Digital transformation remains the number one concern for Australia’s business leaders as they look ahead to 2020, but new worries have emerged surrounding the global political and economic landscape, and climate change.
A survey of nearly 200 C-suite executives by KPMG Australia paints a picture of CEOs who are worried about the future, with sustainability & climate change; leadership capability; and workforce upskilling and the wider global political and economic environment entering the top 10 list for the first time this year.
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The results are contained in the third annual edition of Keeping Us Up At Night: The big issues facing business leaders.
Digital transformation has ranked as the number one CEO concern each year KPMG has conducted the survey, while innovation and disruption has dropped from the second spot to fourth on the list this year. Upskilling cracked the top 10 for the first time, up from 15th last year.
The KPMG report argues that true transformation will rely on staff skills and training and that Australian businesses will need to fundamentally rethink traditional attitudes and practices to ensure the right skills mix for the 2020s.
The top 10 big issues facing Australian business leaders in 2020:
1. Digital transformation
2. Global political and economic environment
3. Regulation and regulatory environment
4. Innovation and disruption
=5. Sustainability and climate change
=5. Public trust
=5. Leadership capability, accountability, stability
8. Customer and citizen centricity
9. Political paralysis and effective government planning and response
10. Workforce upskilling and transformation.
Gary Wingrove, CEO of KPMG Australia, said, “It is not surprising that digital transformation remains the top issue, and in many ways pervades the survey, given its close linkage to fourth-placed innovation and disruption.”
“C-level executives in business and government are also concerned about the effective delivery of large transformation projects. They may run large legacy organisations, with hundreds of products or services and find that untangling established processes, systems and mindsets, while profoundly necessary, can be extremely challenging.”
Regulation has been a consistent concern highlighted by the study. And post-banking royal commission the more stringent laws are expected to emerge in the 2020s.
On climate change – which was ranked 14th in the survey a year ago – the report authors argued businesses need to be clear about two broad categories of risk: physical and transitional. Physical refers to immediate concerns such as higher and more extreme incidences of bush fires, storms, drought, El Nino effects. While transitional refers to longer terms effects like rising sea levels, biodiversity loss, the death of the Great Barrier Reef.
Wingrove commented, “We expect to see climate change continue its upwards momentum on the agendas of boards and CEOs. There is a clear obligation on businesses to acknowledge, understand and plan to mitigate the risks associated with climate change as a practical problem. These are now deemed foreseeable and material. Those in sectors not used to thinking about the natural environment as a critical factor need to change their mindset.”
The report noted concern for the geo-political and economic environment has risen significantly over the past 12 months. For example, global trade tensions mean Australian businesses and universities now fear it may become difficult to collaborate with both the United States and China.
Leadership capability is also new in the top 10, at seventh place, with respondents grappling with the challenges of leading in a complex environment. The report comments that organisations need to be increasingly conscious of reflecting diversity in order to derive the best ideas, and optimal culture.