The latest of Gartner’s CEO surveys published two weeks ago, clearly shows that CEOs and senior business executives are confident about growth and recovery this year. It also reveals that their digital focus is on the rise again, with CIOs’ clear strategic priority being digitization.
The focus of the survey was around the major priorities and business concerns of CEOs and executives of large companies. The results show that post crisis, participants are shaping their businesses with confidence and concentrating on digital business strategies.
“In total, 465 actively employed CEOs and other senior executive business leaders qualified and participated to the survey”. These participants work for enterprises with revenue between $50m and $10b+.
2021 is the year of rebuilding. For the vast majority of CEOs who took part in the survey, the main task will be recovering revenue, profit and growth, to bring them in line with pre-pandemic levels. A smaller group will be adapting their businesses to profit from increased demand, while only a small minority will focus on surviving through to 2022.
The survey contains a lot of interesting first-hand information. To us, the key takeaways are:
- “More CEOs anticipate an economic boom (60%) than stagnation (40%) in 2021-2022.
- The top priorities of CEOs indicate confidence; 56% mention growth and cost focus fell by 17%.
- CEOs’ digital focus rose again; 36% gave a tech-related top priority and 20% said “digital”.
- Few CEOs have CDOs, but 83% have CIOs – the main task for CIOs is digitalization.”
“More CEOs anticipate an economic boom (60%) than stagnation (40%) in 2021-2022”
After mass vaccination, the majority are anticipating a fast and sharp recovery, and many are already making moves to take advantage of this. In fact, the majority of CEOs are predicting “something of an economic boom,” according to Gartner.
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«Overall, a majority expect to be back at 2019 revenue levels by the end of 2021, and only 10% expect it to take until beyond the end of 2022.”
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“The top priorities of CEOs indicate confidence; 56% mention growth and cost focus fell by 17%.”
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What are the top priorities for CEOs?
The top focus for CEOs over the next two years is still growth, while the number of participants whose priority is technology-related has risen. As Gartner says, “with all the emphasis the crisis placed on remote working and digital commerce, this is to be expected.”
The corporate action category has gone up a little – directional changes to businesses, such as new strategies, M&As and reorganization, are to be expected. In fourth position is the financial category. This year, the biggest increase of emphasis in this category was on cash flow, as might be expected in a period of downturn. The workforce category in fifth position showed a marked rise as a result of CEOs becoming concerned about the wellbeing of their staff, mainly because of the need to retain talent. If businesses recover quickly, CEOs cannot afford to lose the people they will need.
Customer retention is an obvious priority. Amid the pandemic in 2020, executives implemented rapid cost-cutting measures, so focus on costs has fallen by 17%. Product and service innovation and development is not a high priority for most CEOs this year, and nor is risk management, but most have already been forced to actively focus on that area over the past year.
“A drop in emphasis on productivity and efficiency is to be expected,” says Gartner, “because simple demand and supply management and safe operations are more important now. However, this topic might be one that rises quickly in the next couple of years if CEOs have to reengineer margins to deliver on investors’ top demand for higher profit returns.”
Compared to 2020, the simple business priority – to drive technology-related change – went up. Mentions of “digital” rose, and the commitment to increase investment in “digital capabilities” also increased. Meanwhile, the intent to increase investment in other areas fell back.
However, within that technology-related category, mentions of “digital transformation” halved, and there were other subtle indicators: “The center of attention has become more about digital commerce catch-up and scaling and digital remote working,” the report says, “rather than deeper digital value proposition and business model innovation.”
Gartner continues: “That’s not a problem for now but the risk is that today’s pragmatism cements itself as tomorrow’s complacency. We have seen that happen before — for example in the early 2000s when mainstream companies were busy scaling down IT even as the digital giants were building their foundations of power. Digital disruption of industries will accelerate more this decade, and any lack of strategic ambition to reach the next horizon could become dangerous quite quickly.”
What happens to CEO’s after the pandemic?
After the crisis, Gartner expects to see many CEOs be replaced or retire. Some leaders, whose leaving was overdue, stayed longer in order to manage their business through the crisis. The post-pandemic era will be a new start for many companies, but the coming and going of CEOs could be quite disruptive.
Gartner recommends:
- Reconnecting the digital business mission as new leaders join, to focus on rebuilding a digital agenda.
- Targeting “techquisitions” in order to execute M&As that align with the growth strategy.
- Investing in corporate social responsibility (CSR) analytics: tracking and analyzing environmental and social performance.
- Contributing to diversification with new and scaled-up digital products and services.
“CEOs’ digital focus rose again; 36% gave a tech-related top priority and 20% said digital””
The second-highest priority for CEOs was technology related, and in fact, over a third mentioned it as one of their top three business priorities.
The term “digital” has become elastic – it lacks common meaning. Overall, there are quite different agendas for the application of digital technology in general: from e-commerce to business apps, and omni-channel strategies to analytics and big data. Digitalization is becoming the most used category, while digital transformation is declining.
“Few CEOs have CDOs, but 83% have CIOs – the main task for CIOs is digitalization”
What does digitalization mean to top CEO’s?
Digitalization appears to be a top priority for both CIO and digital officers. Gartner believes that CEOs are wanting and expecting both of these roles to frame and set an agenda for the use of technology.
Gartner asked CEOs to say what digital business means in the context of their business and industry. Overall, Gartner confirms that CEOs remain heavily focused on the market-facing aspects of the business (rather than internal operating efficiency) when they think of digital. But surprise and disappointment rise from the fact that they have not increased focus on the product innovation aspect.
In fact, that focus has decreased a little since 2018, the last time Gartner asked this question. This is another signal that the depth of CEOs’ digital innovation intent may have regressed somewhat during the crisis.
FAQ’s
What are the top priorities for CEOs?
The top focus for CEOs over the next two years is still growth, while the number of participants whose priority is technology-related has risen. As Gartner says, “with all the emphasis the crisis placed on remote working and digital commerce, this is to be expected.”
What happens to CEO’s after the pandemic?
After the crisis, Gartner expects to see many CEOs be replaced or retire. Some leaders, whose leaving was overdue, stayed longer in order to manage their business through the crisis. The post-pandemic era will be a new start for many companies, but the coming and going of CEOs could be quite disruptive.
What does digitalization mean to top CEO’s?
Digitalization appears to be a top priority for both CIO and digital officers. Gartner believes that CEOs are wanting and expecting both of these roles to frame and set an agenda for the use of technology.
Gartner asked CEOs to say what digital business means in the context of their business and industry. Overall, Gartner confirms that CEOs remain heavily focused on the market-facing aspects of the business (rather than internal operating efficiency) when they think of digital. But surprise and disappointment rise from the fact that they have not increased focus on the product innovation aspect.