One in five Irish CEOs believe that their business will not be economically viable in ten years if they continue on their current path. They expect their industry’s profitability to be impacted by regulatory changes (53%), labour and skills shortages (51%), changing customer demands and preferences (49%) and technology disruptors (49%) in the decade ahead.

21% of CEOs recognise the need to transform in order to remain viable

It is interesting to note that four in ten global CEOs are concerned about their companies’ long-term economic viability—almost double the rate of Irish CEOs. The reason for this gap may well be due to the relative strength of the Irish economy and the possibility that Ireland could avoid an immediate recession, but Irish CEOs should nevertheless be aware of their comparative optimism.

Meanwhile, CEOs are navigating a number of megatrends including climate change, technological disruption, demographic shifts, a fracturing world and social instability. Some of these trends have come into sharp focus in the last 12 months and this is reflected in the changing nature of what Irish CEOs perceive as the most immediate threats to their business. Climate change risks (9%) and cyber risks (8%) have been replaced by inflation (38%), macroeconomic volatility (26%) and geopolitical conflict (22%) as the leading threats facing Irish businesses in the next 12 months.

CEOs clearly face a dual imperative—protecting their businesses from near-term risks while transforming their businesses in order to stay ahead of longer term threats to their companies, to society, and to the planet itself. While this delicate balancing act is a challenge for CEOs, it also presents an opportunity for CEOs to lead with purpose and for their businesses to play a much-needed role in society as a catalyst for innovation and a community of solvers that plays for the long haul.

As CEOs navigate an uncertain macroeconomic outlook and high inflation, they face a host of day-to-day tensions. Although both Irish (83%) and global (73%) CEOs expect global economic growth to decline in the year ahead, 85% of Irish business leaders are confident about their company’s prospects for revenue growth in the next 12 months and that figure rises to 97% for a three-year time horizon. In addition, 33% of Irish CEOs believe that national economic growth will improve in the year ahead—higher than any PwC Ireland CEO Survey conducted between 2008 and 2013 as the country recovered from the fallout of the financial crisis.

There has been a dramatic fall in confidence among Irish CEOs in relation to global economic growth for 2023

This apparent disconnect between global economic growth prospects and national economic and revenue growth prospects could be due in part to the fact that Irish CEOs are already taking action to mitigate potential economic challenges and volatility in 2023 in a broadly supportive business environment. Irish CEOs either have taken, or are in the process of taking, a range of measures including raising the prices of products and services (51%), diversifying their product/service offering (49%) and reducing operating costs (44%). However, just 8% have already reduced their workforce with only a further 11% actively considering this option in the next 12 months amid the fight to retain talent.

On top of this, geopolitical conflict is prominent on the CEO’s agenda with 22% of Irish respondents stating that their company is extremely or highly exposed to this key threat in the next 12 months, down from 29% last year. The war in Ukraine and growing concern about flashpoints in other parts of the world are leading business leaders to integrate a wider range of potential disruptions into their scenario planning models. From increased investments in cybersecurity or data privacy (49%) to diversification of products/services (46%) and adjusting supply chains (41%), Irish business leaders are proactively considering a host of actions to mitigate their exposure to geopolitical conflict in the year ahead. And interestingly, Irish CEOs plan to invest more than their global counterparts in a number of areas.

Given the dual imperative to mitigate near-term risks while transforming for sustained success into the future, CEOs are faced with competing demands on their time. Irish CEOs express a willingness to spend less time driving current operating performance (19%) and more time evolving the business and its strategy to meet future demands (25%). They also want to spend more time engaging with customers (22%), engaging with or mentoring/developing employees (20%) and engaging with investors, government officials and other leaders (10%).

Transformation in Irish businesses is also being aided by investment in a range of areas in the next 12 months, from the automation of processes and systems (82%) to upskilling the workforce (80%) and deploying technology (71%). Tellingly, each of these investments are weighted in favour of reinventing the business for the future as opposed to preserving current business, and Irish CEOs plan to out-invest their global peers in these fields.

However, a cultural shift is needed if leaders within the business are to spot and respond to both opportunities and threats. While 78% of Irish CEOs are actively involved in strategic decision-making for their organisation’s functions or divisions, just 61% of leaders encourage dissent and debate while 43% tolerate small-scale failures. To ensure success into the future, business leaders need to set a shared vision and empower their people to make decisions and act as visible champions for change.

Many CEOs question whether critical preconditions for organisational empowerment and entrepreneurship are present in their companies

^{Footnotes:
[1] Source: "Ireland Economic Snapshot", OECD, 14 December 2022
[2] Source: "Russia’s war of aggression against Ukraine continues to create serious headwinds for global economy", OECD says", OECD, 22 November 2022}