It is not surprising to hear that Australian CEOs are less confident about their growth prospects in 2016 – both globally and domestically – than they were a year ago. However, an overwhelming majority of CEOs remain optimistic that their businesses are likely to grow revenues in the year ahead.
PricewaterhouseCoopers’ 19th Global CEO Survey confirmed what we’ve all been hearing about a sluggish world economy and some challenging times ahead. The key – our CEOs are saying – is to continue to focus on driving revenue growth while at the same time getting costs under control. Given Australia’s macroeconomic challenges and political instability, we continue to see an economic readjustment from our reliance on mining and commodities, to a new technology and customer focussed paradigm. Our businesses are getting smarter and more tech savvy but is that enough to keep pace on the global stage? There are two key trends emerging amongst our CEOs. First, it is encouraging to see Australia’s CEOs continuing to make changes to their businesses, focussing on ‘problem solving’ through the use of technologies and encouraging more diversity in their workforce. The results are starting to play out – businesses are enhancing customer experiences and building trust; they are also exploring opportunities in global markets more than ever before. Beaumont Tiles is an example of a local business that is introducing new augmented technologies, which allow their customers to visualise different designs in their own home, leading to improved customer experience and greater sales. However, the challenge in years to come will be our CEOs’ appetite to invest in Research and Development (R&D) and innovation for engagement with customers and stakeholders relative to their global peers. Less than a quarter of Australian CEOs believe R&D activities generate a greater return on investment compared to more than 50 percent of CEOs globally. One South Australian business that is bucking the trend in R&D is Redarc. Playing in the automotive industry, the business has more white coats than blue. Redarc sets the benchmark for its industry through continual investment in expanding its R&D capabilities, driving its innovation through to commercialisation of its products. Globally, private and family-owned businesses are playing a longer game than publicly owned businesses. Call it entrepreneurialism, a willingness to invest in super-charged returns, or mere survival, but more than 58 percent of private businesses believe there are more new prospects for growth than ever before. So where are they focussing their efforts? The PwC survey indicates 92 percent of private business CEOs are changing how they manage their brand, marketing and communications, and the same percentage are looking at how they define and manage risks. The beauty of private and family owned businesses has been, and always will be, their ability to make decisions quickly, and with a greater degree of flexibility to seize upon new opportunities. Complexity has become part of the norm for the global business environment, but with a majority of SMEs fuelling the South Australian economy, we are in a unique position to exploit these opportunities both domestically and globally by having the courage and confidence to back ourselves. At the recent launch of PwC’s CEO Survey in Adelaide, our own CEOs were optimistic about growth prospects, and flagged their intention to continue investing in new markets and growth industries as both an offensive and defensive play. So while our business leaders have pointed to lower margins and digital disruption as major challenges, it is encouraging to see that the cost of doing business is not disrupting their pursuit to grow top-line revenues. James Blackburn, Partner, PricewaterhouseCoopers pwc.com.au