2018 Global CEO Outlook: UK

32 Pages·2017·3.75 MB·English

Leading from
the centre
2018 Global CEO Outlook: UK
kpmg.com/uk/ceo-outlook
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Foreword
For our fourth annual Global CEO These include customers’ rapidly is the way CEOs are taking greater
Outlook report, we reached out to evolving expectations, the threat from personal accountability. For example,
1,300 CEOs of large companies around cyber, and geopolitical volatility. The two-thirds say they are personally
the world, including more than 150 latter is now hitting the boardroom prepared to lead their organisation
based here in the UK. with force and over half cite a ‘return through radical transformation despite
to territorialism’ as the No.1 threat pressure from boards to deliver
The results from these conversations
to growth. immediate results. They are pursuing
showed just what a dynamic and
partnerships to make themselves more
complex set of issues chief executives For CEOs in the UK, this fear of
agile. And they are personally leading
face in 2018. The fndings also greater political volatility and a less
the organisations’ digital charge.
exposed some important differences open economic order is even more
in the ways UK CEOs are approaching pronounced – perhaps unsurprisingly The most successful CEOs are doing
the challenges and opportunities as Brexit approaches – and it continues this by being embedded at the heart
ahead. to weigh on their confdence. As a of their organisations: leading from the
result, revenue forecasts given by UK centre. From here the chief executive
Broadly, it seems the mood among
CEOs for the next three years follow can be in touch with every part of
CEOs around the world is positive. Two
this more bearish trend. the organisation and show greater
thirds are confdent about the outlook
agility, resourcefulness and realism –
for the global economy, even more are These pressures aren’t likely to ease
maximising the chances of success in
backing their own companies’ growth any time soon and, in any case,
the transformation journey ahead.
prospects and the vast majority are there is little CEOs can do to alter
embracing the opportunities brought these forces. Instead, they are rightly Our thanks to all the CEOs who gave
by disruption rather than fearing it. focusing on growth. their time and spoke so candidly about
the issues they face. I look forward to
But their optimism is tempered this What comes out of this survey for
continuing the conversation with you.
year by some signifcant headwinds. me, and especially in the UK numbers,
Bill Michael
Chairman, KPMG in the UK
© 2018 KPMG LLP, a UK limited liability partnership and a member frm of the KPMG network of independent member frms affliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
Contents
Key fndings
4
Growth headwinds
6
Realistic growth
12
Digital gets personal
18
Instinct over data
24
Conclusions
29
Methodology and acknowledgments
30
© 2018 KPMG LLP, a UK limited liability partnership and a member frm of the KPMG network of independent member frms affliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
Key findings
Growth headwinds Realistic growth
The strategic issues Optimism
CEOs face in the tempered by
pursuit of growth pragmatism
— Geopolitics hits the boardroom — Optimistic macro-economic
55% of global CEOs cite ‘a return to outlook
territorialism’ as their number one 67% of global CEOs are confdent
threat to growth in the global economy and 74%

have confdence in their domestic
64% in the UK
economies

— Cyber certainty UK CEOs are more confdent about
49% of global CEOs say that becoming the global economic outlook (77%)
the victim of a cyber-attack is a case of but less optimistic about their
“when”, not “if” home market (65%)

39% in the UK
— A healthy dose of pragmatism
55% of global CEOs predict
— Changing customer expectations
cautious revenue growth of less
25% of global CEOs believe they are
than 2%
not meeting customer expectations of
a personalised experience This was 61% in the UK. Despite

that, more UK CEOs are hiring
30% in the UK
new skills for the future (also 61%
versus 48% globally)
© 2018 KPMG LLP, a UK limited liability partnership and a member frm of the KPMG network of independent member frms affliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
4 2018 Global CEO Outlook: UK
Digital gets personal Instinct over data
CEOs take personal CEOs say agility and
ownership of driving intuition are key to
digital transformation turning digital disruption
and trust into opportunity
— Owning transformation — Digital disruption as an opportunity
71% of global CEOs are personally 95% of both global and UK CEOs see
ready to lead a radical organisational disruption as more of an opportunity
transformation than a threat, 30 percentage points

higher than in 2017
67% in the UK
— Agility is key
— CEO as data protector
59% of global CEOs say agility is the
59% of global CEOs see protecting
new currency of business
customer data as a critical personal
responsibility 79% in the UK

40% in the UK
— Intuition over data
67% of global and UK CEOs have put
— Unrealistic expectations
their own intuition over data driven
51% of global CEOs feel their board
insights in the past three years
has unreasonable expectations of ROI
from digital transformation

72% in the UK
— AI seen to create more jobs
than it eliminates
62% of global CEOs expect AI to
create more jobs than it destroys

71% in the UK
© 2018 KPMG LLP, a UK limited liability partnership and a member frm of the KPMG network of independent member frms affliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
2018 Global CEO Outlook: UK 5
Growth
headwinds
In our 2017 Global CEO Outlook, we For Dan Schulman, CEO of electronic
Geopolitical found chief executives excited about payments company PayPal, this
changes the future: they saw technology-driven return to more of a protectionist
change as an opportunity to disrupt environment compels business
are forcing their business. That optimism continues leaders to respond. “During these
in 2018, with CEOs showing faith in the times of profound political and
companies to economic environment, both nationally economic change, business leaders
and globally, to grow their business. cannot sit on the sidelines and watch,”
rethink their he says. “We need to be a force for
However, CEOs’ optimism is tempered
business models. by greater anxiety about existential change, and draw on our missions and
our values to make a difference – and
threats. They are having to manage
we need to partner across the public
their exposure to three strong
and private sectors to address the
Sanjay Thakkar headwinds: geopolitical volatility, cyber
economic pain points.”
Head of Deal Advisory security risk, and changing customer
expectations. In fact, CEOs rank a return to
KPMG in the UK
‘territorialism’ as their number one
Geopolitics hits risk to growth in 2018. The sentiment
the boardroom is particularly pronounced in the UK,
After many years of widespread where 64% of CEOs identifed it as
international consensus on their biggest worry regarding growth.
globalisation, the potential withdrawal The result represents a stark change
from trade agreements by some from 2017 when operational risk was
developed countries, the UK’s decision ranked as the top threat, yet this ranks
to exit the EU and the proposed as only their sixth greatest concern
application of tariffs by the US and this year.
China show that barriers to an open
global economic order are now on
the rise.
Chart 1: Threats to growth: the risk landscape
Global CEOs UK CEOs
1 Return to territorialism 1 Return to territorialism
2 Cyber security risk 2 Environmental/climate change risk
3 Emerging/disruptive technology risk 3 Emerging/disruptive technology risk
4 Environmental/climate change risk 4 Cyber security risk
© 2018 KPMG LLP, a UK limited liability partnership
and a member frm of the KPMG network of
independent member frms affliated with KPMG 5 Operational risk 5 Brand risk
International Cooperative (“KPMG International”), a
Swiss entity. All rights reserved. Source: 2018 Global CEO Outlook, KPMG International
6 2018 Global CEO Outlook: UK
We need to be a force for
change, and draw on our
missions and our values to
make a difference.
Dan Schulman
CEO
PayPal
oF r Ken Allen, CEO of logistics
company DHL Express , ti si about
b gnie aperp der of r op lti aci l tneve s CEOs play a critical role in tax risk
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t yeh liw l den to tak e om er
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2018 Global CEO Outlook: UK 7
The people have decided on
Brexit — now, our job is to
understand what the new
rules and regulations are.
K ne lA l ne
CEO
DHL Express
Cah rt 2: Por p ortio n woh agre e that a“ cybe r attack i s on w a
Digital
questio n o f whe‘ ’n on t i‘f ” ’ (b y countr y )
innovation
US 68%
might offer
greater Australia 62%
connectivity, Germany 47%
but it also
France 47%
brings
Japan 46%
increased
UK 39%
vulnerability.
Netherlands 36%
Italy 34%
India 34%
China 32%
Spain 32%
Source: 2018 Global CEO Outlook, KPMG International
© 2018 KPMG LLP, a UK limited liability partnership and a member frm of the KPMG network of independent member frms affliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
8 2018 Global CEO Outlook: UK
Cyber certainty strategy, education and investment to Only 39 percent
embed agile and sustainable capabilities
Digital innovation might offer greater
across the business can equip you to of UK CEOs say
connectivity, but it also brings increased
manage innovation, new technologies and
vulnerability. Half of all CEOs (49%) say
changing cyber risks - security is integral they are well-
that a cyber attack is now just a case of
to your business and not an add-on.”
‘when’, rather than ‘if’, although UK CEOs prepared for
seem less worried with a more modest There is an apparent paradox among UK
39% agreeing that an attack is inevitable. CEOs on cyber: a much higher proportion a cyber attack
of CEOs in the UK believe a strong cyber
For Bia Bedri, Partner, KPMG in the UK’s
strategy is critical to engendering trust compared to 51
Cyber Security practice, the challenge
(74% versus 55% globally). Yet not only
of cyber security will only increase as percent globally.
do they think an attack is less likely, they
businesses innovate and embrace new
are also less prepared to deal with it than
technologies. “The reality is that it is very
they were last year, or than their global
diffcult to be ‘fully’ prepared for a cyber
peers are today (39% of UK CEOs say
event. In part, this is because the nature
they are well-prepared for a cyber attack
of the threat and the risk vectors are
this year versus 59% who said they were
continuously evolving and cyber attackers
fully prepared last year, and compared to
are constantly adapting.
51% of global CEOs today).
“At the same time, the introduction,
They are also less confdent that their
development and adoption of new
organisations could identify new cyber
technologies, business models and
threats (41% of UK CEOs versus
supply chain also lead to new and
60% globally).
unexpected cyber risks. A robust cyber
Chart 3: How well prepared is your sector for a cyber attack? (global results)
Infrastructure 67%
Life sciences 58%
Insurance 54%
Asset
management 53%
Energy 53%
Consumer
52%
and retail
Banking 50%
Telecom 49%
Manufacturing 48%
Technology 42%
Automotive 41%
Source: 2018 Global CEO Outlook, KPMG International
© 2018 KPMG LLP, a UK limited liability partnership and a member frm of the KPMG network of independent member frms affliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
2018 Global CEO Outlook: UK 9
Changing customer
expectations
The digital economy adds complexity and
opportunity to tax oT evird lot-gn mre org tw ,h
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am gnisimix t eh oop tr utin sei tah t
bu senis om led ”.s tem gni uc ts o rem tcepxe atoi sn o f a
tigid al orp ”.sediv
osrep an l desi .ecneirepxe nI t eh UK ,
tah t orp op tr oi n si 03 .% uF tr omreh ,er
%4 o f UK CEO s as y t eh tsevni tnem s
t yeh ah ev am ed ni t gniyr to osrep an l esi
t eh uc ts o rem ecneirepxe ah ev on t
led derevi t eh org tw h bt�ene s t yeh
I think the trick of being
successful in innovation is being
successful in technology.
Hikmet Ersek
CEO
Western Union
© 2018 KGMP , PLa UK ltimi de lai bli ti y ap tr pihsren a dn a bmem re mr� o f t eh
KGMP ten ow kr o f tnednepedni bmem re smr� al�f ai t de tiw h KGMP tnI anre toi an l
Cooarep t evi K“( GMP tnI anre toi an l ,)” a siwS tne ti . y lA l thgir s .devreser
10 2018 Global CEO Outlook: UK