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CEO Challenge® 2015 CREATING OPPORTUNITY OUT OF ADVERSITY
Building Innovative, People-Driven Organizations
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Background on CEO Challenge
Annual survey in its 15th year; fielded from September 2014 to October
2014
CEOs asked to rank their top five challenges and top five strategies for
meeting their top five challenges
In addition we ask questions on:
The most important hot button issues —more immediate and
tactical events and situations that CEOs believe will require much of
their attention in the coming year.
Two special questions on:
• Strategies and tactics for raising profitability in the near term
• Characteristics of becoming or remaining a high-performing
organization
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CEO CHALLENGE 2015
10 Big-Picture Trends
Taking the offensive against slowing global growth
Controlling the controllable
Building a stronger and more dynamic relationship with
customers critical to winning market share
More integrated approach to innovation
Growth challenges linked to strengthening human capital by
a grow-your-own strategy
A surprising lack of emphasis on cross-cultural competency
Increasing comfort with big data, but continued uncertainty
about how best to use it
Sustainability emerges as a top global challenge
CEOs seek to rebuild trust, sometimes below the radar
CEOs expect much of themselves
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CEO Challenge Year Over Year – Global Results
2012 2011
1. Innovation
2. Human capital
3. Global political/
economic risk
4. Government
regulation
5. Global expansion
6. Cost optimization
7. Customer
relationships
8. Sustainability
9. Corporate brand
and reputation
10. Investor relations
1. Business growth
2. Talent
3. Cost optimization
4. Innovation
5. Government
regulation
6. Customer
relationships
7. Corporate brand
and reputation
8. Sustainability
9. International
expansion
10. Investor relations
1. Human capital
2. Operational
excellence
3. Innovation
4. Customer
relationships
5. Global
political/economic
risk
6. Government
regulation
7. Global expansion
8. Corporate brand
and reputation
9. Sustainability
10. Trust in business
2013
1. Human capital
2. Customer
relationships
3. Innovation (T3)
4. Operational
excellence (T3)
5. Corporate brand
and reputation
6. Global political/
economic risk
7. Government
regulation
8. Sustainability
9. Global/international
expansion
10. Trust in business
2014
1. Human capital
2. Innovation
3. Customer
relationships
4. Operational
excellence
5. Sustainability
6. Corporate brand
and reputation
7. Government
regulation
8. Global
political/economic
risk
9. Global/international
expansion
10. Trust in business
2015
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CEO Challenge Year Over Year – Canada Results
2012 2011
1. Human capital
2. Global political/
economic risk T2
3. Customer
relationships T2
4. Cost optimization
5. Government
regulation
6. Global expansion
7. Sustainability
8. Innovation
9. Corporate brand
and reputation
10. Investor relations
1. Business growth
2. Talent
3. Cost optimization
4. Government
regulation
5. Customer
relationships
6. Innovation
7. Sustainability
8. Corporate brand
and reputation
9. International
expansion
10. Investor relations
1. Operational
excellence
2. Customer
relationships
3. Human capital
4. Innovation
5. Government
regulation
6. Global
political/economic
risk
7. Sustainability
8. Corporate brand
and reputation
9. Global expansion
10. Trust in business
2013
1. Operational
excellence
2. Human capital
3. Customer
relationships
4. Innovation
5. Corporate brand
and reputation
6. Government
regulation
7. Sustainability
8. Global political/
economic risk
9. Global/international
expansion
10. Trust in business
2014
1. Operational
excellence T1
2. Customer
relationships T1
3. Innovation
4. Human capital
5. Sustainability
6. Government
regulation T6
7. Corporate brand
and reputation T6
8. Global
political/economic
risk
9. Trust in business
10. Global/international
expansion
2015
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CREDIBILITY OF SPOKESPERSONS, 2014 VS. 2015 IN CANADA
Academics most trusted spokespeople
73%
58% 56%
53% 50% 50%
36% 33%
60% 57%
50% 50% 50%
41%
34%
28%
Academic or Industry Expert
Company Technical Expert
Financial or Industry Analyst
A Person Like Yourself
NGO Representative
Regular Employee
Government Official or Regulator
CEO
2014 2015
More Trust Less Trust
Informed
Public
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CEO CHALLENGE 2015
Global Top Five Strategies to Meet the Top Five Challenges
1 Human capital 2 Innovation 3 Customer
relationships
4 Operational
excellence
5 Sustainability
1 Improve performance
management processes
and accountability
Create culture of innovation
by promoting and rewarding
entrepreneurship and risk
taking
Engage personally with key
customers/clients
Improve our organizational
agility/flexibility
Ensure sustainability is part
of the corporate brand
identity and culture of the
organization
2 Provide employee training
and development
Engage in strategic
alliances with customers,
suppliers, and/or other
business partners
Enhance quality of
products/services
Seek better alignment
between strategy,
objectives and
organizational capabilities
Incorporate sustainability
goals into corporate
strategic performance
objectives
3 Enhance effectiveness of
the senior management
team
Find, engage, and
incentivize key talent for
innovation
Develop a more outward
looking customer-centric
culture
Raise employee
engagement to drive
productivity
Enhance portfolio of
sustainable products and
services
4 Raise employee
engagement
Apply new technologies
(product, process,
information, etc.)
Increase speed of products
and services to market
Redesign business
processes
Engage with stakeholders
to balance short-term
performance pressures with
long-term sustainability
goals
5 Improve leadership
development programs
Adopt a user-centric
approach to innovation
Tailor marketing, promotion,
and communications
campaigns to key customer
needs
Continual improvement
(lean six sigma, etc.)
Treat sustainability issues
as long-term risk issues
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6 Corporate
brand and
reputation
7 Global
political/economic
risk
8 Government
regulation
9 Global/
international
expansion
10 Trust in
business
1 Communicate corporate
values to customers and
key stakeholders
Improve our organizational
agility/flexibility
Strengthen internal
regulatory compliance
processes
Enter new geographic markets
with existing products/services
Actively engage with all
stakeholders
2 Ensure ethical
accountability throughout
the organization
Integrate long-term risk
recognition into strategic
planning
Focus on competitive
opportunities created by
regulation
Develop local management
talent for top roles
Foster an environment
of open and transparent
communications
3 Enhance quality of
products and processes
Update contingency plans and
procedures for crises (e.g.,
geographical, political,
relocation of employees)
Encourage more industry
self-regulation
Tailor marketing and
communication messages to
local market
Focus on my own
behavior as a model of
ethical leadership
4 Improve alignment of
business
practices/management
behavior with corporate
values
Reduce exposure to risky
countries/regions
Engage with competitors to
influence regulatory agenda
Form joint ventures in target
geographic markets
Make sure the quality
and safety of products
and services are
delivered consistently at
a fair price
5 Enhance corporate brand
awareness and
understanding across
different cultures
Get Board more actively
involved in enterprise risk
management
Personally spend more
time with regulators
Introduce new “localized”
products/services for
customers/clients in new
geographic markets
Better communicate
corporate values within
the organization
CEO CHALLENGE 2015
Global Top Five Strategies to Meet the Bottom Five Challenges
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CEO CHALLENGE 2015
Top Five Strategies to Meet the Top Five Challenges in Canada
1 Operational
excellence
2 Customer
relationships
3 Innovation 4 Human capital 5 Sustainability
1 Seek better alignment
between strategy, objectives
and organizational
capabilities
Develop a more outward
looking customer-centric
culture
Find, engage, and
incentivize key talent for
innovation
Improve leadership
development programs
Ensure sustainability is part
of the corporate brand
identity and culture of the
organization
2 Continual improvement (lean
six sigma, etc.)
Enhance quality of
products/services
Engage in strategic
alliances with customers,
suppliers, and/or other
business partners
Improve succession planning
for current and future needs
Incorporate sustainability
goals into corporate
strategic performance
objectives
3 Break down internal silos Engage personally with key
customers/clients
Apply new technologies
(product, process,
information, etc.)
Improve performance
management processes and
accountability
Engage with local
communities to enable
sustainable growth and
manage expectations
4 Invest in employee training
and development to improve
employee skills base
Use competitive intelligence
to better understand
customer/client needs
Create culture of
innovation by promoting
and rewarding
entrepreneurship and risk
taking
Enhance effectiveness of the
senior management team
Invest in new technologies
to reduce both
environmental impact and
exposure to resource
scarcity
5 Improve our organizational
agility/flexibility
Tailor marketing, promotion,
and communications
campaigns to key customer
needs
Leverage expertise of
senior leaders to develop
high-potentials and
transfer knowledge
Provide employee training
and development
Engage with stakeholders
to balance short-term
performance pressures with
long-term sustainability
goals
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CEO CHALLENGE 2015
Top Five Strategies to Meet the Bottom Five Challenges in
Canada
6 Government
regulation
7 Corporate brand
and reputation
8 Global
political/economic
risk
9 Trust in
business
10 Global/internation
al expansion
1 Personally spend more
time with regulators
Increase investment in
corporate brand
communication externally
Improve our organizational
agility/flexibility
Actively engage with all
stakeholders
Enter new geographic
markets with existing
products/services
2 Engage with competitors
to influence regulatory
agenda
Redefine corporate brand
positioning
Integrate long-term risk
recognition into strategic
planning
Foster an environment of
open and transparent
communications
Introduce new “localized”
products/services for
customers/clients in new
geographic markets
3 Increase lobbying
activities to promote a
level playing field
Communicate corporate
values to customers and key
stakeholders
Update contingency plans
and procedures for crises
(e.g., geographical,
political, relocation of
employees)
Focus on my own
behavior as a model of
ethical leadership
Enter new
geographies/regions to
secure access to critical
input materials
4 Engage with the public to
influence government
Enhance quality of products
and processes
Engage with governments
to solve pressing social
problems
Improve transparency of
decision-making
processes externally
Form joint ventures in
target geographic markets
5 Focus on competitive
opportunities created by
regulation
Improve alignment of
business
practices/management
behavior with corporate
values
Get Board more actively
involved in enterprise risk
management
Make sure the quality and
safety of products and
services are delivered
consistently at a fair price
Develop local management
talent for top roles
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CEO CHALLENGE 2015
What are your firm’s profit expectations for the coming
year?
3.0%
4.5%
18.6%
58.5%
15.5%
N/A
Decrease
Remain the same
Increase moderately
Increase substantially
N=938
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CEO CHALLENGE 2015
Top 10 Strategies for Increasing and Maintaining Profitability
Global Canada United
States Europe Asia China
Latin
America
N=943 Profitability Strategies N=27 N=230 N=133 N=332 N=79 N=80
1 Focus more strongly on revenue growth 2 1 1 3 4 1
2 Launch new products/services 4 2 2 1 1 3
3 Leverage innovation to increase efficiency of processes 3 4 6 2 T2 2
4 Leverage technology to increase efficiency of business
operations 1 3 4 4 T2 7
5 Increase employee engagement initiatives T8 5 3 9 7 T5
6 Intensify training of employees in critical areas of
operational performance 5 9 8 5 6 9
7 Organizational restructuring 6 8 9 7 12 T5
8 Launch customer engagement initiatives & loyalty
programs to increase demand 10 6 5 10 8 13
9 Eliminate low margin operations 11 10 7 11 9 8
10 Consolidate supply chain for efficiency T17 15 15 6 5 4
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Chief Executive Officer
– Building an agile organization requires a strong and innovative change management function
– Managing the tradeoff between innovation and sustained performance is a minefield
Chief Strategy Officer
– The notion of sustainability needs to be embedded throughout the organization and business processes; it
needs to be viewed as a part of the risk portfolio
Chief Financial Officer
– Investment in intangibles is more critical than ever; stop viewing them as a cost rather than an investment
Chief HR Officer
– CEOs are focused on employee engagement as a driver of improved productivity and critical to growth
– CEOs believe that culture has overtaken technology as the critical enabler of innovation, and they are
emphasizing the importance of a strong entrepreneurial culture to drive growth. Help build a culture of
innovation
Chief Talent and Learning Officer
– CEOs are stressing the importance of strong leadership for organizational growth, along with improving
leadership development programs
– While practitioners view global awareness and cultural sensitivity as critical to leadership development; CEOs
rate these traits low on their list. How do you fix the disconnect?
General Counsel
– In a tightening economy where individuals and organizations are tempted to take shortcuts, maintaining a
strong culture of ethics is critical
– CEOs are stressing the importance of cybersecurity
Meeting the Challenges: Implications for the C-Suite
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The Conference Board, Inc. of New York, New York
In collaboration with
The Conference Board of Canada
The full report can be accessed at
http://www.conferenceboard.ca/
e-library/abstract.aspx?did=6756
www.conferenceboard.ca