Leading through accelerated reinvention

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Twelve months ago, we reported that 53% of Asia Pacific CEOs believed their companies would no longer be viable in ten years’ time if they continued on their current path. This highlighted a dual imperative for CEOs: the need to focus on the profitability challenges of the ‘here and now’ while simultaneously reinventing their business to ensure future viability.

In this year’s CEO Survey, conducted with 1,774 CEOs in the region, we continue seeing unease among business leaders. The path ahead remains unclear. Their views on the global economy are divergent: 45% expect the global economy to decline, while 40% expect it to improve in 2024.

Facing an uphill battle, the vast majority of companies (97%) in Asia Pacific are taking at least some steps toward reinvention. But is it enough? The survey suggests not. 63% of CEOs remain uncertain about their company's viability —10% higher than the previous year and 18% above the average for global CEOs.

Curiously, CEOs also report feeling less exposed to threats over the near term: inflation (down 21%), macroeconomic volatility (down 9%) and geopolitical conflict (down 12%). How can the two sentiments co-exist? It's possible that CEOs are focusing more on addressing the short-term risks — and having some success — rather than the wider long-term sustainability of their business. 

This level of future uncertainty has been compounded by a year of persistent economic challenges, high inflation and geopolitical conflicts re-defining risk and limiting growth. 

CEOs are also confronting generational crises and opportunities in climate and generative artificial intelligence (GenAI). All things considered, there’s a compelling argument for the need to accelerate business reinvention.

Other key findings

• Both internal and external pressures drive barriers to reinvention.

  • The top three external barriers to reinvention are regulatory environment, a shortage of workforce skills and supply chain instability.

  • From an internal perspective, CEOs may have not done enough resource allocation (i.e. financial and human) which is fundamental to reinvention. Two-thirds of Asia Pacific CEOs reported only 20% or less resource reallocation from year to year. 

• Asia Pacific CEOs still consider the US and China as critical to their growth prospects. Their investment focus remains steady or increases in several other Asia Pacific territories.

• Most progress on climate action has been made in decarbonisation. However, about one in five are not currently pursuing other types of action related to climate adaptation, the ‘just transition’ or nature-based solutions.

• 41% of Asia Pacific CEOs report that they have not yet adopted GenAI across their companies in the last 12 months even though they anticipate GenAI to significantly impact their companies, workforce and markets within the next three years. 26% predict a reduction in headcount due to GenAI.