Today, it's challenging to be in an organization led by a CEO with a custodian mindset. They may reflect back on their legacy of serving longtime customers, even when they're losing customers at an alarming rate. Meanwhile, carefully chosen loyal lieutenants defend their static corporate culture and smile reassuringly.
However, there are agile large multinational companies with leaders that reject the status quo. These are the leading organizations that will pursue digital growth in 2021 and beyond. They willingly embrace change.
More savvy CEOs anticipate an economic boom (60 percent) in 2021 and 2022, according to the latest worldwide survey of CEOs and senior executives by Gartner.
Digital Business Market Development
"CEOs’ top priorities for 2021 show confidence," said Mark Raskino, vice president at Gartner. Over half report 'growth' as their primary focus and see opportunity on the other side of the crisis, followed by 'technology change' and 'corporate action'.
"This year, all leaders will be working hard to decode what the post-pandemic world looks like and redeveloping mid- to long-range business strategy accordingly. In most cases, that will uncover a round of new structural changes to capability, location, products, and business models," says Mr. Raskino.
The annual Gartner 2021 CEO Survey was conducted among 465 actively employed CEOs and other senior business executives in North America, EMEA and APAC across different industries, revenue and company sizes.
The technology-related change was the second-highest priority for CEOs. When asked about their organization’s top five strategic business priorities for the next two years, respondents gave answers in their own words.
CEOs’ responses increasingly included the simple word "digital," cited by one in five CEOs in this year’s survey. Digital capabilities were also the only category in which CEOs intended to increase investment in 2021.
When it comes to specific technologies, CEOs see artificial intelligence (AI) as the most industry-impactful technology. Over 30 percent of respondents said that quantum computing will be highly relevant to their long-range business plans but are still not quite sure how.
Blockchain, 5G, AI, and quantum computing are at the forefront of an emerging economic race between the U.S. and China, with one-third of CEOs believing that evolving trade disputes between the two nations over these technologies are a significant concern for their businesses.
Within CEOs’ third strategic business priority of "corporate action," mergers and acquisitions (M&A) were the most mentioned item, rising 75 percent year-over-year. This shows that CEOs and senior executives seeking advantage from a cyclical downturn are going shopping for structural inorganic growth.
There was a significant reduction in mentions of "sales revenue" within the growth priority category and a significant increase in mentions of "new markets" across different industries and company sizes, suggesting that CEOs are finding it hard to obtain simple incremental sales revenue growth using the strategies that have served them well in the past.
"Techquisitions can bolster digital business progress, while also providing access to potential fast-growth market sectors," said Mr. Raskino.
However, over 80 percent of CEOs expect enduring societal behavior change arising from the pandemic, such as a permanent shift to hybrid work. Shifts in customer behavior are expected as well.
The biggest concern among CEOs is that customer demand will be constrained, particularly in industries such as travel, and that consumers and chief financial officers (CFOs) alike will hold back on related expenditures.
Outlook for Further Changes in 2021 and Beyond
More use of digital technology and the demand for digital channel flexibility are also within the top three anticipated shifts in customer behavior. According to the Gartner assessment, this suggests that continuing to improve the way customers are served digitally will be vital.
As key matters of sustainability and social justice rise to the foreground of public consciousness in many countries, 39 percent of CEOs said that taking an active social justice stance is good for business and that their employees are mostly of one mind.
This leaves 61 percent who are tentative around such subjects – the majority are still not confident and comfortable navigating the business through this area of change. In addition, nearly half of CEOs (45 percent) said climate change mitigation is having a significant impact on their businesses.
That said, I believe more custodian business leaders will be replaced in the coming year, as the typical board of directors is infused with new talent and C-suite executives are held to higher standards of performance by institutional investors and other large shareholders who demand transformation results.