CEOs must face uncertainty and tackle it head-on

CEOs, when they speak as a club, hold up a mirror through which a country can closely examine its eco-nomic outlook. So, when they say, as they did in the KPMG report released last week, that they expect their companies to grow by only two per cent over the next three years, this should make policy makers and the government sit up and take notice. That CEOs are now more focused on building resilience in their orga-nizations, rather than looking for new ways to grow profits, sends a strong message about the state of the economy considering that as a club, CEOs are generally more optimistic in their outlook compared to other segments of the economy, say the working class and the self-employed.
Slow growth, however, is not the only challenge that the CEOs have to grapple with. In his foreword to the latest report, Josphat Mwaura, CEO and Senior Partner of KPMG East Africa, observes that 62 per cent of CEOs now consider it critically important to improve their innova-tion processes, a steep jump from only 20 per cent the previous year.
This underlies the disruption that traditional businesses are expe-riencing, making it all the harder for the chief executives to steer their organizations in the face of the head-winds.
“In this year’s findings, we see that to be a CEO today is not what it was yesterday,” Mr. Mwaura observes. “There have been signifi-cant changes in the breadth of their responsibilities (and) the skills they therefore need.”
Despite these daunting challeng-es, there is a silver lining in the dark clouds, with CEOs in East Africa saying that they view disruption as an opportunity rather than a challenge and a significant num-ber saying that they are seeking to disrupt their own industries rather than sit on their hands and wait to be disrupted.
According to the KPMG report titled “Agile or Irrelevant: Redefining Resilience”, 58 per cent of the chief executives surveyed in the region said they were willing to allow mis-takes to be made in the pursuit of innovation. This represents a signif-icant shift in companies’ tolerance for failure in the quest for better products and services in a culture that traditionally emphasized getting it right the first time. Like Einstein, who once observed that he learnt over a thousand ways in which a light bulb does not work, CEOs are willing to allow experimenta-tion. But, for this to succeed, top executives ought to loosen the purse strings and strengthen their research and development (R&D) depart-ments where they already exist. And where they do not, the question should be about when they will be set up, not whether.
The second step that they need to take is to equip their core teams, as well as their staff generally, with the skills that will position them to face disruption head-on and find new ways to survive the turbulence. Although this is a reality that a significant numbers of the CEOs are already alive to, in East Africa, there are not many enough who see the need to respond with speed to emerging challenges.
According to the KPMG report, only 46 per cent of those inter-viewed in East Africa said that act-ing with agility “is the new currency of business” compared to 67 per cent globally. Worse, only eight per cent of executives in the region are already using Artificial Intelligence (AI) in the automation of their pro-cesses, yet global experience has demonstrated the capabilities of AI to cut costs, improve processes and deploy targeted responses to cus-tomer needs.
It is also worrying that only four per cent of regional CEOs have any plans to ensure that more than half of their employees are trained to enhance their digital capabilities against a global average of 44 per cent.