New Zealand CEOs turn to upskilling and technology in the race to reinvent
29 February 2024
Insights from PwC’s 27th Annual CEO Survey show local business leaders’ focus on both shorter term issues and the need for reinvention.
23% of local business leaders do not believe their business will be viable in a decade without reinvention.
95% of NZ CEOs have taken steps to change how they create, deliver, and capture value over the past five years.
NZ CEOs expect more pressure over the next three years than they experienced over the previous five from technology, customer preferences and several other megatrends.
- 83% of local business leaders report they have a skills shortage within their organisation and 76% specify a lack of technical capabilities as a barrier to transformation.
- 61% of local business leaders believe Generative AI will require their workforce to upskill in the next three years.
Auckland, 29 February 2024 – PwC’s latest CEO Survey reveals the importance of business model reinvention for long-term success, with 23% of local business leaders expressing concerns about the viability of their businesses beyond the next decade without reinvention.
These findings have emerged from PwC’s 27th Annual Global CEO Survey, conducted in October and November 2023. There were 4,702 CEOs interviewed in 105 countries, including 117 CEOs from New Zealand.
Almost all (95%) New Zealand CEOs note they have taken steps to change how they create, deliver, and capture value in the past five years, and 70% have taken at least one action that had a large or very large impact on their company’s business model.
But, while CEOs are taking action, they are faced with a number of immediate challenges. Fifty-eight per cent cite the regulatory environment as inhibiting their ability to reinvent their business model to at least a moderate extent, 57% point to competing operational concerns, and 41% highlight a lack of skills in their company’s workforce.
Mark Averill, CEO at PwC New Zealand says:
"New Zealand businesses are facing both immediate challenges and the need to adapt for the future. This raises the question, are CEOs in New Zealand acting fast enough to transform their business models? What we do as leaders in the next two years will significantly influence how our businesses fare in the next ten. Businesses need conviction to make some important decisions - how they adapt now will be a big determinant in long-term success."
The results show that 48% of New Zealand CEOs believe that global economic growth will improve in the next 12 months, a significant increase from 13% in 2023. Similarly, 52% of local business leaders are optimistic about New Zealand's economic growth in the coming year, compared to 23% last year.
While local business leaders are confident about economic growth, macroeconomic volatility is still seen as a major threat. New Zealand CEOs acknowledge some level of exposure for their businesses. Despite some indication that inflation will stabilise, it continues to add pressure to business decisions. However, fewer CEOs (21%) anticipate high exposure to inflationary pressures in the coming year, compared to 38% last year.
The survey also reveals that a third of local CEO’s (36%) are extremely confident in their own organisation’s potential for revenue growth in the next 12 months, compared to 39% last year. New Zealand CEOs are more optimistic about their three-year revenue growth prospects compared to the shorter term, with 50% feeling extremely confident.
"While CEO’s continue to navigate a number of headwinds, there are still plenty of reasons to feel positive about the coming year, with inflation reducing and indicators suggesting that will continue. But, longer-term challenges remain. CEOs need to tackle these and those in the nearer term in a smart and integrated way to make sure they are fit for the future," says Averill.
New Zealand CEOs recognise the potential of Generative AI for short-term impact, anticipating enhancements in product quality, efficiency, and business outcomes like revenue and profitability. However, despite this awareness, the majority (61%) of local business leaders have not yet implemented Generative AI throughout their organisations.
Local business leaders also anticipate significant impacts on their workforce, with 61% predicting that their employees will need to learn new skills due to advancements in Generative AI. Skill gaps, availability of these technologies, and concerns around cyber security and the spread of misinformation, are all factors impacting adoption.
Averill notes, “CEOs are focused on the impact and potential of Generative AI for their businesses. They see it as a way to boost productivity, create value, and empower employees. Implementing Generative AI requires time, a strong foundation in governance and cyber security, and careful planning to ensure it aligns with business needs.”
New Zealand CEOs are actively addressing climate change by reducing carbon emissions and improving energy efficiency. Seventy-four per cent of leaders are either in the process, or have completed, improvements in energy efficiency. Additionally, 68% are working on, or have completed, the development of new climate-friendly products, services, or technologies.
Yet, there is still more work to be done to tackle climate challenges and attract more investment. In the past year, 41% of CEOs have accepted lower returns for environmentally friendly investments compared to other options. Seventy-five per cent of local business leaders would be willing to accept a rate of return that is up to 6% lower for climate-friendly investments compared to other investments.
Upskilling and reskilling the workforce emerged as a top priority, with 83% of New Zealand CEOs reporting a skills shortage within their organisations. Seventy-six per cent of leaders identified a lack of technical capabilities as a significant barrier to transformation.
Despite these challenges, CEOs are taking proactive measures to bridge the skills gap. The survey revealed that 72% of CEOs have plans to develop leadership and talent, while 64% intend to invest in upskilling and reskilling their employees within the next 12 months.
The survey also highlighted the majority (64%) of New Zealand CEOs plan to upskill or reskill their employees in the next 12 months to drive increased productivity.
The survey results reveal that infrastructure challenges are a top concern for New Zealand business leaders. Over half (53%) of the CEOs surveyed believe that these challenges are impeding their company's ability to transform how they create, deliver, and capture value.
Averill concludes, “Our country's infrastructure deficit is impacting productivity gains. The challenge is caused by financial constraints, policy and institutional settings, and uncertainty about project pipelines. Collaboration between the public sector, private sector, and iwi can provide alternative solutions. However, success requires the right policies, project certainty, and sustainable funding mechanisms.”
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