findings at a glance to find out more.
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.