- CEOs face the imperative to reinvent their businesses, with generative AI essential to ensure future viability and competitiveness.
- 45% of CEOs doubt their company’s future without change, highlighting the need to reinvent the business model and adopt AI.
- Generative AI is emerging as a crucial tool for CEOs to drive efficiency and innovation in response to global business challenges.
Change is the only constant; businesses are faced with the need to adapt and evolve like never before. With rapid technological advancements, changing market dynamics, and emerging global challenges, business strategy and leadership are being reshaped. CEOs now find themselves at a critical juncture, faced with the decision to reinvent their organizations for future success or risk obsolescence amid relentless innovation and competition.
The urgency of business reinvention
A year ago, PwC revealed that around 40% of global CEOs believed their businesses would not be viable in a decade if they continued on their current path. This stark revelation sparked much discussion among PwC partners and CEOs around the world, leading many to wonder whether their companies fell into the vulnerable 40% category or the safer 60%. These conversations often led to the realization that a transformative approach was essential for the organization to survive and thrive in the years to come.
Recent PwC projects Global CEO Survey indicates that most companies are starting to reinvent themselves. However, despite efforts to change business models, CEOs are increasingly concerned about the long-term survival of their organizations. Among the 4,702 CEOs who participated in the survey, many expressed optimism about global economic growth, but almost half still doubted their companies’ viability over the next decade without significant changes.
The desire for reinvention is becoming more and more urgent. CEOs predict greater challenges related to technology, climate change and other major global trends in the next three years than in the last five years. This trend is particularly pronounced among the 45% of CEOs who are less confident about their company’s future, with these leaders being more proactive in pursuing business model reinvention, particularly in smaller organizations.
CEOs report significant inefficiencies in routine business activities, such as meetings and emails, estimating that about 40% of time spent on these tasks is unproductive. This inefficiency amounts to a considerable loss of productivity, comparable to a self-imposed tax of approximately US$10 trillion. Generative AI, expected by 60% of CEOs to drive efficiencies, could play a crucial role in alleviating these burdens.
The 27th Annual Global CEO Survey by PwC shows that 97% of CEOs have made changes to the way their companies operate, and 76% of them have taken actions that have had a significant impact on their business model over the past five years. This response reflects growing concerns, with 45% of CEOs now doubting the viability of their company beyond the next decade, compared to 39% a year earlier.
The imperative for reinvention appears to be accelerating. (Source – PWC).
The survey also highlights an expected increase in pressures influencing business model changes over the next three years, including technological changes, evolving customer preferences and climate change. These factors, with the exception of supply chain instability, are expected to have a greater impact than in the previous five years.
The role of generative AI in various businesses
In addition to climate change, technological disruption, particularly generative AI, is a key focus of the survey. This technology is at a crucial moment, poised to transform business models and redefine work processes across industries. CEOs recognize both the rapid adoption and disruptive potential of generative AI.
Over the next year, about half of CEOs expect generative AI to increase stakeholder trust, and 60% anticipate improvements in product or service quality. Over the next three years, nearly 70% expect increased competition and changes to their business models due to generative AI and the need for new skills within their workforce. CEOs who have already widely implemented Generative AI The leaders of their companies are more optimistic about its transformative potential in the short and medium term.
Overall, CEOs predict various positive business impacts of generative AI in the near future, including increased revenue through improved product quality, customer trust, and efficiency gains. This aligns with the results of PwC’s 2023 Global Risk Survey, in which 60% of respondents view generative AI more as an opportunity than a risk.
Societal impact and meeting the challenges of AI
The societal impact of generative AI remains uncertain, with the potential loss of jobs in the short term being one of the efficiency benefits. A quarter of CEOs plan to reduce their workforce by at least 5% in 2024 using generative AI. However, companies are also exploring growth and revenue opportunities, which could lead to compensatory hiring in other areas.
For example, while 14% of tech CEOs plan workforce reductions thanks to generative AI, 56% plan hiring in 2024, a rate significantly higher than the global average. Overall, 39% of CEOs expect their company’s headcount to grow by at least 5% over the next 12 months, highlighting the dynamic nature of employment trends influenced by AI.
This situation highlights the importance for CEOs to involve their employees in the transition to generative AI. Emphasizing transparency, focused strategies, and trust in AI-related projects can help employees adapt and innovate with technology, despite concerns about job security. CEOs must manage the balance between short-term job losses and the long-term job creation potential of AI.
As generative AI continues to gain momentum, experts in the field are concerned about its potential unintended consequences. CEOs share these concerns, particularly regarding cybersecurity risks and the increased likelihood of misinformation spreading within their companies. A third of CEOs expect generative AI to exacerbate bias toward certain groups of employees or customers over the next year. These apprehensions highlight the need for constant vigilance as the role of generative AI in business becomes more complex.
To address these challenges, CEOs must approach the adoption of generative AI quickly and responsibly. It is essential to consider all dimensions of risk associated with AI, from strategy to impact on employees. It is crucial to set clear priorities, establish robust internal controls for data privacy and AI model training, and monitor third-party AI risk management. CEOs also need to stay abreast of regulatory developments related to data privacy, AI bias and governance. Upgrading cyber programs to include more sophisticated risk modeling, potentially using generative AI for cyber defense, will be integral to managing these emerging risks.
In conclusion, as generative AI transforms the business landscape, CEOs must strike a balance between seizing its opportunities and mitigating its challenges. This new technological era requires a proactive and thoughtful approach to ensure businesses adapt to change and shape a sustainable and prosperous future.
