Senior execs are cautiously navigating today's economic realities but are also intent on investing in the future. 2023 imperatives should include business productivity and building a new three- to-seven-year growth strategy.
The Big Picture: CEO Plans in a Changed World
The 2023 Gartner CEO and Senior Business Executive Survey shows the short-term reactivity of recent years giving way to relative stability and allowing executive leaders to cautiously return to long-term planning. But the pandemic forever changed consumer and employee behaviors and ways of working. Longer-range strategies must accommodate — and develop ways to benefit from — such changes.
Growth remains a top business priority for 49% of CEOs, down from 54% in the 2022 survey, reflecting economic realities like inflation, but the majority of CEOs don’t fear a significant or long-term recession. The focus now should be on building the next mid- to long-term (three- to seven-year) growth strategy.
Senior executives report profitability is investors’ top focus in 2023, while investor interest in revenue growth declined sharply.
We urge deep, multiyear productivity engineering to compensate for margin erosion, though our survey shows efficiency and productivity are only just starting to creep back into CEOs’ top 10 priorities.
We expect productivity to be a top 5 CEO strategic business priority by 2025, with key enablers of business productivity including:
Using data science to identify new ways to reengineer costs and devise better diagnostic measures to increase per capita output
Applying AI, autonomous vehicles, cobots, blockchains and other new technologies creatively to generate deep digital productivity advances
Tech and automation remain key
Technology remains a top strategic focus for one-third of senior executives, with automation rising noticeably as a key initiative versus 2022, and digitalization and digital transformation firmly on the radar.
CEOs also seem to be differentiating more distinctly now between “information technology” and “digital capabilities.” Fewer expect to increase investment in IT more than in digital, likely because they perceive the most valuable uses of IT to be under the banner of “digital” — where they are already committed to investment.
Prepare to message your planning and investments accordingly. Although internal and back-office systems and legacy reduction work may still most logically be called “IT,” don’t be shy about using terms like “digital modernization,” “digital productivity” and “digital workplace,” which may focus attention appropriately.
Talent shortage and inflation rank as higher concerns than recession or rising interest rates. The workforce category has risen among CEO strategic business priorities in recent years, with attracting and retaining talent as the most important component.
Companies across industries and geographies have struggled to find the people they need. Some reasons are pandemic-related: early retirements, long-term sickness and new expectations for pay and work conditions. However, deeper structural, demographic issues, such as the workforce departure of the baby-boomer generation, are also at play.
CEOs also cite compensation as a key talent issue. Employees’ pay concerns naturally grow during inflationary periods, but today’s unusual labor market — in which unemployment remains low despite economic weakness — means employee pay demands aren’t likely to abate.
Note employees’ ongoing demands for flexibility and hybrid work options — and respond accordingly.
Analyze key talent shortages and estimate the extent to which they constrain business growth by conducting rigorous workforce planning exercises.
From the Desk of Mark Raskino, Distinguished VP Analyst
“CEOs may hit pause for a while, but they will overcome hesitancy during 2023 and pivot toward a return-to-growth conviction in 2024 and beyond. In the shorter term, given budget constraints and the need to improve margins and profitability, we urge targeted productivity improvement programs aimed at high-impact roles/activities — in particular, using AI and robot automation. But don’t just automate old, redundant ways of doing things. Be prepared to reinvent methods, processes and even products.”
3 Things to Tell Your Peers
1. CEOs remain cautious about 2023 but expect business to improve in 2024 and beyond.
2. Budgets and approvals remain tight in the short term, but executive leaders should find time to ideate and plan for the longer term, assuming no major new crises arise.
3. By 2025, productivity will be a top 5 CEO strategic business priority.
Mark Raskino is a Gartner Fellow in the CEO and Digital Business Leadership research team, where he covers business and technology trends and their implications for business strategy, innovation, business models, leadership and executive relationships.