PwC Japan releases the results of PwC’s 27th Annual Global CEO Survey Japan Edition

Responses having a sense of urgency about company continuity in a decade surpassed 50% for the second year in a row
Internal bureaucratic processes and lack of in-house technological capability inhibit reinvention

2 February 2024
PwC Japan Group

The PwC Japan Group (Chairman: Koichiro Kimura) today released the results of PwC’s 27th Annual Global CEO Survey Japan Edition. This survey focuses on the responses from 179 Japanese CEOs extracted from the survey published by PwC Global on January 15, 2024. The survey provides a comparative analysis of Japanese companies with companies around the world as a whole, as well as major foreign countries. It also examines the current situation in which Japanese companies stand and their future issues.

Key findings of PwC’s 27th Annual Global CEO Survey Japan Edition

1. To the question ‘How confident are you about your company’s prospects for revenue growth over the next 12 months?’, Japanese CEOs responded that they are extremely confident/very confident (17%) and moderately confident (50%). It is clear that they have some confidence in the current performance of their company.
2. Following the previous survey, a majority (64%) of Japanese CEOs think their company will no longer be economically viable in a decade from now, if it continues running on its current path. They have a strong sense of urgency about the future compared to CEOs around the world (45%), as well in the US and Western Europe.
3. We asked CEOs about the factors inhibiting reinvention. Japanese CEOs chose ‘Bureaucratic processes in my company’, ‘Lack of technological capabilities in my company’ and ‘Lack of skills in my company’s workforce’ at high percentages. Although many CEOs are aware of the need to transform their companies due to a sense of crisis about the future, they are unsure whether they can do it on their own.
4. Regarding the expected impact of generative AI over the next 12 months, about 40% of Japanese CEOs expected to increase efficiencies in their employees’ and their own time at work.
5. For addressing climate change, Japanese CEOs have already started to take various measures to address climate change. These include ‘Improving energy efficiency’ and ‘Innovating new, climate-friendly products, services or technologies.

Japanese CEOs are optimistic about the global economy. However, half of them have a sense of urgency about their company’s continuity in a decade.

This global survey shows that global CEOs increasingly hold a notion that their company will no longer be economically viable a decade from now, if it continues on its current path (45% in 2024 vs 39% in 2023). Nevertheless, an optimistic outlook for the global economy is increasing among CEOs. More Japanese CEOs are optimistic about the global economy; however, 64% answered that their company will no longer be economically viable a decade from now. This percentage is relatively high compared to CEOs around the world, the US and Western Europe, and surpassed 50% for the second year in a row.

[Diagram 1] CEOs in the US are moderately conservative on economic growth, but those in Japan, Western Europe, China and other parts of the world are optimistic

[Diagram 2] Although Japanese CEOs tend to estimate their company’s viability over a decade at low levels, the gap with the rest of the world has narrowed

Lack of technological capability inhibits reinvention

We asked CEOs about factors inhibiting reinvention. Japanese CEOs chose ‘Bureaucratic processes in my company’, ‘Lack of technological capability in my company’ and ‘Lack of skills in my company’s workforce’ at high percentages. Global CEOs mentioned ‘Regulatory environment’ and ‘Limited financial resources’ as factors inhibiting reinvention, both of which Japanese CEOs are less concerned about.

[Diagram 3] Japanese CEOs perceive in-house personnel issues as obstacles to the changes, while global CEOs see external constraints and resource limitations as major inhibiting factors

Generative AI utilisation is expanding in Japan, but more results are being achieved around the world

We asked CEOs about generative AI, which attracts huge attention as a leading innovative technology. Over 40% of Japanese CEOs recognised the improvement of ‘Efficiency in my employees’ time at work’ and ‘Efficiency in my own time at work’ as benefits of generative AI. Meanwhile, around 60% of global CEOs anticipate these positive impacts, which indicates that there may be some room for better utilisation of  generative AI at Japanese companies.

[Diagram 4] Japanese and global CEOs are expecting most to increase efficiencies in working hours through the use of generative AI

Many companies are taking some initiatives to address climate change

We asked CEOs about the progress of the actions their companies are taking to address climate change. Japanese CEOs selected ‘In progress’ for each action at a higher rate than CEOs worldwide and in the US and China. The percentages were particularly high for ‘Improving energy efficiency’ and ‘Innovating new, climate-friendly products, services or technologies’.

[Diagram 5]　Japanese CEOs already initiated many actions, such as improving energy efficiency, and innovating new, climate-friendly products, services or technologies

Koichiro Kimura, Chairman of the PwC Japan Group, stated, ‘This survey showed that the willingness of Japanese CEOs to reform is evident in the various responses. Although the level of urgency about the future has declined slightly compared to the previous survey, it is clear that the majority of CEOs continue to view the situation of their companies a decade from now as an issue. In addition, many CEOs seem to be aware that factors inhibiting reinvention exist in their companies, but they are unsure if they can execute necessary transformation on their own. Technological disruption and decarbonisation have become inevitable issues for all companies. However, both require professional expertise, and furthermore, unexpected risks can suddenly emerge in both areas. Are you a company that can sustain voluntary change for decades, not only when your company faces an actual crisis, but also in any economic or social environment, in preparation for crises yet to be seen? It is exactly at this time, when the economy and company business performance are expected to remain strong, that companies are being questioned about their preparedness.’