2013 US CEO survey                       Creating value in uncertain times16th Annual GlobalCEO Survey 2013US Executive Su...
OverviewUS CEOs in our 16th Annual Global CEO Survey are             The experiences they will be able to pass on to the n...
Leaders most admiredby US-based CEOsWe asked CEOs, “As a leader, can youshare an example from literature orhistory where s...
Creating value                                                     Confidence falters for US CEOsin uncertain times       ...
US CEO agenda for 2013Based on what we heard in the 16th Annual Global CEO Survey, these are some of the ques-tions US CEO...
US CEOs see US market expansion as primary growth driver in 2013Growth               What do you see as the main opportuni...
Foreign revenue now accounts for                China still #1, but German, Canadian and Mexican markets rise inaround 40%...
Domestic deals, alliances on 2013 agenda for US CEOs                                                   Fiscal and economic...
US CEOs rate a wide range of possible high-impact risks                                                                   ...
Another comes from the modern,        CEOs said their strategies areflexible supply chain—one area        influenced by lo...
Fiscal policy, tax uncertainties weigh heavily on US CEOs                                              said that governmen...
Fast pace of strategic change drives cost agenda for US CEOsOperations                              To what extent do you ...
CEOs to strengthen engagement with partners to fortify supply chains against array of risksSupply chain                   ...
Talent availability remains a signifi-         CEOs identify the most effective strategies for managing theTalent         ...
CEOs are rallying their organiza-           CEOs show disparity in customer-centered investment prioritiesCustomer        ...
CEOs investing more to secure natural resourcesSustainability            How strongly do you agree or disagree that the go...
Environmental and social issues get more CEO attentionHow concerned are you about lack of trust in your industry as a thre...
Increasingly sophisticated investors,                  all participants in a global flow of                they are more l...
US CEOs anticipating cyberattacks more than global counterparts                                 accountability, with many ...
About the 2013 US CEO SurveyPwC conducted 167 interviews with US-based CEOs as a part of the16th Annual PwC Global CEO Sur...
To have a deeper discussion about the 2013 US CEO Surveyfindings, please contact:Bob Moritz                               ...
www.pwc.com/usceosurveyPwC firms help organisations and individuals create the value they’re looking for. We’re a network ...
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PwC's 2013 US CEO Survey

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US CEOs are showing less confidence for growth in the next year but are optimistic about the longer-term horizon. They are far more confident in their company’s ability to navigate through the anticipated volatility expected over the next three years. As you’ll discover in our Survey, today’s CEOs are focused on building resilient organizations. Learn more. http://pwc.to/145hUDn

PwC's 2013 US CEO Survey

  1. 1. 2013 US CEO survey Creating value in uncertain times16th Annual GlobalCEO Survey 2013US Executive Summary
  2. 2. OverviewUS CEOs in our 16th Annual Global CEO Survey are The experiences they will be able to pass on to the nextshowing less confidence for growth in the next year but generation will shape a new perspective on the importanceare optimistic about the longer-term horizon. They are of resilient leadership through uncertainty. “Persistent,”far more confident in their company’s ability to navigate “ethical” and “pragmatic” were the words many CEOs usedthrough the anticipated volatility expected over the next to describe traits of historical leaders they most admire.three years. I would like to thank all who participated in the survey,As you’ll discover in our report, today’s CEOs are focused particularly the CEOs who took the time to sit down with uson building resilient organizations. They’re setting the to share their perspectives on the opportunities and challengesfoundation for long-term growth by finding new ways to businesses are facing today. Their insights greatly informedextend their competencies. They’re sharing value as well our survey, and you can view our interviews with them,as risks as they increasingly operate within networks of along with the full report, at www.pwc.com/usceosurvey.alliances and partnerships.Half of the 167 US CEOs participating in our survey havebeen heading their company for less than five years. Theoperating environment over the past few years has beenunlike anything seen before, so this group has admittedly Bob Moritzlearned a lot—and gained a lot, too. US Chairman, Senior Partner PwC
  3. 3. Leaders most admiredby US-based CEOsWe asked CEOs, “As a leader, can youshare an example from literature orhistory where someone exhibitedgood leadership? What did youadmire about their actions?” Theseleaders topped the US CEOs’ list. #1 Winston Churchill #2 Abraham Lincoln #3 Ronald Reagan “He explained the reality of “He understood the greater “His mantra—‘trust, but verify’—isBase: 130. Source: PwC, 16th Annual Global CEO what people faced and he good and he understood the a very good leadership skill.”Survey, January 2013. mobilized them to deal with it.” bigger picture.”Leaders most admired by CEOs globally1. Winston Churchill 6. Abraham Lincoln2. Steve Jobs 7. Margaret Thatcher3. Mahatma Gandhi 8. Ronald Reagan4. Nelson Mandela 9. John F. Kennedy Nelson Mandela5. Jack Welch 10. Napoleon Bonaparte “Excellent moral leadership, a skill that has been lost or forgotten inBase: 1,351. Source: PwC, 16th Annual Global CEO Survey, January 2013. the new era.” —Australian CEO16th Annual Global CEO Survey 2013—US Executive Summary 1
  4. 4. Creating value Confidence falters for US CEOsin uncertain times How confident are you about your company’s prospects for revenue growth over the next 12 months? Over the next three years? Not confident about prospects Very confident about of revenue growth prospects for revenue growth2013 is shaping up as a pivotal year. CEOs are redirectinginvestments and strategies against a backdrop of global fiscal 3%and economic uncertainties. They are honing approaches,focusing on organic growth, their customers, and operational 7%effectiveness. Here’s what the 167 US-based CEOs tell us they’redoing to adjust—and to set the foundation for new growth. 19%#1 Building resilience to disruption US CEOsExpect more strategic alliances and partnerships this year. Next 12 months 30%CEOs are seeking to increase their companies’ ability to swiftlyrespond to demand changes by collaborating with partners more Next 3 yearsclosely or by diversifying to best ensure uninterrupted business 47%operations through a range of scenarios. Next 3 years (2012 survey) 54%#2 Taking the home-field advantageLook for a sharpened focus on the US market this year. CEOs Bases: US 2012: 161; 2013: 167. Sources: PwC, 15th Annual Global CEO Survey, January 2012; PwC,are planning to consolidate advantages on their home turf. 16th Annual Global CEO Survey, January 2013.They’re considering domestic deals, and 41% see expanding theircustomer base in the US as the main avenue for growth in 2013. The additive effect of a decade’s our survey, confidence in near-term#3 Siding with the customer worth of volatile global growth growth has only surpassed 50%Expect interest in predictive analytics and other customer- cannot be understated. Short-term twice in the past decade—in 2008oriented strategies to keep growing. CEOs are setting the confidence is faltering: A third of and 2007.customer as their beacon to build businesses that last. Getting US CEOs are ‘very confident’ theirthe right read on changing customer demands will help on a companies will see revenue growth Push out the horizon three years, andnumber of fronts: where manufacturing is located; where to over the next 12 months, down from CEO spirits revive. They are far moreconsider acquisitions; how to spend precious R&D funds; and 41% in 2012. Of course, CEOs have confident in their companies’ abilitywhere to form alliances to extend competencies. historically been less bullish about to navigate the anticipated volatility. short-term prospects; according to 2 PwC
  5. 5. US CEO agenda for 2013Based on what we heard in the 16th Annual Global CEO Survey, these are some of the ques-tions 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 theirresponses into the following issues. Growth How prepared are we for greater competition 4 Talent How will we foster the next generation 12 in the US market? of leaders in our company? Deals How can we take advantage of a potentially 6 Customer How can we more effectively put our customers 13 healthier deals market in 2013? focus at the center of our growth initiatives? Risks What can we do to make our company more 7 Sustainability What more can we do to prepare for global 14 resilient to significant and unpredictable risks? constraints on critical natural resources? Tax How can we forge ahead amid uncertainty 9 Social media Do we really *like* social media? 16 about tax and regulations? Operations What are the most important transformations 10 Cybersecurity How do we get to a place where cyberattacks 17 in operations that our company needs? are less of a threat to our network? Supply chain How can we shore up our supply chain so that 11 it’s better able to withstand disruptions?16th Annual Global CEO Survey 2013—US Executive Summary 3
  6. 6. US CEOs see US market expansion as primary growth driver in 2013Growth What do you see as the main opportunity to grow your business in the next 12 months? When people ask me what’s going to happen in the next five years, I throw up my hands and 2012 2013How prepared say, ‘I have no idea and neither Increased share in Organic growth inare we for greater existing markets 38% existing domestic 41% do you.’ How do you cope with market that degree of uncertainty?competition in the New product or New M&A/joint Well, I think first by having theUS market? service development 26% ventures/strategic 22% right attitude about the process alliances of change and reinvention. New geographic New product or And second, is by forming markets 16% service development 17% partnerships, collaborations and alliances with other like- Mergers and Organic growth in minded companies that have acquisitions 13% existing foreign market 16% something to contribute beyond what you can provide. New joint ventures New operation(s) in and/or strategic 6% foreign markets 4% —Peter Tortorici, CEO, GroupM alliances Entertainment Global Note: 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. Two goals head the growth agenda opportunities. Surely, weak pros- Yet the range of potential outcomes in 2013 for many US CEOs: pects for Europe (where 47% of US in the US factor in, too. Tilting posi- capturing more share in existing CEOs said they have key operations) tively is a fledgling housing recovery markets, whether in the US or inter- and less clear growth trajectories and the shale gas revolution.1 nationally, and making greater use in some fast-growing economies of acquisitions or strategic alliances matter. As does increasing compe- It bears repeating: International to advance that aim. tition in international markets. markets are crucial to CEOs no For example, this year, a higher matter where they are based. What has changed? Just a year ago, percentage of German CEOs said US CEOs saw growth drawn more that China became a more impor- 1 PwC, Shale Gas: A renaissance in US evenly across a range of potential tant market than the US. manufacturing? 20114 PwC
  7. 7. Foreign revenue now accounts for China still #1, but German, Canadian and Mexican markets rise inaround 40% of total revenue for importance for US CEOsglobal companies.2 And sources Which three countries, excluding the US, do you consider most important to overall growthof global growth and investment prospects over the next 12 months?flows have been shifting for sometime, with the 2008 financial crisis 2012 2013accelerating the trend. China, Indiaand Brazil will together add around China 48% China 41%$1 trillion to the world economy Brazil 24% Brazil 21%in 2013.3 India 17% Germany 21%Over the next three years—as global UK 16% Canada 20%competition intensifies—CEOs willneed to develop a keener sense of Germany 12% UK 15%what will drive growth and how tocreate sustainable businesses.4 That Canada 11% India 13%is perhaps what has changed for Mexico 9% Mexico 13%CEOs the most. Base: 2012: 161; 2013: 167. Sources: PwC, 15th Annual Global CEO Survey, January 2012; PwC, 16th Annual2 MSCI Global Index. Global CEO Survey, January 2013.3 PwC, Global Economy Watch, January 2013.4 PwC, Growth in new markets: It’s all abouthow, 2012. 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 see real and sustained growth, not only from an economic development standpoint across all sectors—residential, commercial, as well as industrial—but the spin off that flows from additional manufacturing in this area. This is the greatest opportunity we’ve had in years in this country to reposition ourselves again as a leader in manufacturing and in advanced technologies. —Anthony Alexander, President and CEO, FirstEnergy, Oct. 5, 201216th Annual Global CEO Survey 2013—US Executive Summary 5
  8. 8. Domestic deals, alliances on 2013 agenda for US CEOs Fiscal and economic uncertain-Deals Which, if any, of the following restructuring activities have you initiated in the past 12 months? ties loom large, yet there are some sector-specific shifts in play that may Plan to initiate in the coming 12 months? drive activity. Sweeping reforms inHow can we take Completed deals Planning deals the Affordable Care Act are likelyadvantage of a in 2012 in 2013 to spur consolidation as healthcare revenue models change.2 Anotherpotentially healthier Domestic M&A 30% 42% example: Financial services compa-deals market in 2013? 24% 28% nies continue to pursue divestitures Cross-border M&A 23% 28% to bolster capital levels and unlock 19% 26% asset value. Divestitures/ 25% 22% market exits 19% 15% In fact, divestitures have been important—representing around a New alliances/JVs 42% 57% third of deal volume in 2012—and 36% 47% they are expected to retain a promi- US CEOs Global CEOs nent strategic position in 2013 for US and European CEOs. CompaniesWe’re about a $1.5 billion system Base: US: 167; Global: 1,330. Sources: PwC, 15th Annual Global CEO Survey, January 2012; PwC, are tapping into a variety of exitright now. To compete in this 16th Annual Global CEO Survey, January 2013. options in this market.3market, we need to probably be inthe $3 to $5 billion dollar range … CEOs based outside North AmericaTherefore, one would think that US CEOs are more intent on M&A The US deals market, while in better are a second source for US activity:consolidation is something that in 2013 than their global peers, shape than some markets elsewhere, 30% of global CEOs said they planwill likely occur, just as it is and they’re concentrating on remains restrained. Increasing an acquisition or alliance in Northoccurring in many other places consolidation and expansion in the interest in strategic alliances is a America, led by pharmaceuticals &across the country. US market. Consider that 42% of factor,1 yet the fundamentals for life sciences (52%); power & utilities US CEOs said they’re planning to growth in the deals market are in—Dr. Larry Kaiser, President and CEO, (44%); transportation & logisticsTemple University Health System complete a domestic deal this year. place. Interest rates are low and over (42%); and technology CEOs (39%). It will mark a significant uptick if $1 trillion in cash sits on corporate they’re able to deliver: 30% said they balance sheets. completed a domestic deal in 2012. 2 PwC, Health reform re-elected: ACA 1 PwC, Navigating Joint Ventures and Business implementation in tough fiscal times, 2012. Alliances, 2012. 3 PwC, Corporate exit strategies: Selecting the best strategy to generate value, 2012. 6 PwC
  9. 9. US CEOs rate a wide range of possible high-impact risks US CEOs recognize they’ll have toRisks How likely are the following scenarios to occur? And how would your organization cope work around a flock of new risks, from global debt burdens to social with the following scenarios if they happened within the next 12 months? media scrutiny. Growth strategiesWhat can we do to 100% should factor in how governmentmake our company policies could shock the economy— 90% of US CEOs worry about uncer-more resilient to tain or volatile economic growth, asignificant and Recession greater share than their global peers. Major social unrest in the USunpredictable risks? 80% in the country in which In their view, potential outcomes for you are based 2013 are wide-ranging. On average, CEOs expect more than one major CEOs who think it’s likely to have negative impact Natural disaster Cyberattack or risk event to occur. disrupting a major major disruption trading/ 60% manufacturing hub China’s GDP growth The future increasingly depends on Health crisis falling below 7.5% unpredictable risks far beyond core operations—financial meltdowns Military or trade or cyber breaches, to name two.I don’t think that organizations Scenario testing offers one example Break-up tensions affectingthat are slow to adjust and that access to natural of concrete measures some busi- 40% of the Eurozoneare reactive are going to thrive in resources ness leaders are taking to betterthe years ahead. So we are going to understand where their companies’invest time, resources and attention vulnerabilities lie.to become a more innovativeorganization, and to do it quickly.—Steven H. Lesnik, Chairman, President 0% 10% 20% 30% 40% 50%and CEO, Career Education Corporation CEOs who think it’s likely to occur Base: 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 2013.16th Annual Global CEO Survey 2013—US Executive Summary 7
  10. 10. Another comes from the modern, CEOs said their strategies areflexible supply chain—one area influenced by local communities,of operations that has been tested users of social media, industryheavily in recent years. Companies competitors and peers, govern-are now working more closely with ments and regulators, as well asa range of supply chain partners those closer to their operations.to ensure they can quickly scale They also plan to strengthenup or down in response to sudden engagement with a majority ofchanges in demand.1 their influential stakeholders.Agility requires thinking about the These steps all add up to busi-system, not just the enterprise. US nesses building resilience to moveCEOs are responding by engaging forward and grow in an increas-more broadly across sprawling ingly uncertain environment.networks. More than half of US1 PwC, 10Minutes on supply chainflexibility, 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 capital expenditures and people and building better opportunities for the future. Because buying 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. 8 PwC
  11. 11. Fiscal policy, tax uncertainties weigh heavily on US CEOs said that governments are notTax How concerned are you about the following potential business, economic and policy threats succeeding in harmonizing global tax and regulatory frameworks. to your growth prospects?How can we US CEOs Global CEOs Yet despite being much moreforge ahead amid concerned about taxes than theiruncertainty about Government response to fiscal global counterparts, US CEOs are deficit and debt burden 67% 35% only marginally more likely to taketax and regulations? a closer look at their approaches Uncertain or volatile economic to tax planning and contribution 53% 39% growth (40% vs. 37% globally). Keep an eye on tax policy in 2013. Over-regulation 44% 30% Reforms can drive up tax bills, but well-targeted changes can increase business confidence and open Increasing tax burden 40% 25% new opportunities.The global community ofregulators—as well as the Base: US: 167; Global: 1,330. Respondents who stated ‘extremely concerned.’political classes—are keen on Source: PwC, 16th Annual Global CEO Survey, January 2013.ensuring the stability of thefinancial system. And that impliesa completely new order, a new set Tax issues top US CEO concerns, Taxes are particularly thorny forof rules to play by. In these cases, with almost three-quarters global companies. And while muchit’s not uncommon to wind up in a concerned (of which 40% are is changing—more countriessituation of regulatory overreach. ‘extremely’ concerned) about how continue to take steps to ease the tax—Piyush Gupta, CEO and Director, DBS tax reform could potentially slow compliance burden on business1—Group, Singapore, 16th Annual Global activity, turn profits into higher tax few CEOs expect overall relief onCEO Survey bills and make them less globally global tax standards anytime soon. competitive. More than two-thirds of US CEOs 1 PwC, World Bank and IFC, Paying taxes 2013.16th Annual Global CEO Survey 2013—US Executive Summary 9
  12. 12. Fast pace of strategic change drives cost agenda for US CEOsOperations To what extent do you anticipate your company’s strategy will change over the next 12 I see more movement toward looking at population health months? Any of the following areas over the next 12 months? Which, if any, restructuring activities do you plan to initiate in the coming 12 months? management and the factWhat are the that we need to learn how tomost important 61% 68% 29% 17% manage the chronic diseases in expect some level anticipate changes plan to outsource plan to “insource” a population, which accounttransformations in of strategic change to their company’s a business a previously in their companies organizational process or outsourced business for so much of the healthcareoperations that our in 2013 structure function process or function dollar.company needs? —Joel Allison, President and CEO, Baylor Health Care System Underlying every business model is an operating model that marshals assets, partners, technologies and systems to actually make things happen. Thus CEOs seek opportuni- ties for competitive advantage in theirGiven that the global economy operating models to offer customersand the global pace of life are more and to do so at a lower cost.getting faster in all aspects, oneneeds to become more agile and Such opportunities lie in coreefficient about everything— Base: 167. Source: PwC, 16th Annual Global CEO Survey, January 2013. processes like product innovation,including running a company. supply chain and service delivery;It’s essential that you streamline US CEOs continue to keep costs in fronts, including customer demand, or in transforming corporate func-operations and become leaner check. Last year, 81% implemented labor costs, technology, transporta- tions like procurement, tax andwherever you can, so as to be able cost-cutting measures. In 2013, 71% tion and regulatory/tax regimes. marketing. Leading companies taketo react more quickly to changing are planning cuts. a global view, and some are seeingmarket conditions. Yet CEOs are seeking more from performance gains from setting up—Anders Nyrén, President and CEO, In an environment of pricing pres- operational leaders than holding a global business services structureIndustrivärden AB, 16th Annual Global sure and slow demand growth, every the line on costs. They’re also being that integrates functions and focusesCEO Survey element of direct and SG&A expense asked to create value and contribute them on customer needs.1 is getting a fresh look. Businesses to growth. Forty-four percent of US are redoubling efforts to analyze— CEOs are investing to increase their 1 PwC, 10Minutes on creating value from and scrutinize—dynamics on many company’s operational effectiveness. Global Business Services, 2012.10 PwC
  13. 13. CEOs to strengthen engagement with partners to fortify supply chains against array of risksSupply chain How concerned are you about the following potential business, economic and policy threats to your growth prospects? US CEOs Global CEOsHow can we shore Uncertain or volatile economic growth 90% 81%up our supply chain Availability of key skills 54% 58% Protectionist tendencies of national governmentsso that it’s better Shift in consumer spending and behaviors 47% 43% 51% 49%able to withstand Speed of technological change 43% 42%disruptions? Exchange rate volatility 41% 54% Energy and raw material costs 41% 52% Inability to protect intellectual property and customer data 36% 34% Inadequacy of basic infrastructure 27% 35% Bribery and corruption 24% 41% Supply chain disruption 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 learning A recent host of factors, including engagement with key suppliers about energy and raw materialexperience and an opportunity market and demand volatility, to both minimize costs and maxi- costs (41%). They’ll be looking atto deepen your crisis management the speed of process automation, mize supply chain flexibility and how low-cost options for shale gascapabilities. But our operations transparency needs, and even delivery performance. Globally, change sourcing options, in additionare now scaled so broadly that we disruptions due to natural disasters industries most focused on supply to other benefits of reshoring.2have to accept the fact that there have led to questions about what chain engagement include industrialare some events that just aren’t strong supply chain performance manufacturing (84%), consumer A more sustainable supply chain ispredictable. A degree of fragility looks like. Companies that run the goods (80%), energy, oil and gas of interest, too. Reducing the compa-is part and parcel of the system. supply chain as a strategic asset (79%) and technology (76%). ny’s environmental footprint—much want their suppliers to be true part- of which falls along the supply—Peter Tortorici, CEO, GroupMEntertainment Global ners in helping them cope with the They’ll have a full agenda. In many chain—makes the radar (43%). But ups and downs.1 cases they’ll be collaborating on sustainability doesn’t come without delivery issues and requirements significant challenges: The use of low- In the year ahead, more than half of to tailor products to different cost and best-cost country sourcing US CEOs (53%) plan to strengthen consumer needs; 43% of US CEOs can make it more difficult to control said 2013 will bring more shifts environmental and social risks. 1 PwC, Next-generation supply chains: in consumer spending behaviors. Efficient, fast and tailored, 2012. Many US CEOs are concerned 2 PwC, 10Minutes on US manufacturing resurgence, 2012.16th Annual Global CEO Survey 2013—US Executive Summary 11
  14. 14. Talent availability remains a signifi- CEOs identify the most effective strategies for managing theTalent cant concern for CEOs everywhere. In an age in which companies are leadership pipeline How effective are the following options at developing your leadership pipeline? increasingly differentiated by theHow will we foster talent they can deploy, this shouldn’t US CEOs Global CEOsthe next generation come as a surprise.1 Involving managers below board level in 84% 70%of leaders in our strategic decision-making More than half of US CEOs pointcompany? to the availability of key skills as a Active succession planning including 74% 59% potential threat to growth in 2013. identifying multiple successors With talent widely recognized as central to powering growth, Rotations to different functions/challenges 51% 52% more CEOs are taking action. In fact, nearly three-quarters of US Encouraging global mobility and 50% 51% CEOs expect to change their talent international experience management strategies, with 18% prepared to make major changes in Dedicated executive development program 47% 59% the coming year.There is clearly a supply-demand Programs to encourage diversity among 46% 44%issue when it comes to top-level To do that, they are willing to business leaderstalent globally. Given the commit resources, with 65% of USdemographics, the technology CEOs planning to invest in creating Shadowing a senior executive 20% 29%changes that we’re seeing today, and fostering a skilled workforce inand the economic environment in their home country. But they alsowhich we’re operating, the supply- don’t expect to do it alone: 68% Base: US: 167; Global: 1,330. Respondents who stated ‘very effective’ or ‘somewhat effective.’ Source: PwC, 16th Annual Global CEO Survey, January 2013.demand issue is not going to go of US CEOs said building a skilledaway overnight. workforce should be a top govern-— L. Kevin Kelly, CEO, Heidrick & ment priority. They also believe Where else will they focus when planning (89%) and programs toStruggles there’s considerable room for it comes to talent? For those encourage diversity among busi- improvement, with only 3% saying who agree employees are impor- ness leaders (64%). They say that that the government has been effec- tant stakeholders, 80% plan to the most effective of these strate- tive in doing so. strengthen employee engagement gies include involving managers in programs. They also are focusing on strategic decision-making and active 1 PwC, 10Minutes on talent priorities, 2012 developing their leadership pipe- succession planning. lines, including active succession12 PwC
  15. 15. CEOs are rallying their organiza- CEOs show disparity in customer-centered investment prioritiesCustomer tions around the “customer” in 2013. It is the clearest refrain from What are your top three investment priorities over the next 12 months?focus this year’s survey. This is a top three South Africa investment priority for CEOs (63%); US expanding their customer base isHow can we more Mexico where more US CEOs believe their Africaeffectively put main opportunities lie. Western Europeour customers at Global US CEOs ranking Asia Pacific customer as a top threethe center of our What’s different this time? A lot— Japan investment priority and US CEOs are signaling they’llgrowth initiatives? China & Hong Kong Growing your invest time and money to catch up. customer base Latin America Nearly half of US CEOs worry that India Enhancing shifts in consumer spending and Russia customer service behaviors threaten their companies’ Brazil growth prospects. But this isn’t just about retailers and the intense online 0% 20% 40% 60% competition they face. It’s never beenSome of the key elements in IFF’s easier for a customer to walk away Bases: 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.success model are based around from an established company rela- Source: PwC, 16th Annual Global CEO Survey, January 2013.customer intimacy and consumer tionship, regardless of the industry.insights. It all starts with the Consider that orders for many US company. Ninety percent of US initiatives provide another example:consumer—a rich and robust contract manufacturers go global respondents said they are strength- Leading companies configure theirunderstanding of what they want, from day one. In the power & utilities ening their customer and client supply chains for specific customerwhere they’re going, but, most industry, which until recently had engagement programs. segments, adopting collabora-importantly, what they want a virtually captive customer base, tive planning with customers andin the future. 80% of senior executives acknowl- In the CEO’s corner are evolving suppliers.—Douglas D. Tough, Chairman edge that shortcomings in customer technology tools, such as predic-and CEO, International Flavors and engagement could limit the potential tive analysis, that open the door Companies with the strongestFragrances, Inc. impact of smart grid technology.1 to a deeper understanding of their customer-centered DNA have CEOs customers’ behaviors and help to who double as the chief customer Thus ‘getting closer to the measure success.2 Collaboration officer, in spirit if not in title. customer’ is escalating into putting the customer at the heart of the 2 PwC, “The third wave of customer analytics,” Technology Forecast: Reshaping the 1 PwC, The shape of power to come, 2012. workforce with the new analytics, 2012.16th Annual Global CEO Survey 2013—US Executive Summary 13
  16. 16. CEOs investing more to secure natural resourcesSustainability How strongly do you agree or disagree that the government helps companies secure access to natural resources (e.g., raw materials, water and energy)? How much does your company plan to increase its investment over the next three years to secure natural resources that areWhat more can we do critical to business in the country in which you are based?to prepare for global Emerging-market Developed-marketconstraints on critical CEOs CEOsnatural resources? Agree that the government helps companies secure access to natural 20% 17% resources (e.g., raw materials, water, energy) Plan to increase investment over the 52% 35% next three years in securing natural resources Base: Emerging-market CEOs: 671; Developed-market CEOs: 659. Respondents who stated ‘Agree’ or ‘Agree strongly’ and who stated 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, production is set to grow at twice developed-market CEOs plan to with 41% of US CEOs and 52% of the rate of energy demand, due increase investment in securing global CEOs concerned about rising to more diversity in the energy natural resources, and 52% of energy costs as a threat to growth supply.2 Add a trend toward greater emerging-market CEOs said prospects. interactions between fuels, markets the same. and prices, and the result is little Global energy demand is set to grow immunity from global energy Beyond securing what they’ll need, more than one-third between now market fluctuations.3 CEOs will make energy efficiency and 2035.1 Environmentally, that’s and water conservation measures unsustainable. On this path, not Thus CEOs are intent on securing pay off in both cost and reputation; only will greenhouse gas emis- natural resources now, including 43% of US CEOs plan to increase sions soar, but energy will become energy, water and raw materials. efforts to reduce their companies’ thirstier. Water needed for energy Over the next three years, 35% of environmental impacts. 1 World Energy Outlook 2012, ©OECD/IEA, 2 Ibid. November 2012. 3 Ibid.14 PwC
  17. 17. 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?Lack of trust in your industry? Framework to support Reducing Social enterprise Non-financial reporting a culture of ethical environmental initiatives (including corporate behavior footprint responsibility reporting) 27%US 50% 43% 30% 30% 39%Global 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.Other stakeholders—includingemployees, local communities, Sustainability is important to our customers, and increasingly it’sgovernments and supply chain become very important to our employees who want to see the companypartners—are important, too. Half as a highly responsible, sustainable organization. Beyond that, it’s justof US CEOs plan to increase their good business. The triple bottom line of environmental and consumercompanies’ focus on a framework safety and profitability all come together, and reduced waste generatesto support a culture of ethical savings for the company.behavior. Nearly one-third plan to —Douglas D. Tough, Chairman and CEO, International Flavors & Fragrances, Inc.increase their focus on non-financialreporting, giving stakeholdersa better view of the company’sworth and the value it contributesto society.16th Annual Global CEO Survey 2013—US Executive Summary 15
  18. 18. Increasingly sophisticated investors, all participants in a global flow of they are more likely to recommend aSocial media regulators and customers reward greater transparency. On the other information about a company’s brand and industry. And 69% of US brand after “liking” it on Facebook.2 One in three social media users say hand, new disclosure rules and viral adult online users are connected to they prefer to use the platform overDo we really *like* reaction cycles punish frank talk. at least one social media platform.1 the phone for customer service.3social media? What’s a CEO to do? Word-of -mouth marketing has turned into instantaneous reviews by Thus many businesses today are Opting out of social media is no customers—56% of consumers say experimenting with social media, longer a viable option. Customers, taking steps like embedding digital competitors and employees are 1 Social Networking, Pew Internet Project, 2012. tools and methods into workflow. The more advanced are social by design, not by reflex. They are US CEOs catching up to rise of social media converging customer, sales and To what extent do users of social media influence your business strategy? social data to empower the sales process, using measurement and 53% 69% analytics to improve predictability. US CEOs who say social media users US adult online users connected to The fully engaged are seeing results influence their business strategy at least one social network in increased revenue and loyalty.People are communicatingdifferently today, and I think CEOs recognize the power ofit’s important to stay in touch their online dialogues; 53% ofwith the frontlines. US CEOs said social media users—Steve Smith, CEO and President, influence their business strategy.Equinix, Inc. The viral nature of social media puts company behavior—internal and external—potentially on display. The heightened reputational risk is not lost on business leaders: 50% of US CEOs said they’re increasing their focus on supporting a culture of ethical behavior. 2 10 Quick Facts You Should Know About Consumer Behavior on Facebook, Constant Contact and Chadwick Martin Bailey, 2011. Base: 167. Sources: PwC, 16th Annual Global CEO Survey, 2013; Pew Internet Project, Social Networking, 3 State of the Media: The Social Media Report, November 2012. Nielsen, 2012.16 PwC
  19. 19. US CEOs anticipating cyberattacks more than global counterparts accountability, with many installingCybersecurity How likely is a cyberattack or major disruption of the Internet? an executive role or council charged with all aspects of cybersecurity. Unlikely LikelyHow do we get to occur to occur They do recognize the potential 20%to a place where damage a security breach could 31% inflict, both financial and reputa-cyberattacks are 32% tional; 68% of US CEOs said that aless of a threat to 44% cyberattack would have a negative US CEOs Global CEOsour network? impact on their businesses. CEOs of global industries that deal in regu- 35% lated data are most concerned about the negative impact of cyberattacks, 37% such as banking (77%), power & Not sure utilities (73%), healthcare (71%) and communications (71%). Base: US: 167; Global: 1,330. Source: PwC, 16th Annual Global CEO Survey, 2013. Some CEOs are beginning to view cybersecurity as an integral part of their business strategy—one that With intellectual property, trade cyberthreats are an intrinsic part can even bring advantage. Some secrets, financial information and of the digital business ecosystem. 10% of US CEOs said a cyberattack even national security at risk, CEOs And many are also realizing that could present an opportunity—not and boards are paying more atten- cybersecurity underpins every- a threat—for their businesses. Only tion to what once was considered thing they do—product and service 4% of global CEOs felt the same way. an IT issue. Cyberattacks are now development, mergers and acquisi- a routine part of doing business; tions, and operations. Companies among US CEOs, 31% believe that are adopting this new mindset a cyberattack or major Internet have identified their most crucial disruption is likely to occur. information assets and prioritized how they will protect them. They’re Company leaders are acknowl- considering cybersecurity at the edging that as we’ve become more outset of business initiatives. They’re reliant on information assets, also evaluating responsibility and16th Annual Global CEO Survey 2013—US Executive Summary 17
  20. 20. About the 2013 US CEO SurveyPwC conducted 167 interviews with US-based CEOs as a part of the16th Annual PwC Global CEO Survey. In all, PwC conducted a total of1,330 interviews with CEOs in 68 countries between 5 September and4 December 2012. The interviews were spread across a range of industries,with further details by region and industry available on request.The majority of interviews were conducted by telephone, with somecountry exceptions: Interviews were conducted face-to-face in Africa andthe Philippines; postal surveys were used in Japan and Korea; and onlinesurveys were completed in Australia, Iceland and Singapore. The US andGreece 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 confi-dence and on an unattributable basis. In all, PwC conducted in-depth inter-views with 33 CEOs from five continents over the fourth quarter of 2012.The Global CEO Survey can be found at http://www.pwc.com/ceosurvey.For this report, PwC also conducted in-depth interviews with nine US-basedCEOs. Their interviews are quoted in this report, and more extensiveextracts can be found on 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. 21. To have a deeper discussion about the 2013 US CEO Surveyfindings, please contact:Bob Moritz Rob Gittings Tom CrarenUS Chairman and Senior Partner US Vice Chairman, Client Service Partner, Global CEO Survey Advisory Board1 646 471 8486 1 646 471 7586 1 646 471 6465robert.moritz@us.pwc.com robert.gittings@us.pwc.com tom.craren@us.pwc.comAcknowledgementsThe following people in PwC contributed to the production of this report.Advisors Core editorial team Principal author and editor CreativeEd Boswell Cristina Ampil Emily Church Tracy FulhamDavid Burg Nicholas Braude Adiba KhanMichael Compton Emily Church Project management Amy KunzTom Craren Francisco Gomez Natalie Kontra Samantha PattersonPaul D’Alessandro Dee Hildy Tatiana PechenikMichael Hinchcliffe Jessical Melwani Tanya RebeloBen McConnell Angela Pham Adam WestEileen Mullaney Craig ScaliseKathy Nieland Elizabeth StrottScott Olsen Deepali SussmanJohn Potter Peter VigilMark Strom Christine Wendin16th Annual Global CEO Survey 2013—US Executive Summary 19
  22. 22. www.pwc.com/usceosurveyPwC firms help organisations and individuals create the value they’re looking for. We’re a network of firms in 158 countries with close to 169,000 people who are committed todelivering quality 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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