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PWC - US CEO Survey 2013: Creating value in uncertain times
PWC - US CEO Survey 2013: Creating value in uncertain times
PWC - US CEO Survey 2013: Creating value in uncertain times
PWC - US CEO Survey 2013: Creating value in uncertain times
PWC - US CEO Survey 2013: Creating value in uncertain times
PWC - US CEO Survey 2013: Creating value in uncertain times
PWC - US CEO Survey 2013: Creating value in uncertain times
PWC - US CEO Survey 2013: Creating value in uncertain times
PWC - US CEO Survey 2013: Creating value in uncertain times
PWC - US CEO Survey 2013: Creating value in uncertain times
PWC - US CEO Survey 2013: Creating value in uncertain times
PWC - US CEO Survey 2013: Creating value in uncertain times
PWC - US CEO Survey 2013: Creating value in uncertain times
PWC - US CEO Survey 2013: Creating value in uncertain times
PWC - US CEO Survey 2013: Creating value in uncertain times
PWC - US CEO Survey 2013: Creating value in uncertain times
PWC - US CEO Survey 2013: Creating value in uncertain times
PWC - US CEO Survey 2013: Creating value in uncertain times
PWC - US CEO Survey 2013: Creating value in uncertain times
PWC - US CEO Survey 2013: Creating value in uncertain times
PWC - US CEO Survey 2013: Creating value in uncertain times
PWC - US CEO Survey 2013: Creating value in uncertain times
PWC - US CEO Survey 2013: Creating value in uncertain times
PWC - US CEO Survey 2013: Creating value in uncertain times
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PWC - US CEO Survey 2013: Creating value in uncertain times

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PWC - US CEO Survey 2013

PWC - US CEO Survey 2013

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  • 1. 2013 US CEO SurveyCreating value in uncertain times16th Annual GlobalCEO Survey 2013US Executive Summary
  • 2. The experiences they will be able to pass on tothe next generation will shape a new perspectiveon the importance of resilient leadership throughuncertainty. “Persistent,” “ethical” and “pragmatic”were the words many CEOs used to describe traitsof historical leaders they most admire.I would like to thank all who participated in thesurvey, particularlytheCEOswhotookthetimetositdownwithustosharetheirperspectivesontheopportunitiesandchallengesbusinessesarefacingtoday.Theirinsightsgreatlyinformedour survey,and you can view our interviews with them, alongwiththefullreport,atwww.pwc.com/usceosurvey.Bob MoritzUS Chairman, Senior PartnerPwCOverviewUS CEOs in our 16th Annual Global CEO Surveyare showing less confidence for growth in the nextyear but are optimistic about the longer-term horizon.They are far more confident in their company’s abilityto navigate through the anticipated volatility expectedover the next three years.As you’ll discover in our report, today’s CEOsare focused on building resilient organizations.They’re setting the foundation for long-term growthby finding new ways to extend their competencies.They’re sharing value as well as risks as theyincreasingly operate within networks of alliancesand partnerships.Half of the 167 US CEOs participating in our surveyhave been heading their company for less than fiveyears. The operating environment over the past fewyears has been unlike anything seen before, so thisgroup has admittedly learned a lot—and gaineda lot, too.
  • 3. Leaders most admired byUS-based CEOsWe asked CEOs, “As a leader, can youshare an example from literature or historywhere someone exhibited good leadership?What did you admire about their actions?”These leaders topped the US CEOs’ list.Base: 130. Source: PwC, 16th Annual Global CEOSurvey, January 2013. #1 Winston Churchill“He explained the reality of whatpeople faced and he mobilized themto deal with it.”Nelson Mandela“Excellent moral leadership, a skill thathas been lost or forgotten in the new era.”—Australian CEO#2 Abraham Lincoln“He understood the greater good andhe understood the bigger picture.”#3 Ronald Reagan“His mantra—‘trust, but verify’—isa very good leadership skill.”Leaders most admired by CEOs globally1. Winston Churchill2. Steve Jobs3. Mahatma Gandhi4. Nelson Mandela5. Jack Welch6. Abraham Lincoln7. Margaret Thatcher8. Ronald Reagan9. John F. Kennedy10. Napoleon BonaparteBase: 1,351. Source: PwC, 16th Annual Global CEO Survey, January 2013.116th Annual Global CEO Survey 2013—US Executive Summary
  • 4. The additive effect of a decade’s worthof volatile global growth cannot be under-stated. Short-term confidence is faltering:A third of US CEOs are ‘very confident’ theircompanies will see revenue growth over thenext 12 months, down from 41% in 2012.Of course, CEOs have historically beenless bullish about short-term prospects;2013 is shaping up as a pivotal year. CEOs are redirecting investmentsand strategies against a backdrop of global fiscal and economic uncertainties.They are honing approaches, focusing on organic growth, their customers,and operational effectiveness. Here’s what the 167 US-based CEOs tell usthey’re doing to adjust—and to set the foundation for new growth.#1 Building resilience to disruptionExpect more strategic alliances and partnerships this year. CEOs are seekingto increase their companies’ ability to swiftly respond to demand changesby collaborating with partners more closely or by diversifying to best ensureuninterrupted business operations through a range of scenarios.#2 Taking the home-field advantageLook for a sharpened focus on the US market this year. CEOs are planningto consolidate advantages on their home turf. They’re considering domesticdeals, and 41% see expanding their customer base in the US as the mainavenue for growth in 2013.#3 Siding with the customerExpect interest in predictive analytics and other customer-oriented strate-gies to keep growing. CEOs are setting the customer as their beacon to buildbusinesses that last. Getting the right read on changing customer demandswill help on a number of fronts: where manufacturing is located; where toconsider acquisitions; how to spend precious R&D funds; and where toform alliances to extend competencies.Confidence falters for US CEOsHow confident are you about your company’s prospects for revenue growth over the next12 months? Over the next three years?Next 12 monthsNext 3 years47%54%30%19%Next 3 years(2012 survey)3%7%Not confident about prospectsof revenue growthVery confident aboutprospects for revenue growthUS CEOsBases: US 2012: 161; 2013: 167. Sources: PwC, 15th Annual Global CEO Survey, January 2012;PwC, 16th Annual Global CEO Survey, January 2013.Creating value in uncertain timesaccording to our survey, confidence in near-term growth has only surpassed 50% twicein the past decade—in 2008 and 2007.Push out the horizon three years, and CEOspirits revive. They are far more confidentin their companies’ ability to navigate theanticipated volatility.PwC2
  • 5. Growth How prepared are we for greater competition in theUS market?4 Talent How will we foster the next generationof leaders in our company?12Deals How can we take advantage of a potentially healthierdeals market in 2013?6 Customer focus How can we more effectively put our customersat the center of our growth initiatives?13Risks What can we do to make our company more resilientto significant and unpredictable risks?7 Sustainability What more can we do to prepare for globalconstraints on critical natural resources?14Tax How can we forge ahead amid uncertainty about taxand regulations?9 Social media Do we really *like* social media? 16Operations What are the most important transformationsin operations that our company needs?10 Cybersecurity How do we get to a place where cyberattacksare less of a threat to our network?17Supply chain How can we shore up our supply chain so thatit’s better able to withstand disruptions?11316th Annual Global CEO Survey 2013—US Executive SummaryBased on what we heard in the 16th Annual Global CEO Survey, these are some of the questions US CEOs will be asking themselves and their management teams as they pursue growthin the year ahead. PwC surveyed 167 business leaders based in the US. We’ve grouped their responses into the following issues.US CEO agenda for 2013
  • 6. How prepared are we forgreater competition in theUS market?Two goals head the growth agenda in2013 for many US CEOs: capturing moreshare in existing markets, whether in theUS or internationally, and making greateruse of acquisitions or strategic alliancesto advance that aim.What has changed? Just a year ago,US CEOs saw growth drawn more evenlyacross a range of potential opportunities.Surely, weak prospects for Europe(where 47% of US CEOs said they havekey operations) and less clear growthtrajectories in some fast-growing econo-mies matter. As does increasing competi-tion in international markets. For example,this year, a higher percentage of GermanCEOs said that China became a moreimportant market than the US.Yet the range of potential outcomes inthe US factor in, too. Tilting positivelyUS CEOs see US market expansion as primary growth driver in 2013What do you see as the main opportunity to grow your business in the next 12 months?Organic growth inexisting domesticmarketNew M&A/jointventures/strategicalliancesNew product orservice developmentOrganic growth inexisting foreign marketNew operation(s) inforeign markets41%22%17%16%4%Increased share inexisting marketsNew product orservice developmentNew geographicmarketsMergers andacquisitionsNew joint venturesand/or strategicalliances38%26%16%13%6%2012 2013Note: There were variations in the survey question from year to year. Base: 2012: 161; 2013: 167.Sources: PwC, 15th Annual Global CEO Survey, January 2012; PwC, 16th Annual Global CEO Survey, January 2013.When people ask me what’s going tohappen in the next five years, I throwup my hands and say, ‘I have no ideaand neither do you.’ How do youcope with that degree of uncertainty?Well, I think first by having the rightattitude about the process of changeand reinvention. And second, is byforming partnerships, collaborationsand alliances with other like-mindedcompanies that have something tocontribute beyond what you canprovide.—Peter Tortorici, CEO, GroupMEntertainment Globalis a fledgling housing recovery and theshale gas revolution.1It bears repeating: International marketsare crucial to CEOs no matter where theyare based. Foreign revenue now accountsfor around 40% of total revenue for globalcompanies.2And sources of global growth1 PwC, Shale Gas: A renaissance in US manufacturing? 20112 MSCI Global Index.Growth4 PwC
  • 7. and investment flows have been shiftingfor some time, with the 2008 financialcrisis accelerating the trend. China,India and Brazil will together add around$1 trillion to the world economy in 2013.3Over the next three years—as globalcompetition intensifies—CEOs will needto develop a keener sense of what will drivegrowth and how to create sustainable busi-nesses.4That is perhaps what has changedfor CEOs the most.3 PwC, Global Economy Watch, January 2013.4 PwC, Growth in new markets: It’s all about how, 2012.China still #1, but German, Canadian and Mexican markets rise in importancefor US CEOsWhich three countries, excluding the US, do you consider most important to overall growthprospects over the next 12 months?China 48%Brazil 24%India 17%UK 16%Germany 12%Canada 11%Mexico 9%China 41%Brazil 21%Germany 21%Canada 20%UK 15%India 13%Mexico 13%2012 2013Base: 2012: 161; 2013: 167. Sources: PwC, 15th Annual Global CEO Survey, January 2012; PwC, 16th Annual GlobalCEO Survey, January 2013.This is the manufacturing heartland. It always has been, and if we can develop[shale gas] resources and take advantage of them, we have an opportunity to seereal and sustained growth, not only from an economic development standpointacross all sectors—residential, commercial, as well as industrial—but the spinoff that flows from additional manufacturing in this area. This is the greatestopportunity we’ve had in years in this country to reposition ourselves again asa leader in manufacturing and in advanced technologies.—Anthony Alexander, President and CEO, FirstEnergy, Oct. 5, 2012516th Annual Global CEO Survey 2013—US Executive Summary
  • 8. US CEOs are more intent on M&A in 2013than their global peers, and they’re concen-trating on consolidation and expansion inthe US market. Consider that 42% of USCEOs said they’re planning to completea domestic deal this year. It will mark asignificant uptick if they’re able to deliver:30% said they completed a domestic dealin 2012.The US deals market, while in better shapethan some markets elsewhere, remainsrestrained. Increasing interest in strategicalliances is a factor,1yet the fundamentalsfor growth in the deals market are in place.Interest rates are low and over $1 trillionin cash sits on corporate balance sheets.1 PwC, Navigating Joint Ventures and Business Alliances,2012.How can we take advantageof a potentially healthierdeals market in 2013?Fiscal and economic uncertaintiesloom large, yet there are some sector-specific shifts in play that may driveactivity. Sweeping reforms in theAffordable Care Act are likely to spurconsolidation as healthcare revenuemodels change.2Another example:Financial services companies continueto pursue divestitures to bolster capitallevels and unlock asset value.In fact, divestitures have been important—representing around a third of deal volumein 2012—and they are expected to retaina prominent strategic position in 2013 forUS and European CEOs. Companies aretapping into a variety of exit options inthis market.3CEOs based outside North America area second source for US activity: 30% ofglobal CEOs said they plan an acquisitionor alliance in North America, led by phar-maceuticals & life sciences (52%); power &utilities (44%); transportation & logistics(42%);andtechnologyCEOs(39%).2 PwC, Health reform re-elected: ACA implementation intough fiscal times, 2012.3 PwC, Corporate exit strategies: Selecting the best strategyto generate value, 2012.We’re about a $1.5 billion systemright now. To compete in this market,we need to probably be in the $3 to$5 billion dollar range … Therefore,one would think that consolidationis something that will likely occur,just as it is occurring in many otherplaces across the country.—Dr. Larry Kaiser, President and CEO, TempleUniversity Health SystemDomestic deals, alliances on 2013 agenda for US CEOsWhich, if any, of the following restructuring activities have you initiated in the past 12 months?Plan to initiate in the coming 12 months?Completed dealsin 2012Planning dealsin 2013Domestic M&AUS CEOs30%23%25%42%42%28%22%57%24%19%19%36%28%26%15%47%Cross-border M&ADivestitures/market exitsNew alliances/JVsGlobal CEOsBase: US: 167; Global: 1,330. Sources: PwC, 15th Annual Global CEO Survey, January 2012;PwC, 16th Annual Global CEO Survey, January 2013.Deals6 PwC
  • 9. US CEOs recognize they’ll have to workaround a flock of new risks, from globaldebt burdens to social media scrutiny.Growth strategies should factor in howgovernment policies could shock theeconomy—90% of US CEOs worry aboutuncertain or volatile economic growth,a greater share than their global peers.In their view, potential outcomes for 2013are wide-ranging. On average, CEOs expectmore than one major risk event to occur.The future increasingly depends onunpredictable risks far beyond coreoperations—financial meltdowns or cyberbreaches, to name two. Scenario testingoffers one example of concrete measuressome business leaders are taking to betterunderstand where their companies’ vulner-abilities lie.What can we do tomake our company moreresilient to significantand unpredictable risks?US CEOs rate a wide range of possible high-impact risksHow likely are the following scenarios to occur? And how would your organization cope withthe following scenarios if they happened within the next 12 months?0% 10% 20% 30% 40% 50%40%60%80%100%CEOs who think it’s likely to occurCEOswhothinkit’slikelytohavenegativeimpactChina’s GDP growthfalling below 7.5%China’s GDP growthfalling below 7.5%Recessionin the USRecessionin the USCyberattack ormajor disruptionCyberattack ormajor disruptionMilitary or tradetensions affectingaccess to naturalresourcesMilitary or tradetensions affectingaccess to naturalresourcesNatural disasterdisrupting a majortrading/manufacturing hubNatural disasterdisrupting a majortrading/manufacturing hubBreak-upof the EurozoneBreak-upof the EurozoneHealth crisisHealth crisisMajor social unrestin the country in whichyou are basedMajor social unrestin the country in whichyou are basedBase: 167. Respondents who stated ‘likely to occur’ and respondents who stated ‘it would have a negative impact.’Source: PwC, 16th Annual Global CEO Survey, January 2013.I don’t think that organizations thatare slow to adjust and that are reactiveare going to thrive in the years ahead.So we are going to invest time, resourcesand attention to become a moreinnovative organization, and to doit quickly.—Steven H. Lesnik, Chairman, President and CEO,Career Education CorporationRisks716th Annual Global CEO Survey 2013—US Executive Summary
  • 10. Another comes from the modern, flexiblesupply chain—one area of operations thathas been tested heavily in recent years.Companies are now working more closelywith a range of supply chain partners toensure they can quickly scale up or downin response to sudden changes in demand.1Agility requires thinking about thesystem, not just the enterprise. US CEOsare responding by engaging more broadlyacross sprawling networks. More than half1 PwC, 10Minutes on supply chain flexibility, 2013.We need to find a way to create trust so that we can look beyond the next year.We need to create confidence and a partnership between government and business,so that CEOs worldwide and their leadership teams put that money into capitalexpenditures and people and building better opportunities for the future. Becausebuying back your shares is only a short-term solution. It does not solve the long-term growth that is necessary to have a high-performing stock.—Larry Fink, Chairman and CEO, BlackRock, Inc.of US CEOs said their strategies are influ-enced by local communities, users of socialmedia, industry competitors and peers,governments and regulators, as well asthose closer to their operations. Theyalso plan to strengthen engagement witha majority of their influential stakeholders.These steps all add up to businesses buildingresilience to move forward and grow in anincreasingly uncertain environment.8 PwC
  • 11. Tax issues top US CEO concerns, withalmost three-quarters concerned (of which40% are ‘extremely’ concerned) about howtax reform could potentially slow activity,turn profits into higher tax bills and makethem less globally competitive.Taxes are particularly thorny for globalcompanies. And while much is changing—more countries continue to take stepsto ease the tax compliance burden onbusiness1—few CEOs expect overall reliefon global tax standards anytime soon.More than two-thirds of US CEOs saidthat governments are not succeeding inharmonizing global tax and regulatoryframeworks.1 PwC, World Bank and IFC, Paying taxes 2013.How can we forge aheadamid uncertainty abouttax and regulations?Fiscal policy, tax uncertainties weigh heavily on US CEOsHow concerned are you about the following potential business, economic and policy threatsto your growth prospects?Government response to fiscaldeficit and debt burdenUncertain or volatile economicgrowth67%53%35%39%Over-regulation 44% 30%Increasing tax burden 40% 25%US CEOs Global CEOsBase: US: 167; Global: 1,330. Respondents who stated ‘extremely concerned.’ Source: PwC, 16th Annual GlobalCEO Survey, January 2013.The global community of regulators—as well as the political classes—arekeen on ensuring the stability of thefinancial system. And that implies acompletely new order, a new set ofrules to play by. In these cases, it’s notuncommon to wind up in a situationof regulatory overreach.—Piyush Gupta, CEO and Director, DBS Group,Singapore, 16th Annual Global CEO SurveyYet despite being much more concernedabout taxes than their global counterparts,US CEOs are only marginally more likelyto take a closer look at their approachesto tax planning and contribution (40% vs.37% globally).Keep an eye on tax policy in 2013. Reformscan drive up tax bills, but well-targetedchanges can increase business confidenceand open new opportunities.Tax916th Annual Global CEO Survey 2013—US Executive Summary
  • 12. US CEOs continue to keep costs in check.Last year, 81% implemented cost-cuttingmeasures. In 2013, 71% are planning cuts.In an environment of pricing pressure andslow demand growth, every element ofdirect and SG&A expense is getting a freshlook. Businesses are redoubling efforts toanalyze—and scrutinize—dynamics onmany fronts, including customer demand,labor costs, technology, transportationand regulatory/tax regimes.Yet CEOs are seeking more from opera-tional leaders than holding the line oncosts. They’re also being asked to createvalue and contribute to growth. Forty-four percent of US CEOs are investingto increase their company’s operationaleffectiveness.What are the mostimportant transformationsin operations that ourcompany needs?Underlying every business model is anoperating model that marshals assets,partners, technologies and systems to actu-ally make things happen. ThusCEOsseekopportunitiesforcompetitiveadvantageintheiroperating models to offer customersmore and to do so at a lower cost.Such opportunities lie in core processeslike product innovation, supply chain andservice delivery; or in transforming corpo-rate functions like procurement, tax andmarketing. Leading companies take a globalview, and some are seeing performancegains from setting up a globalbusinessservicesstructurethat integrates functionsand focuses them on customer needs.11 PwC, 10Minutes on creating value from Global BusinessServices, 2012.Fast pace of strategic change drives cost agenda for US CEOsTo what extent do you anticipate your company’s strategy will change over the next 12 months?Any of the following areas over the next 12 months? Which, if any, restructuring activities doyou plan to initiate in the coming 12 months?61%expect some levelof strategic changein their companiesin 201368%anticipate changesto their company’sorganizationalstructure29%plan to outsourcea businessprocess orfunction17%plan to “insource”a previouslyoutsourced businessprocess or functionBase: 167. Source: PwC, 16th Annual Global CEO Survey, January 2013.I see more movement toward lookingat population health managementand the fact that we need to learnhow to manage the chronic diseasesin a population, which account forso much of the healthcare dollar.—Joel Allison, President and CEO, BaylorHealth Care SystemGiven that the global economy andthe global pace of life are gettingfaster in all aspects, one needs tobecome more agile and efficientabout everything—including runninga company. It’s essential that youstreamline operations and becomeleaner wherever you can, so as tobe able to react more quickly tochanging market conditions.—Anders Nyrén, President and CEO,Industrivärden AB, 16th Annual GlobalCEO SurveyOperations10 PwC
  • 13. A recent host of factors, including marketand demand volatility, the speed of processautomation, transparency needs, and evendisruptions due to natural disasters haveled to questions about what strong supplychain performance looks like. Companiesthat run the supply chain as a strategicasset want their suppliers to be truepartners in helping them cope withthe ups and downs.1In the year ahead, more than half of USCEOs (53%) plan to strengthen engagement1 PwC, Next-generation supply chains: Efficient, fast andtailored, 2012.with key suppliers to both minimize costsand maximize supply chain flexibility anddelivery performance. Globally, industriesmost focused on supply chain engagementinclude industrial manufacturing (84%),consumer goods (80%), energy, oil andgas (79%) and technology (76%).They’ll have a full agenda. In many casesthey’ll be collaborating on delivery issuesand requirements to tailor products todifferent consumer needs; 43% of USCEOs said 2013 will bring more shifts inconsumer spending behaviors. Many USCEOs are concerned about energy andHow can we shore up oursupply chain so that it’sbetter able to withstanddisruptions?raw material costs (41%). They’ll belooking at how low-cost options for shalegas change sourcing options, in additionto other benefits of reshoring.2A more sustainable supply chain is ofinterest,too.Reducingthecompany’senvi-ronmental footprint—much of which fallsalong the supply chain—makes the radar(43%). But sustainability doesn’t comewithout significantchallenges:Theuseoflow-cost and best-cost country sourcingcan make it more difficult to control envi-ronmental and social risks.2 PwC, 10Minutes on US manufacturing resurgence, 2012.CEOs to strengthen engagement with partners to fortify supply chains against array of risksHow concerned are you about the following potential business, economic and policy threats to your growth prospects?Uncertain or volatile economic growthAvailability of key skillsProtectionist tendencies of national governmentsShift in consumer spending and behaviorsSpeed of technological changeExchange rate volatilityEnergy and raw material costsInability to protect intellectual property and customer dataInadequacy of basic infrastructureBribery and corruptionSupply chain disruptionUS CEOs Global CEOs90% 81%54% 58%47% 51%43% 49%43% 42%41% 54%41% 52%36% 34%27% 35%24% 41%23% 35%Base: US: 167; Global: 1,330. CEOs who responded ‘extremely’ or ‘somewhat’ concerned, select answers shown.Source: PwC, 16th Annual Global CEO Survey, January 2013.Every crisis is also a learningexperience and an opportunityto deepen your crisis managementcapabilities. But our operations arenow scaled so broadly that we haveto accept the fact that there are someevents that just aren’t predictable.A degree of fragility is part andparcel of the system.—Peter Tortorici, CEO, GroupM EntertainmentGlobalSupply chain1116th Annual Global CEO Survey 2013—US Executive Summary
  • 14. Talent availability remains a significantconcern for CEOs everywhere. In an agein which companies are increasinglydifferentiated by the talent they candeploy, this shouldn’t come as a surprise.1MorethanhalfofUSCEOspointtotheavailabilityofkeyskillsasapotentialthreattogrowthin2013.Withtalentwidelyrecognizedascentraltopoweringgrowth,moreCEOsaretaking action.Infact,nearlythree-quartersofUSCEOsexpecttochangetheirtalentmanagementstrategies,with18%preparedtomakemajorchangesinthecomingyear.To do that, they are willing to commitresources, with 65% of US CEOs planningto invest in creating and fostering a skilledworkforce in their home country. But theyalso don’t expect to do it alone: 68% ofUS CEOs said building a skilled workforceshould be a top government priority. Theyalso believe there’s considerable room forimprovement, with only 3% saying that thegovernment has been effective in doing so.Where else will they focus when it comesto talent? For those who agree employeesare important stakeholders, 80% planto strengthen employee engagementprograms. They also are focusing on1 PwC, 10Minutes on talent priorities, 2012.developing their leadership pipelines,including active succession planning(89%) and programs to encouragediversity among business leaders (64%).They say that the most effective of thesestrategies include involving managersin strategic decision-making and activesuccession planning.How will we foster thenext generation of leadersin our company?CEOs identify the most effective strategies for managing the leadership pipelineHow effective are the following options at developing your leadership pipeline?Involving managers below board level instrategic decision-makingActive succession planning includingidentifying multiple successorsRotations to different functions/challengesEncouraging global mobility andinternational experienceDedicated executive development programPrograms to encourage diversity amongbusiness leadersShadowing a senior executiveUS CEOs Global CEOs84% 70%74% 59%51% 52%50% 51%47% 59%46% 44%20% 29%Base: US: 167; Global: 1,330. Respondents who stated ‘very effective’ or ‘somewhat effective.’Source: PwC, 16th Annual Global CEO Survey, January 2013.There is clearly a supply-demandissue when it comes to top-level talentglobally. Given the demographics, thetechnology changes that we’re seeingtoday, and the economic environmentin which we’re operating, the supply-demand issue is not going to go awayovernight.— L. Kevin Kelly, CEO, Heidrick & StrugglesTalent12 PwC
  • 15. CEOs are rallying their organizationsaround the “customer” in 2013. It is theclearest refrain from this year’s survey.This is a top three investment priority forCEOs (63%); expanding their customerbase is where more US CEOs believetheir main opportunities lie.What’s different this time? A lot—and USCEOs are signaling they’ll invest time andmoney to catch up. Nearly half of US CEOsworry that shifts in consumer spending andbehaviors threaten their companies’ growthprospects. But this isn’t just about retailersand the intense online competition theyface. It’s never been easier for a customerto walk away from an established companyrelationship, regardless of the industry.Consider that orders for many US contractmanufacturers go global from day one. Inthe power & utilities industry, which untilrecently had a virtually captive customerbase,80%ofseniorexecutivesacknowledgethatshortcomingsincustomerengagementcould limit the potential impact of smartgrid technology.1Thus ‘getting closer to the customer’ isescalating into putting the customer atthe heart of the company. Ninety percentof US respondents said they are1 PwC, The shape of power to come, 2012.strengthening their customer and clientengagement programs.In the CEO’s corner are evolving technologytools, such as predictive analysis, that openthe door to a deeper understanding of theircustomers’ behaviors and help to measuresuccess.2Collaboration initiatives provideanother example: Leading companies2 PwC, “The third wave of customer analytics,”Technology Forecast: Reshaping the workforce with thenew analytics, 2012.How can we moreeffectively put ourcustomers at the centerof our growth initiatives?CEOs show disparity in customer-centered investment prioritiesWhat are your top three investment priorities over the next 12 months?0% 20% 40% 60%US CEOs rankingcustomer as a top threeinvestment priorityGrowing yourcustomer baseEnhancingcustomerserviceSouth AfricaUSMexicoAfricaWestern EuropeGlobalAsia PacificJapanChina & Hong KongLatin AmericaIndiaRussiaBrazilBases: Western Europe: 312; Asia Pacific: 449; Japan: 162; China & Hong Kong: 132; India: 73; US: 167;Latin America: 165; Brazil: 45; Mexico: 110; Russia: 41; Africa: 48; South Africa: 56.Source: PwC, 16th Annual Global CEO Survey, January 2013.Some of the key elements in IFF’ssuccess model are based aroundcustomer intimacy and consumerinsights. It all starts with theconsumer—a rich and robustunderstanding of what they want,where they’re going, but, mostimportantly, what they wantin the future.—Douglas D. Tough, Chairman and CEO,International Flavors and Fragrances, Inc.configure their supply chains for specificcustomer segments, adopting collaborativeplanning with customers and suppliers.Companies with the strongest customer-centered DNA have CEOs who double asthe chief customer officer, in spirit if notin title.Customer focus1316th Annual Global CEO Survey 2013—US Executive Summary
  • 16. CEOs investing more to secure natural resourcesHow strongly do you agree or disagree that the government helps companies secure accessto natural resources (e.g., raw materials, water and energy)? How much does your companyplan to increase its investment over the next three years to secure natural resources that arecritical to business in the country in which you are based?Agree that the government helpscompanies secure access to naturalresources (e.g., raw materials, water,energy)Plan to increase investment over thenext three years in securing naturalresources20%52%17%35%Emerging-marketCEOsDeveloped-marketCEOsBase: Emerging-market CEOs: 671; Developed-market CEOs: 659. Respondents who stated ‘Agree’ or ‘Agreestrongly’ and who stated ‘small’ increase, ‘some’ increase or a ‘significant’ increase.Source: PwC, 16th Annual Global CEO Survey, January 2013.Energy is on the radar for US CEOs, with41% of US CEOs and 52% of global CEOsconcerned about rising energy costs as athreat to growth prospects.Global energy demand is set to growmore than one-third between now and2035.1Environmentally, that’s unsustain-able. On this path, not only will green-house gas emissions soar, but energy willbecome thirstier. Water needed for energy1 World Energy Outlook 2012, ©OECD/IEA, November2012.production is set to grow at twice the rateof energy demand, due to more diversityin the energy supply.2Add a trend towardgreater interactions between fuels, marketsand prices, and the result is little immunityfrom global energy market fluctuations.3Thus CEOs are intent on securing naturalresources now, including energy, water andraw materials. Over the next three years,35% of developed-market CEOs plan to2 Ibid.3 Ibid.What more can we doto prepare for globalconstraints on criticalnatural resources?Sustainability14 PwC
  • 17. increase investment in securing naturalresources, and 52% of emerging-marketCEOs said the same.Beyond securing what they’ll need,CEOs will make energy efficiency andwater conservation measures pay offin both cost and reputation; 43% of USCEOs plan to increase efforts to reducetheir companies’ environmental impacts.Other stakeholders—includingemployees, local communities, govern-ments and supply chain partners—areimportant, too. Half of US CEOs planto increase their companies’ focus ona framework to support a culture ofethical behavior. Nearly one-third planto increase their focus on non-financialreporting, giving stakeholders a betterview of the company’s worth and thevalue it contributes to society.Environmental and social issues get more CEO attentionHow concerned are you about lack of trust in your industry as a threat to your growth prospects? To what extent does your organization planto focus on the following priorities over the next 12 months?USLack of trust in your industry? Framework to supporta culture of ethicalbehaviorReducingenvironmentalfootprintSocial enterpriseinitiativesNon-financial reporting(including corporateresponsibility reporting)27%Global39%50% 43% 30% 30%56% 48% 35% 41%Base: US: 167; Global: 1,330. Respondents who stated ‘extremely’ or ‘somewhat concerned’ and ‘increase our focus somewhat’ or ‘increase our focus significantly.’Source: PwC, 16th Annual Global CEO Survey, January 2013.Sustainability is important to our customers, and increasingly it’s become veryimportant to our employees who want to see the company as a highly responsible,sustainable organization. Beyond that, it’s just good business. The triple bottomline of environmental and consumer safety and profitability all come together,and reduced waste generates savings for the company.—Douglas D. Tough, Chairman and CEO, International Flavors & Fragrances, Inc.1516th Annual Global CEO Survey 2013—US Executive Summary
  • 18. Increasingly sophisticated investors, regu-lators and customers reward greater trans-parency. On the other hand, new disclosurerules and viral reaction cycles punish franktalk. What’s a CEO to do?Opting out of social media is no longer aviable option. Customers, competitors andemployees are all participants in a globalflow of information about a company’sbrand and industry. And 69% of US adultonline users are connected to at least onesocial media platform.1Word-of -mouthmarketing has turned into instantaneousreviews by customers—56% of consumerssay they are more likely to recommend a1 Social Networking, Pew Internet Project, 2012.Do we really *like*social media?brand after “liking” it on Facebook.2Onein three social media users say they preferto use the platform over the phone forcustomer service.3Thus many businesses today are experi-menting with social media, taking stepslike embedding digital tools and methodsinto workflow. The more advanced aresocial by design, not by reflex. They areconverging customer, sales and socialdata to empower the sales process, usingmeasurement and analytics to improvepredictability. The fully engaged are seeingresults in increased revenue and loyalty.CEOs recognize the power of their onlinedialogues; 53% of US CEOs said socialmedia users influence their businessstrategy. The viral nature of social mediaputs company behavior—internal andexternal—potentially on display. Theheightened reputational risk is not loston business leaders: 50% of US CEOssaid they’re increasing their focus onsupporting a culture of ethical behavior.2 10 Quick Facts You Should Know About ConsumerBehavior on Facebook, Constant Contact and ChadwickMartin Bailey, 2011.3 State of the Media: The Social Media Report, Nielsen,2012.US CEOs catching up to rise of social mediaTo what extent do users of social media influence your business strategy?US CEOs who say social media usersinfluence their business strategyUS adult online users connected toat least one social network53% 69%Base: 167. Sources: PwC, 16th Annual Global CEO Survey, 2013; Pew Internet Project, Social Networking,November 2012.People are communicating differentlytoday, and I think it’s important tostay in touch with the frontlines.—Steve Smith, CEO and President, Equinix, Inc.Social media16 PwC
  • 19. With intellectual property, trade secrets,financial information and even nationalsecurity at risk, CEOs and boards are payingmore attention to what once was consid-ered an IT issue. Cyberattacks are now aroutine part of doing business; among USCEOs, 31% believe a cyberattack or majorInternet disruption is likely to occur.Company leaders are acknowledging thatas we’ve become more reliant on informa-tion assets, cyberthreats are an intrinsicpart of the digital business ecosystem. Andmany are also realizing that cybersecurityunderpins everything they do—productand service development, mergers andacquisitions, and operations. Companiesthat are adopting this new mindset haveidentified their most crucial informationassets and prioritized how they will protectthem. They’re considering cybersecurity atthe outset of business initiatives. They’realso evaluating responsibility and account-ability, with many installing an executiverole or council charged with all aspectsof cybersecurity.They do recognize the potential damage asecurity breach could inflict, both financialand reputational; 68% of US CEOs saidHow do we get to a placewhere cyberattacks are lessof a threat to our network?that a cyberattack would have a negativeimpact on their businesses. CEOs of globalindustries that deal in regulated data aremost concerned about the negative impactof cyberattacks, such as banking (77%),power & utilities (73%), healthcare (71%)and communications (71%).Some CEOs are beginning to view cyberse-curity as an integral part of their businessstrategy—one that can even bring advan-tage. Some 10% of US CEOs said a cyberat-tack could present an opportunity—not athreat—for their businesses. Only 4% ofglobal CEOs felt the same way.US CEOs anticipating cyberattacks more than global counterpartsHow likely is a cyberattack or major disruption of the Internet?32%37%31%Likelyto occurUnlikelyto occurNot sureUS CEOs35%44%Global CEOs20%Base: US: 167; Global: 1,330. Source: PwC, 16th Annual Global CEO Survey, 2013.Cybersecurity1716th Annual Global CEO Survey 2013—US Executive Summary
  • 20. About the 2013 US CEO SurveyPwC conducted 167 interviews with US-based CEOs as a part of the 16th AnnualPwC Global CEO Survey. In all, PwC conducted a total of 1,330 interviews with CEOs in68 countries between 5 September and 4 December 2012. The interviews were spreadacross a range of industries, with further details by region and industry available on request.The majority of interviews were conducted by telephone, with some country exceptions:Interviews were conducted face-to-face in Africa and the Philippines; postal surveyswere used in Japan and Korea; and online surveys were completed in Australia, Icelandand Singapore. The US and Greece also used a mixed approach of telephone and online.In addition, members of our global CEO panel were invited to take part online, with230 CEOs providing their views. All interviews were conducted in confidence and onan unattributable basis. In all, PwC conducted in-depth interviews with 33 CEOs fromfive continents over the fourth quarter of 2012. The Global CEO Survey can be found athttp://www.pwc.com/ceosurvey.For this report, PwC also conducted in-depth interviews with nine US-based CEOs.Their interviews are quoted in this report, and more extensive extracts can be foundon our website at http://www.pwc.com/usceosurvey.Note: Not all figures add up to 100%, due to rounding of percentages andto the exclusion of ‘neither/nor’ and ‘don’t know’ responses.18 PwC
  • 21. To have a deeper discussion about the2013 US CEO Survey findings, please contact:Bob MoritzUS Chairman and Senior Partner1 646 471 8486robert.moritz@us.pwc.comRob GittingsUS Vice Chairman, Client Service1 646 471 7586robert.gittings@us.pwc.comTom CrarenPartner, Global CEO Survey Advisory Board1 646 471 6465tom.craren@us.pwc.com1916th Annual Global CEO Survey 2013—US Executive Summary
  • 22. AdvisorsEd BoswellDavid BurgMichael ComptonTom CrarenPaul D’AlessandroMichael HinchcliffeBen McConnellEileen MullaneyKathy NielandScott OlsenJohn PotterMark StromCore editorial teamCristina AmpilNicholas BraudeEmily ChurchFrancisco GomezDee HildyJessical MelwaniAngela PhamCraig ScaliseElizabeth StrottDeepali SussmanPeter VigilChristine WendinPrincipal author and editorEmily ChurchProject managementNatalie KontraCreativeTracy FulhamAdiba KhanAmy KunzSamantha PattersonTatiana PechenikIsabella PiestrzynskaTanya RebeloAdam WestAcknowledgementsPwC20
  • 23. www.pwc.com/usceosurveyPwC helps organisations and individuals create the value they’re looking for. We’re a network of firms in 158 countries with more than 180,000 people who are committed to deliveringquality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com.© 2013 PricewaterhouseCoopers. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please seewww.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

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