Feeling confident even amid rising inflation, geopolitical instability, and talent recruiting and retention challenges, nearly 150 leading CEOs across industries express positive sentiments for the year ahead, new research from Deloitte and Fortune reveals. While staffing remains top of mind, these CEOs seek to balance prioritizing longer-term strategic goals by investing in business transformation and innovation while not sacrificing focus on the short-term.
The firm’s Winter 2023 Fortune/Deloitte CEO Survey reports that CEOs are increasingly trending more positive about their company’s growth over the next 12 months: 45 percent of CEOs expect strong or very strong growth, up from 34 percent in October 2022, but still down from 49 percent in June 2022. With optimism on the rise from summer and fall of last year, and pessimism declining, concerns about the global economy dropped sharply from 76 percent in October 2022 to 37 percent.
“CEO optimism has clearly dimmed since this time last year, but the CEOs are still not in anything like a recessionary mindset,” said Alan Murray, Fortune CEO, in a news release. “They see inflation and labor shortages—both problems resulting from excess demand—as their biggest threats. And they feel the mandate to invest in transformation as strongly as ever.”
The CEO Survey series tracks the perspectives and actions of CEOs from the world’s largest and most influential companies, providing key insights into their priorities, challenges, and expectations across more than 15 industries, including technology, finance, and healthcare.
Top concerns remain the same
While the top three disruptors—inflation, geopolitical instability, and talent—remain the same, CEOs are showing decreasing concern around these top issues. Although inflation continues to be seen as the biggest challenge CEOs will face today, those surveyed predict that inflation will decrease by mid-year. However, this improved inflation rate may come at the cost of an increase in the federal funds interest rate.
Geopolitical instability surpassed labor/skills shortages and ranked second behind inflation as external issues that CEOs expect to influence or disrupt their business strategy within the next 12 months. Compared to October 2022, when 48 percent of CEOs ranked geopolitical instability as a top concern, 51 percent expressed the same concern in this survey. Labor/skills shortages dropped to third in this survey with 48 percent, down 2 percent from the fall. Other sources of financial instability, which ranked fourth, has risen steeply to 44 percent, up from 34 percent in October and almost double (23 percent) from June 2022, while supply chain disruption dropped to 27 percent, down from 36 percent in October.
“After what many CEOs agree was another year of disruption and complex challenges, it’s incredibly promising to see increasing optimism among CEOs for the year ahead and expectations that their organizations will continue to grow,” said Jason Girzadas, CEO Elect at Deloitte US, in the release. “While inflation and an uncertain economy are certainly on the minds of CEOs, they appear undeterred from prioritizing investments in key areas like core business transformation, talent, and market innovation that may help drive long-term growth.”
CEOs are simultaneously focusing on the present and the future
Balancing short-term demands with long-term threats, CEOs are finding they spend slightly more time (55 percent) focused on the long-term vs. the short (45 percent). With no shortage of investment areas and priorities to focus on, over two-thirds of CEOs ranked core business transformation (67 percent) and talent acquisition (67 percent) as top priority investment areas. Rounding out the top three priorities, well over half of CEOs (62 percent) ranked other new product/service/market innovations as priority investment areas.
They continue to look to invest in and leverage AI
Following the October 2022 survey when the majority (91 percent) of CEOs said they plan to invest to some degree in AI over the next 12 months, they now seem to be taking a pragmatic approach. Most appear to be focused on the foundational aspects of AI technology, viewing it as a platform for advanced predictive analytics (85 percent), sophisticated data analysis (80 percent), and, to a somewhat lesser degree, recommendation engines (52 percent). Nearly 4 in 10 (39 percent) said they currently view AI as a platform for generative AI, and only a fourth (27 percent) envision AI as a platform for autonomous decision making.
To combat societal issues, CEOs view collaboration as the best means forward
CEOs believe collaboration is the best course of action for ESG issues, trust in institutions, cybersecurity risks, and ethical technology but not necessarily for advanced technologies. Overwhelmingly, CEOs see solving climate change (93 percent) and geopolitical stability (92 percent) issues with collaboration rather than competition.
Fielded between Feb. 14-21, 2023, 149 CEOs representing more than 15 industries shared their perspectives, expectations, thoughts, and priorities for the next 12 months. Those leaders surveyed include Fortune 500 CEOs, Global 500 CEOs, and select CEOs in the global Fortune community.