CEOs on How to Adapt Leadership for Future Growth

With the stock market at record levels, technology fever running high, and the US economy outperforming most others around the world, one might think the boom times of the 1990s are making a comeback. But the underlying business conditions companies face today couldn’t be more different.

Many of the forces that drove corporate growth during the ’90s and well into this century — disinflation, low capital costs, deregulation, free trade, labor mobility, and geopolitical stability among them — have reversed course or are in jeopardy.

Rarely has the business environment appeared so promising and so uncertain at the same time. Today’s CEOs don’t have the wind at their back — they are traveling directly into it.

CEO concerns in 2024

In 2024, the Oliver Wyman Forum partnered with the New York Stock Exchange to assess the attitudes of CEOs of NYSE-listed companies. The biggest concern, shared by 54% of those we surveyed, was the possibility of government interference in the economy via regulation, protectionism, and industrial policy — a sea change after decades of deregulation, free trade, and laissez-faire supremacy. Next up on the list of worries, at 51%: the combination of volatile inflation and higher interest rates. The third biggest concern was geopolitical instability, cited by 37% of chief executives.

To generate “alpha,” or managerial outperformance, in the years ahead, CEOs will need to balance growth and efficiency objectives, revamp supply chains to manage global risks, modernize workforce strategies, and harmonize competing internal and external priorities in an era of technological, demographic, and social tumult.

Diverse food and grocery ecosystems drive growth

The food and grocery ecosystem includes a broad range of company types. The food value chain comprises single-store family-owned businesses and chains of tens of thousands of stores; family-owned single-category suppliers and multinational multi-category CPG conglomerates; as well as a broad spectrum of service providers in technology, logistics, financing, and equipment. The mix of firms is an essential element to what makes the grocery ecosystem work, enabling more innovation in products, in the consumer experience, and in new ways of trade collaboration.

The main priority among the CEOs in our survey was growth. Not every FMI member has the same prioritization. Not every FMI member will pursue growth in the same way. However, every FMI member should understand how some of their major trading partners, customers, and vendors are thinking about growth — and about how growth in the consumer sector might look different than in other industries.

CEOs pursue strategic growth amid uncertainty

Many of the CEOs we surveyed are pursuing a new growth agenda tailored for these times. Three-quarters said they see big strategic opportunities on the horizon despite the uncertainty, including mergers and acquisitions and disruptive new business models. And some 71% of CEOs are optimistic about the ways rapidly changing customer demographics and preferences could fuel growth.

But the optimism is tempered. CEOs can’t toggle between “risk on” and “risk off” in an era of higher-for-longer interest rates and rapid innovation — they must drive growth and value simultaneously. That explains why many chief executives cited organic investment in new revenue streams among their top three priorities as cited capital efficiency and cash flow management — 55% in each case.

That said, CEOs are still pushing harder for growth. Twenty-nine percent rated organic investment in new revenue streams as their number one priority, compared with 20% who cited capital efficiency and cash flow management.

Betting on AI to drive growth and value

Artificial intelligence (AI) is the clearest example of the new growth agenda in practice. The overwhelming consensus among CEOs was that AI is the best way to focus on revenue and cost simultaneously.

The spoils of AI won’t be distributed equally, however. Scale is a big differentiator: Larger companies have the deep pockets needed to make transformational bets, while smaller companies are looking more to build capabilities.

But the biggest mistake many CEOs fear would be to do nothing at all. More than 40% of CEOs cited not moving fast enough on AI and being left behind by competitors as one of their top AI- related risks.

Navigating economic security and geopolitical risks

Governments around the world are prioritizing economic security more than they have in the past several decades, imposing tariffs and launching industrial policy initiatives such as the Inflation Reduction Act. That is forcing CEOs to look for new ways to win on tilted playing fields. Fully 86% of leaders of large and midsized companies said they are planning to take action in the next year or two to address geopolitical stability, protectionism, and government industrial policies.

Regional blocs are gaining prominence as globalization evolves. Some 60% of CEOs said they plan to reduce exposure to higher-risk regions in the next year or two — again, primarily to address geopolitical uncertainty, tariffs, and industrial policies. A little over a third (38%) said they are regionalizing their operations and developing local supply chains. Only 16% of CEOs said they are planning to reshore their operations domestically, showing that globalization is not in retreat but rather is being reimagined for a new age.

The belief that geopolitical factors and crises are now a permanent feature of the business environment is leading CEOs to bolster their companies’ business continuity and crisis management playbooks. They also are empowering local and regional management teams for increased agility to respond to conditions on the ground.

Driving workforce performance in an unsettled world

Today’s everything-everywhere-all-at-once environment presents challenges for workforce management as well. The pandemic unleashed the Great Resignation and the related phenomenon of “quiet quitting”, forcing leaders to rethink major elements of their talent strategies. Now generative AI is already proving to be disruptive.

CEOs recognize that companies with flexible operating models are best prepared to navigate accelerating business conditions. Some 59% said their top workforce priority is to break down business silos to create a more unified franchise. To mitigate employee concerns about AI-related job losses, 31% of the chief executives we surveyed said they are placing a priority on investing to fill in critical skills gaps and reskilling the workforce more broadly, and an equal number said they are upskilling managers to adapt to new ways of working and market conditions. CEOs these days need to focus energy not only on their markets, customers, shareholders, capital structure, and business model but also on solidifying their company’s culture, defining its mission and purpose, and reconciling the goals of thousands of employees whose personal views might not align.

The road ahead — leadership strategies to thrive in challenging times

The most successful CEOs in the next few years will be the ones who can generate alpha amid a fog of uncertainty by remaining flexible and acting on early warning signals.

Of course, this inaugural survey is merely a moment in time, capturing attitudes very much anchored to 2024. How will changing demographics and technology fuel growth in coming years? How will generative AI create long-term value and revenue opportunities? What will supply chains look like in the years ahead? Will the new ways of working succeed? We view these insights as the starting point in a longer conversation to come on leadership in an era of unpredictability.

A version of this was originally published on the Oliver Wyman Forum.