Business leaders globally recognise the potential of AI, but are encountering significant challenges in formulating and operationalising related strategies, according to the latest edition of the EY CEO Outlook Pulse survey.
While more than two-thirds (70%) of CEOs see the need to act quickly on generative AI (gen AI) to avoid giving their competitors a strategic advantage, a similar proportion (68%) reported being stymied by uncertainty around this space.
Conscious of the technology’s potential to disrupt their own business models, almost all CEOs (99%) told the quarterly survey of 1,200 global CEOs that they are making or planning significant investments in gen AI. However the findings report that investing in an AI-enabled future is easier said than done: more than a quarter (26%) of CEO respondents say the rapid pace of gen AI progress is the biggest challenge to making capital allocation decisions on gen AI initiatives.
“The potential for gen AI to reinvent the way companies operate cannot be ignored, and CEOs are making bold investments in the technology to solidify their competitive advantages and future-proof their organisations,” commented Andrea Guerzoni, EY Global Vice Chair – Strategy and Transactions. “However, CEOs know that companies with genuine gen AI capabilities can become game-changing allies or acquisitions, but the relentless hype around artificial intelligence has clouded their view of the landscape.”
Maximising growth and profitability to fund transformations
The past four years have seen business leaders reacting quickly to shifting consumer behaviours, a resetting and reconfiguring of supply chains, an upending of the global energy market, and rapid changes in the growth, inflation and interest rate environment. Yet, a significant number of respondents anticipate higher levels of growth (66%) and profitability (65%) in 2024 compared with 2023.
With global economic growth expectations more likely to be revised on the downside in the near-term, CEOs should consider whether their own growth expectations reflect the slower global market projected over the next five years.
“It is possible that those CEOs planning for higher growth have already made the hard choices during the past few years, both in terms of competitive positioning and potential growth opportunities,” Guerzoni says. “For those yet to do so, challenging the existing business model based on the current and anticipated market conditions is an imperative step that needs immediate attention.
“CEOs need to scrutinise every area of their operations, from both a product and geographic angle, and decide which underperforming areas to jettison. Maximising growth and profitability to fund this transformation will be the key to unlocking long-term value creation for companies.”
To read the full report, visit: ey.com/CEOOutlook
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