According to PwC’s latest pulse survey, concerns of a recession are diminishing, business risks have become less pronounced and executives have become far more likely to prioritize future growth, as opposed to hunkering down in survival mode. At the same time, the survey, which features insight from over 600 U.S. executives and board members, stresses that strategies and approaches can vary from industry to industry. We spoke to Shawn Panson, U.S. private company services leader for PwC U.S., about the report’s findings.
Private Company Director: When you analyzed the data on industries and their strategic priorities, did anything jump out as particularly significant?Â
Shawn Panson: After three years of navigating economic uncertainty and numerous complex challenges, business leaders are increasingly optimistic about the economic and business environment and their companies’ ability to mitigate risk. One thing that really jumped out to me was that only 17% of executives strongly agreed that there will be a recession in the next six months. That’s down from 35% in October 2022, when PwC did a similar survey.
However, when it comes to top risks, executives are concerned about more frequent or broader cyberattacks, with 74% saying it is a serious or moderate risk. This has been on executives’ radars as an ongoing risk, so it isn’t new, but it recently jumped to the number one concern.
Since embedding new technologies into their business model is a top strategic priority over the next three to five years across industries, for each new business initiative or transformation, executives should also prioritize ensuring there is a cyber plan in place.
One other interesting thing that I saw across industries is that, while there is a strong focus on investing in technology and transformation, many executives say challenges to their companies’ ability to transform are largely centered around tech. This includes achieving measurable value from new tech (88%), the cost of adoption (85%) and training talent (84%). In addition, most business leaders (75%) say employee fears that technology will make their jobs obsolete presents a challenge to transforming their business. Only 24% say it’s not a challenge at all.
PCD: Which industries appear to be most committed from a digital transformation perspective?
SP: Across public and private businesses, industries vary in their willingness to go all in on digital transformation. Tech is leading the way for consumer-facing companies, especially compared to financial services organizations, which cite measuring the return on investment of adopting new technologies as a significant challenge, and technology, media and telecom leaders, who say new tech, like generative AI, threatens current business models.
It seems that many of these consumer market leaders are taking their cues from consumers who are excited about generative AI and want to combine both the digital and physical options for their information-gathering and shopping needs. Nearly three-quarters (73%) of consumer-facing companies plan to embed generative AI in the next 12 to 18 months to support new business models.
PCD: The survey found that 75% of private companies believe they have a high level of trust between their leadership and their employees. Why is that important during a time of digital transformation?Â
SP: Trust is a vital foundation during any time of change. But trust is complex, and in today’s ever-changing world, it can also be gone in an instant. Which is why having trust in an organization is so crucial, especially when undertaking large-scale change, like a companywide digital transformation effort.
With 88% of private companies saying they’ll invest in new technologies as a business strategy over the next 12 to 18 months, keeping employees engaged and supportive is a must for long-term success. Employees need to understand that these are strategic investments that they are part of, and digital transformation efforts will help drive growth areas and streamline operations. For private businesses to successfully implement new tech, and for the people to adopt the new tech, there must already be trust among leadership and employees.
PCD: According to the survey, what steps are private companies prepared to take to better embrace the adoption of transformational tech?Â
SP: To adopt transformational tech, private companies are looking to hire talent that has the necessary skill set to implement and help their organizations embrace the technology. Private business leaders are also looking at where the application of new technology will most meaningfully impact their companies — and where it may present significant hurdles.
This requires careful risk assessment to fully understand the opportunities and challenges. Starting with thoughtful risk assessment, which will help companies identify other areas of operations that could make or break their transformation efforts. For example, 38% of private leaders say poor succession planning is a significant challenge to transformation, while 34% struggle to find measurable value from adopting new technologies. This aligns with what we saw earlier this year in our family business survey, where only 19% of business leaders said they put “very much” of their focus, energy and investment in innovative research and development.
If private companies continue to have a high level of trust between leadership and their employees, are able to hire the right talent and upskill their current workforce, and can examine and overcome the risks they’re facing in technology adoption, then they will be set up for long-term business success.