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2018 Global CEO Outlook: UK PDF

32 Pages·2017·3.75 MB·English
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Leading from the centre 2018 Global CEO Outlook: UK kpmg.com/uk/ceo-outlook #CEOoutlook 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 lihw e amer gnini apmi tr ai l . e W“ t yr A dewener of uc s o n an toi an l ta x aw y o f agne gnig ni t eh ucsid ois n to b e yrev on op-n lti aci l ”, eh as .sy op l seici si o en ac�ingis tn apmi tc about t eh of umr latoi n o f op l yci oeP“ lp e ah ev dediced o n tixerB – o f a n aercni lgnis y lc o des aorp a hc tiw h og tnemnrev . tA t eh om tnem , on , w ou r oj b si to utsredn a dn ahw t to tar .ed sA t yeh am an eg t eh t eh ov eci o f bu senis si on t b gnie t eh wen ur l se a dn uger latoi sn a .er lpmi aci toi sn o f op lti aci l tfihs s a dn aeh dr ni tah t ucsid ois ”.n e W den to b e thgir o n to p o f ti a dn ahc ,segn CEO s alos den to b e nehW ew aks de CEO s ohw t yeh aperp der to om ev a s os o n a s toh es attu den to oh w up bl ci tnes tnemi toh uthg aw s opser bisn l e of r wen t sgnih a er up t ni lp a ”.ec about oc opr ar t e ta x bahe oiv u r othgisrev o f ta x ksir , %64 an dem si ahc .gnign fI“ oy u er’ a lg obal aS ajn y ahT kka , r aeH d o f aeD l t eh COF , 2 %9 t eh ahc ri o f t eh bu ,senis oy u den to utsredn a dn osivdA yr of r KGMP ni t eh UK as sy autid oc tim t e a dn 2 %5 la di oh w os teic al tcepxe atoi sn a er oeg op lti sci si alaer yd ahser gnip opser bisn li ti y at t rieh o nw od o . r leved o gnip ni tnerefid oc utn ,seir ucsid ois n ni t eh boaordr o:m a dn alos t yr to look of awr dr lihW e CEO s liw l o f oc u esr G“ oe op lti aci l ahc segn a er of gnicr bace u es ta x ksir ah s a lo gn tali ”, amer ni aeh liv y ler ai tn o n t rieh oc apm sein to ter knih t rieh bu senis as sy aJ en CcM okcimr , KGMP s ’ oagr asin toi ’sn aiceps ltsi s to om led ”,s eh as .sy aT“ k e tixerB , Global aeH d o f aT .x om tin o r ta x ksir , t eh deviecrep hcihw si atc gni a s a n alec are tn to oc ler atoi n bte new ta x a dn ahc ll egne t eh aw y ew od bu ,senis oY“ u ah ev to atn apici t e oh w uper tatoi an l ksir aem sn tah t erehw ew od bu ,senis oh w ew os teic y liw l b e tknih gni ni t eh t yeh liw l den to tak e om er od bu ”.senis uf tu .er oY u alos ah ev to dn� a opser bisn li ti y ni t eh uf tu .er © 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 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 oagr asin toi sn den to aaep l to tigiD asi toi n l�ni tar t se all atceps s tA t eh as em t ,emi tonhce lo yg uf tu er oc usn srem a dn ocer esing tah t o f t eh aw y ew od bu senis si ahc gnign ta x oper tr ,gni uc ts o srem on w amed dn t-dne o dne- toad y a dn ta x si on tpecxe oi n a s bot h of r an� ecn tae sm a dn ,secivres led derevi ni a oc tcen de aw y . op lamyci k sre arg lp e tiw h oh w ta x autoh tir .sei O rev t ,emi to uqs a er t eh oc lpm tixe sei o f t eh tigid asi toi n ohs ul d leh p taapx srey oF r Hikmet Ersek, CEO of Western tigid al oce on ym tiw h tar tid oi an l am k e us er t yeh a er oc lpm ai tn Union ti si about ltsi gnine to t eh aw sy o f ta gnix bu .senis aor u dn t eh lg ob .e uQ tse ses ov eci o f t eh uc ts o rem a dn aad tp gni t eseh ahc ll segne a s tow sedis tonhce lo yg to tem t rieh .sden I“ ehT“ tigid al oce on ym uqer seri o f t eh as em oc :ni oB“ a sdr den tknih t eh tkcir o f b gnie us ufsec l u s to buli d a wen on amr l a lc ae r utsredn a gnidn o f oh w ni oni av toi n si b gnie us ufsec l ni aor u dn oh w ew ta x oc lpm xe t eh tigid al oce on ym atcef s tonhce lo . yg tI s ’ on t tis t gni ni t eh oc renr tni anre toi an l bu ”,sesenis as sy t rieh bu senis om led a dn alt sre o ec�f ah gniv a n aedi about tonhce lo . yg lehciM l e uQ tse , aeH d o f aT ,x t eh uf adn tnem al av lu e o f t rieh tI s ’ aer ll y about ltsi gnine to t eh oisneP sn a dn ageL l secivreS at bu .senis dnA tonhce lo yg liw l uc ts o rem a dn aad tp gni tah t tonhce lo yg KGMP ni t eh UK . tI“ ahc ll segne alos ahc egn oh w bu sesenis to t rieh ,sden oy u den to ltsi ne to t eh tar tid oi an l sweiv o f oh w a dn oper tr of r ta .x uB sesenis den ov eci o f t eh uc ts o rem to erehw av lu e si aerc t de a s lew l to bme ar ec t eseh leved otnemp s b e us ufsec l ”. a s oh w to uq atn yfi ti a dn ti liw l a dn usne er t yeh a er am an gnig tak e t emi to buli d a n tni anre toi an l ocA gnidr to t eh us , yevr 2 %5 o f t eh op ttne ai l ksir s a s lew l a s oc usnesn s o n oh w ew ta x wen lg obal CEO s ble evei t yeh a er on t 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

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