Communications CEOs around the world are more confident about their company’s prospects for revenue growth over the next 12 months. A staggering 90% are somewhat or very confident about growth prospects over the next three years.
Pierre-Alain Sur, PwC global communications leader, says: “Communications CEOs are looking to product and service innovation to drive their companies forward. Communications industry CEOs know they need to keep up with technology. They are very laser-focused on their company’s ability to keep up with the speed of technological change. Most CEOs want to improve their company’s ability to innovate. And they’re looking to strategic alliances or joint ventures to propel growth.”
PwC recently interviewed 39 communications CEOs in 25 countries across the world, as part of its 17th ‘Annual Global CEO Survey’. The global survey results were based on interviews with 1 344 CEOs from 68 countries. In addition, 105 interviews were held with CEOs from South Africa.
The world is not the same place it was a few years ago and will be different again just a year from now. Global CEOs think that three defining trends will transform their businesses over the next five years: Technological advances such as the digital economy, social media, mobile devices and big data; demographic changes; and global shifts in economic power.
The interplay between these trends will be as significant as the trends themselves. Together they will create many new opportunities for innovation and growth, but they will also raise many new challenges.
Johan van Huyssteen, PwC communications leader for Southern Africa, says: “South African CEOs regard technological advances as the most important trend, according to the survey. The digital revolution has put more power in the
hands of more people than ever before. Collaborative networks are replacing conventional corporate models of operating, while consumers are swapping information and advice on the virtual airwaves.”
CEOs are preparing for the future. “The communications industry never sits still. The industry is changing too quickly to predict what will happen in just five years,” says Sur. “In these circumstances more than half of communications CEOs (56%) only have a planning time horizon of three years.
CEOs are looking on multiple fronts for growth opportunities. “CEOs must think strategically as the search for growth is getting increasingly complicated in a global economy which is gradually rebalancing itself,” says Sur.
CEOs are well aware of the importance of collaboration. Partnerships feature prominently in their plans. More than half of communications CEOs (54%) indicated that they are looking into a new strategic alliance or joint venture, while 44% of global respondents intend entering into a new joint venture or alliance in the next 12 months.
Growing market share, whether in existing markets or in new geographies, was also recognised as a big opportunity for business growth. For communications CEOs it is interesting to note that looking beyond the BRICS (Brazil, Russia, India, China and South Africa), Mexico, Philippines, Singapore, Turkey and the UK were considered most important for growth prospects over the next three to five years.
Similarly, South African CEOs across industry see growth opportunities coming from an increased share in existing markets (30%), 30% from new geographic markets, and 24% from product/service innovation. Nearly half of South African CEOs (43%) named other African countries as most important for their prospects for growth in the next 12 months, 29% named China and 23% the US.
“Africa is still considered one of the world’s most dynamic telecommunications markets and is also one of the most innovative. Many international telecoms firms are looking for opportunities in Africa that will provide new revenue streams,” says van Huyssteen.
South Africa’s CEOs across all industries are contending with similar issues as their global counterparts, with the majority viewing over-regulation, exchange rate volatility and the slowdown in high-growth markets as barriers to business growth. Political and economic threats are also looming, as well an increasing tax burden.
Communications CEOs in particular are seriously concerned about cyber threats, including data security breaches, and the speed of technological change.
Demographic trends are having profound implications for the workplace, with the global population expanding and expected to hit 8-billion by 2025.
Globally, corporate payrolls are expected to get a lot bigger over the next 15 years, as greater competition for labour and social pressure to raise salaries in line with productivity growth cause even greater wage convergence. As wages in the emerging economies, including South Africa, catch up with those in developed markets, so the pressure on labour productivity will increase.
Communications CEOs on a global basis are concerned about the availability of key skills (62%).
Van Huyssteen says: “Technological advances are also expected to make it both easier and more difficult to find skilled workers.” They will make it easier by providing efficient new ways to recruit talent, by way of digital platforms, and allowing employees who might otherwise have had to leave the workforce to keep working.
But technology will also help competitors to poach good staff and talented individuals to set up independently. It will also raise the level of education that’s required to perform many jobs. Faced with a host of challenges, no less than 95% of South African CEOs (Global 93%) recognise the need to change, or are changing, their strategies for attracting and retaining talent. However, 60% globally haven’t yet acted on their plans.
This could be because they don’t think their HR functions could cope: More than two-thirds of local CEOs believe their HR function isn’t well-prepared for the changes needed to respond to transformative trends, explains the study.
The majority of communications CEOs (69%) are also concerned about rising labour costs in high-growth markets.
While CEOs globally believe government should be focusing on these critical issues, they acknowledge that business can’t operate in isolation from the society in which it operates. Consequently, many CEOs say they are committed to playing a meaningful role in workforce development and job creation.
The demands being placed on business leaders to adapt to the changing environment are increasing significantly.
In addition to extending planning horizons, businesses are concerned about the total impact of their activities across social, environmental, fiscal and economic dimensions. CEOs believe it is important to balance the interests of different stakeholders, rather than focusing solely on investors, employees and customers.
“CEOs have to become hybrid leaders who can successfully run the business of today while creating the business of tomorrow,” Sur says.
