To Succeed in 2014, Diversify or Die
The year ahead is all about diversifying, diversifying, diversifying as many of you prepare to hire and grow--or so says a new survey of U.S. CEOs.
For its annual global CEO survey, PricewaterhouseCoopers interviewed 1,300 CEOs from 68 countries, and dug deep into the responses of 162 companies with U.S. locations.
The report comes as the Dow Industrials and other indexes ricochet between gains and losses, and continued economic weakness in emerging markets casts a pall over the recovery in the U.S.
So what do company leaders expect in the year ahead? Revenues will grow, partnerships will be formed, and new countries will emerge as the revenue-generating hotspots around the globe for you and your business, according to the report. Headwinds include government regulation, the need to continue cutting costs, a slowdown in high-growth markets and a lack of qualified workers.
"CEOs are looking for, and finding, new sources of value in their own businesses and industries," Bob Moritz, U.S. chairman and senior partner at PwC said in the report.
More than one third of U.S. CEOs felt confident their companies would experience revenue growth in 2014, an increase of six percentage points compared to 2013. Forty percent said they expected the global economy to improve, an increase of 15 percentage points from the prior year. Sixty-two percent said they planned to hire in the year ahead, although nearly an equivalent amount said they'd continue with cost-cutting measures.
The picture painted by the report showed the waning importance of several emerging economies to U.S. businesses, and the growing influence of developed economies. Forty-two percent of U.S. businesses see China as important to overall growth prospects, compared to 69 percent in 2011. Similarly, 22 percent see Brazil as important, compared to 30 percent in 2011. Just 8 percent see India as important to overall growth prospects, compared to 31 percent in 2011.
By contrast, nearly a quarter see Germany and the United Kingdom as important to future prospects, up 8 percentage points and ten percentage points respectively from two years ago.
More than a third see new products and innovation as well as an increasing share in existing markets as critical to their growth, although that's a double-edged sword.
While nearly two thirds of U.S CEOs said they feared new, more technologically sophisticated entrants to the market, nearly a similar amount expressed concern about the speed of technological change.
According to the report:
"U.S. CEOs are coming to realize that no matter their industry, they must now think like technology companies. How can they--before competitors or new entrants--meet changing customer expectations and reimagine how to deliver a product or service in a new way, at a new price point, or in a new market?"
On the policy front, 92 percent of U.S. CEOs see the government response to fiscal issues like the deficit and the debt ceiling to be the most serious challenge going forward. Eighty-three percent said continued slow or negative growth in developing countries would affect them. And Eighty-one percent said over-regulation and increasing tax burdens were major concerns.
Looking ahead to the next five years, eighty-six percent of chief executives said they expected technology to transform their businesses, followed by 69 percent who predicted demographic shifts would factor heavily in potential growth, and nearly 60 percent who said a shift in global economic power would be critical. Resource scarcity, climate change and urbanization were important to more than a third of respondents.