How CEOs are dealing with stress in the face of the recession
When PwC surveyed more than 4,400 CEOs from more than 100 countries and territories, it found that nearly 75% of the world’s top executives expect growth to decline in 2023. But in surveys conducted by PwC in During the previous two years, there was a complete reversal of perception. Three out of four CEOs expressed optimism.
Today, CEOs are managing the tension between short-term economic hardship and the long-term mandate to transform to stay competitive. According to PwC, almost 40% of CEOs think their company won’t be economically viable in a decade if they continue with business as usual. annual global CEO survey.
“My advice: Prepare your business for growth,” said Mohamed Kande, vice president of US advisory solutions and co-lead and global advisory leader at PwC, during the Fortune‘s CEO Leadership Series on Wednesday. “Do all the cost structuring that needs to be done and reinvest in growth. And that growth must be fueled by technology. It will be the future.
For more than a year, Federal Reserve officials have been battling inflation and have steadily rising interest rates with the aim of slowing the economy to mitigate price increases. But policymakers aim to do so in a way that would ideally result in a mild or short-term recession, or perhaps avoid an economic downturn altogether. The strategy has so far been quite successful, with the US seeing inflation come down but economic growth still projected in 2023 by observers like the International Monetary Fund.
Glenn Fogel, CEO and President of an online travel agency Reserve credits, says his company must balance the macroeconomic environment with the future needs of his business. For Booking.com, this largely focuses on accelerating technological innovations, with Fogel pointing to recent buzz around AI and the ChatGPT chatbot.
“You have to have the courage not to just look at the next quarter,” says Fogel. “Travel will grow roughly a little faster than GDP. So I always have to say, ‘Let’s not worry too much about the short term. Let’s make sure we’re aiming for the long term.
Michael Sonnenshein, CEO of crypto asset manager Grayscale Investments, also likes to think long term. He has worked in the crypto sector for nine years and says the industry has seen a lot of noise and even mistrust following the high-profile profile. FTX crypto exchange bankruptcy. But he says it’s a failure of those involved, not an indictment of the entire crypto market.
“Don’t get distracted by the headlines,” says Sonnenshein. He says he reminds his team to focus on what Grayscale is trying to build as an organization and that “day-to-day crypto debates shouldn’t take away from the long-term belief we have around class d ‘assets”.
At the tire manufacturer michelin, longer-term thinking has also led the manufacturing giant to survive on three key levers which are the subject of a five-year plan. Alexis Garcin, president and CEO of Michelin North America, says all three – focusing on customers, accelerating the digitalization of factories and investing in their workforce – also reduce costs overall.
Brad Jackson, CEO of a consulting firm Slalom, says he thinks many executives want a short-term recession because it would allow them to redefine the expectations of investors and their employees. He thinks successful companies in the future need to have a broader cultural reset, with a focus on customers and their employees.
“I would like to see more awareness of long-term investments and their impact on multiple and company valuations,” Jackson says. “We don’t talk about it much today.”
Even if the United States experiences a short-term recession, Tata Consulting Services North America President Suresh Muthuswami said that while companies can cut costs to prepare for the downturn, it shouldn’t affect employee engagement. He says hurting morale could even be counterproductive.
“Technology is the last thing they cut,” Muthuswami says, referencing conversations he’s had with clients.
Janeen Gelbart, CEO of AI-powered software leadership platform Indiggo, says leaders know society is still in a time of change and uncertainty will always exist. And she asked rhetorically, on whose shoulders does this land. His take: Much of the blame rests on the shoulders of middle managers and exhausted leaders.
“We need a balance between quick wins and, at the same time, building our organizations for the future,” says Gelbart. “This mix of transformation, innovation and change is very difficult.”
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