Artificial intelligence was the top technology that chief executives believe will significantly impact their industry over the next three years, according to a new report.
The recent survey of CEOs and senior executives by Gartner found 21% of survey respondents cited AI the top disruptive technology impacting industries.
“Generative AI will profoundly impact business and operating models,” says Mark Raskino, Distinguished VP Analyst at Gartner.
“However, fear of missing out is a powerful driver of technology markets. AI is reaching the tipping point where CEOs who are not yet invested become concerned that they are missing something competitively important.”
The 2023 Gartner CEO and Senior Business Executive Survey was conducted from July through December 2022 among over 400 CEOs and other senior business executives in North America, Europe, Asia/Pacific, Latin America, the Middle East and South Africa, across different industries, revenue and company sizes.
Half of CEOs Cite Growth as Their Top Strategic Business Priority
“When determining business priorities, CEOs are hesitant, but not frozen,” says Kristin Moyer, Distinguished VP Analyst at Gartner.
“More than half of CEOs believe an economic downturn or recession in 2023 will be shallow and short, and the survey showed only a modest rise in cash flow, capital and fundraising concerns.”
Despite the impact of these economic headwinds, half of CEOs cited growth as the top strategic business priority for the next two years. Technology also remains a top focus area for CEOs, closely followed by workforce issues.
“After three years of volatility, CEO priorities are stabilising,” says Raskino. “Executive leaders are looking past the aftershocks of the omnicrisis period to a time when talent, sustainability and next-level digital change will be the levers of competitive performance.”
In fact, mentions of environmental sustainability rose 25% over the previous year’s survey, which was the first time sustainability ranked among CEOs’ top 10 priorities. Gartner predicts that by 2026, environmental sustainability will be a higher CEO strategic business priority than the technology-related category.
Inflation Drives Shifts in Customer Behaviour
Inflation was ranked as the most damaging business risk by 22% of CEOs, and nearly a quarter cited greater price sensitivity as the biggest shift in customer expectations they anticipate this year. However, increasing prices is still the top action that CEOs are taking in response to inflation (44%), followed by cost optimisation (36%) and productivity, efficiency and automation (21%).
“It’s concerning that CEOs do not yet seem to be focused on productivity as much as they should be in an inflationary period,” says Moyer.
This may be due to wishful thinking that inflation will not become a persistent feature of the economic landscape. CEOs must embrace automation to redesign methods, processes and products for efficiency, rather than pushing cost increases onto customers.”
Attracting and Retaining Talent Is the Top Workforce Priority
When asked about the impact of various risks on the business, 26% of CEOs cited the talent shortage as the most damaging risk for their organisation. Attracting and retaining talent is, by far, CEOs’ top workforce priority. Concerns about compensation are the biggest shift in employee and prospective employee behaviour that CEOs anticipate, followed by a desire for greater flexibility and remote or hybrid work.
“The emphasis on pay is not surprising in an inflationary environment, but in prior economic cycles, unemployment would typically be undermining labour market power,” says Raskino.
New Zealand and Australia
Brian Ferreira, VP and executive programs team manager at Gartner, says market messages in ANZ are mixed, with trends towards stable inflation and recession not forthcoming.
"Commercial CEOs are targeting growth and are more concerned about inflation and recession, possibly not being shallow and short," he says.
"Whereas government CEOs are concerned about increasing debt, targeting constrained economic support, and curbing additional spending."
Ferreira says ANZ CEOs are open to spending more on technology if it supports growth or holds market share, which is why it continues to be a top priority.
"In some cases, they chose to increase spending risk for better technology outcomes rather than waiting for technology to prove itself and possibly risk business stability," he says.
“Generative AI has taken off in ANZ with many organisations commencing new business, client and operating efficiencies. Fast adopters are already upskilling all staff on AI capabilities and view generative AI as a new core business capability that will impact industries and business models."
Ferreira says with growth and technology top of mind, it has become more evident for ANZ CEOs that the combination of technology adoption together with a capable workforce is a critical business asset for future success.
“We’re seeing an increase in efforts to ensure solid talent programs are integrated with technology transformation," he says.
"This is the defence for managing inflation by ensuring the business adopts operating efficiencies and holds market share by not passing on inflationary costs to customers. ANZ CEOs are vocal to the Federal Government, asking for more flexibility and opportunities for migrant talent.
“ANZ CEOs recognise they need to work with leaders and boards on adopting a more aggressive risk appetite. They’re more willing to fail for the right reasons and adjust instead of losing business or talent.”