首席执行官展望脉搏调查-2023-10

CEOImperativeSeries

IfAIholdsthe

answers,areCEOs

askingtheright

strategicquestions?

EYCEOOutlookPulseSurvey—July2023

/CEOOutlook

Inbrief

•CEOsembraceAIasa

forceforgoodbuthave

significantconcernsaboutunintendedramifications.

•SustainabilityprioritiesmoveasCEOandinvestorsentimentremainsdisconnected.

•Thetransformationimperativefuelsnear-record-highM&A

appetite,butbarriersto

doingdealswilllikelyhindermarketactivity.

TheCEOOutlookPulse–July2023

findsCEOs’faithinartificialintelligence

benefitstemperedbyconcernsabout

unknownconsequences.

CEOsgloballyareembracingAIasaforceforgoodwhileremaining

waryofunknown,unintendedconsequences.Theybelieve

moreneedstobedonetomitigatesignificantsocial,ethicaland

cyberrisks.

AnEYstudyof1,200CEOsgloballyfocusesonhowtheycurrently

useAIaswellastheirplanstoleveragethetechnologyinthe

future.Italsoprovidesinsightsoncapitalallocation,investment

andtransformationstrategies,aswellasplanstoembed

sustainabilityintothegrowthagenda–allagainstabackdropof

economicheadwinds.

Thelatesteditionofthe

CEOImperativeSeries

,whichprovides

criticalanswersandactionstohelpCEOsreframethefuture

oftheirorganizations,findscompanieslookingforwardand

positioningforgrowth,evenasnewtechnologiesandgeopolitical

pressuresmakethatfutureincreasinglyopaque.

EYCEOOutlookPulseSurvey—July2023|1

Chapter1

TherapidriseofAIcompelsCEOstoreconsiderthefuture

CEOsembracethepromiseofartificialintelligence–butwithsignificantconcerns.

1

a

Towhatextentdoyou

agreeordisagreewith

thefollowingstatements

relatedtoartificial

intelligence?

Therespondentswereallowedtoselectoneoptionforeachstatement.

Theheadline-grabbingexplosionofgenerativeAIinlate2022andearly2023has

capturedtheimaginationofbusinessleaders,investorsandconsumersalike.TensofbillionsofdollarshavebeeninvestedintogenerativeAIapplications,withthemost-fundedusecasesbeingdrugdevelopmentandsoftwarecoding.

AIisaforceforgood–drivingbusinessefficiencyandtherebycreatingpositiveoutcomesforall,suchasinnovationsinhealthcaretreatments

29%36%25%8%2%

TheimpactofAIreplacinghumansintheworkforcewillbecounterbalancedbythenewrolesandcareeropportunitiesthatthetechnologycreates

27%39%23%9%2%

ThebusinesscommunityneedstofocusmuchmoreontheethicalimplicationsofAIandhowitsusecouldimpactkeyareasofourlives,suchasprivacy

29%38%23%8%2%

WeneedtodomoretomitigateagainstAI“badactors”whocouldusethetechnologyinharmfulways–fromcyberattackstodeepfakesanddisinformation

28%37%25%8%2%

WearestillnotdoingenoughtomanagetheunintendedconsequencesofAI,whichcouldhavesignificantimplicationsforthebusinesscommunityandsociety

29%35%24%9%3%

Strongly

agree

Somewhatagree

Neutral

Somewhatdisagree

Stronglydisagree

CEOsclearlyseethehugeupsideopportunitiesofAI.Theyrecognizeitspotentialtodriveproductivityandpositiveoutcomesforallstakeholders.Two-thirds(65%)

65%

agreeorsomewhatagreethatAIisaforceforgood—drivingbusinessefficiencyandthereforecreatingpositiveoutcomesforsociety,suchasinnovationsinhealthcaretreatments.

ofCEOsagreethatAIisaforce

AsimilarcohortbelievestheimpactofAIreplacinghumansintheworkforcewill

forgood,drivingbusiness

efficiencyandthereforecreating

becounterbalancedbythenewrolesandcareeropportunitiesthatthetechnologycreates—theyrejectfearsthatAIcouldnegativelyimpactworkforcenumbers.

positiveoutcomesforall.

ButCEOsaresimultaneouslyconcernedaboutanyunintendedconsequencesofAI–

reflectingabroaderconfluenceofviewsinmedia,societyandcontemporaryculturewheretheexcitingpotentialofartificialintelligenceisoftencontrastedwiththetropesofdystopiansciencefiction.

2|EYCEOOutlookPulseSurvey—July2023

TherapidriseofAIcompelsCEOstoreconsiderthefuture

EYCEOOutlookPulseSurvey—July2023|3

ethicalandcriminalrisksinherentinthenewAI-fueledfuture–fromcyberattacksto

Almosttwo-thirds(65%)ofCEOssaymoreworkisneededtoaddressthesocial,

65%

disinformationanddeepfakes.Asimilarnumberalsoworrythatnotenoughisbeingdonetomanagethesignificantimplicationsandunintendedconsequencesforboththebusinesscommunityandsocietymorebroadly.

ofCEOssaymoreworkisneeded

Governmentpolicymakersandregulatorshaveasignificantroletoplayinestablishing

toaddressthesocial,ethical

rulesandguardrailsforhowgenerativeAIisused.AndCEOsalsoseearoleforthe

andcriminalrisksinthenew

businesscommunitytoengagemuchmoreontheethicalimplicationsofAIandthe

AI-fueledfuture.

impactofitsuseonkeyareasofourlives,suchasprivacy.TheyalsohighlightAI’spotentialtodisrupttheentiredigitalenvironmentthatexiststoday,especiallywithregardtoprivacyandonlinesecurity.

Despitetheseconcerns,CEOsaredevisinginvestmentstrategiestomaximizethe

currentandfuturebenefitsthatAIcanbringtotheirbusinesses.Capitalallocation

isbeingfocusedonthesenewtechnologies.WithnearlyahalfofCEOsalreadyfullyintegratingAI-drivenproductorservicechangesintotheircapitalallocationprocessandactivelyinvestinginAI-driveninnovation.

a

Whichofthefollowing

bestdescribesyour

currentcapital

allocationapproachto

artificialintelligence?

Therespondentswereallowedtoselect

oneoptiononly.

43%

Wehavealreadyfully

integratedAI-drivenproduct

orservicechangesintoour

capitalallocationprocess

andareactivelyinvestingin

AI-driveninnovation

45%

Wehavenotmadesignificantcapital

investmentstodatebutplantodothisinthenext12months

12%

WedonotplananysignificantcapitalinvestmentintoAI-drivenproductorserviceinnovation

17%

16%

13%

28%

22%

16%

29%

28%

22%

24%

21%

31%

10%

9%

14%

Chapter2

Sustainabilityfocusslowsinthefaceofotherpriorities

Sustainabilityinitiativesareatacrossroads–majorCEOshiftinpasttwoyears.

2

ManybusinessesseethepotentialofAItoacceleratetheirprogressonsustainabilityatatimewheninvestors,regulatorsandstakeholdersacrosssocietyareincreasinglydemandinggreaterenvironmental,socialandgovernance(ESG)transparency.

However,CEOrespondentsaresplitthreewaysintermsofhowmuchcapitaltoallocatetosustainabilitypriorities.

Justoverathird(38%)prioritizesustainabilityissueswhenmakingcapitalallocation

decisions,withasimilarnumber(34%)notmakingsuchissuesapriority.The

remainingrespondents(28%)applyanequalweightasotherbusinesspriorities.

a

Whenitcomestoyour

company’scapitalallocationprocess,whichofthe

followingbestdescribestheimportanceofsustainabilityinitiativestoday?

Therespondentswereallowedtoselectone

optiononly.

Sustainabilityinitiativesareatthe forefrontofourcapitalallocationstrategy,andwededicatesubstantialresourcestosupportthem

Weprioritizesustainabilityinitiativesandallocateasignificantportionofourcapitaltowardthem

Weallocatecapitaltosustainabilityinitiativesonthesamelevelasotherbusinesspriorities

Whileweconsidersustainabilityinitiatives,theyarenotgiven significantweightwhenallocatingcapital

Sustainabilityinitiativesarenotapriorityforcapitalallocationinourcompany

Global

I

Americas

I

Asia-Pacific

I

Europe

I

19%

23%

34%

18%

6%

Accordingtothelatest

EYGlobalCorporateReportingandInstitutionalInvestor

Survey(pdf)

,businesses,andmanyoftheirbiggestinvestorsaroundtheglobe,areatoddsovertheactionneededonsustainability–aclashofopinionsthatthreatenstostifleaccesstocapitalformanyorganizations,whichcouldhinderprogresson

decarbonizationandothersustainability-driveninitiatives.

However,whenitcomestothetrade-offbetweenshort-termearningsandlong-termvaluecreation,thereisadisconnectbetweeninvestorsandCFOs.Investorsaremorelikelytofavordecisionsthatleadtosustainablelong-termvaluecreation,evenattheexpenseofshort-termearnings.Financeleadersappearmuchlessinclinedtomakethattrade-off.

Theresearchfound76%ofinvestorsarewillingtoaccept“alowerrateofreturnoninvestmentwhenthetargetcompanyhasabeneficialimpactonplanetorpeople.”

4|EYCEOOutlookPulseSurvey—July2023

Sustainabilityfocusslowsinthefaceofotherpriorities

EYCEOOutlookPulseSurvey—July2023|5

Lastsurvey

(January2023)

Lastsurvey

(January2023)

37%

12%

10%

36%

32%

30%

41%

34%

23%

22%

9%

8%

1%2%2%2%

Thisisinstarkcontrasttoour

CEOOutlookofJanuary2022

when65%ofCEOs

65%

reportedtheyhadencounteredresistancefrominvestorsabouttheirsustainability

transitionstrategy.Almostaquarter(21%)thensaidthatinvestorsarenotshowing

supportforlong-terminvestmentplans,orthattheyarefixatedonquarterlyearnings.

Investorappetitehasshiftedtowardsustainability-friendlybusinesseswhileCEO

ofCEOsreportedtheyhad

prioritizationseemstohavemovedintheoppositedirection–short-termfinancial

encounteredresistance

performance.Theharshrealitiesoftoday’slow-growth,high-inflationandhigh-

frominvestorsabouttheir

interest-rateenvironmenthavenodoubtencouragedmanyCEOstofocusmore

sustainabilitytransitionstrategy.

sharplyonquarterlyperformance.Ontheotherhand,formanycompanies,sustainabilitymayalreadybebakedintothestrategicdirection.

Nevertheless,tomeetstakeholderdemands,CEOshavetoseekmoreeffective

waysofcommunicatingstrategicperformancewithbothnonfinancialandfinancialmetricstohelpbridgethegapwithinvestorexpectationsandalignwithmore

demandingstakeholders.

Acceptingnewrealities,short-termvolatilityandrisks

Giventhenear-tomidtermeconomicheadwinds,theincreasingcostofdoing

business,risingcapitalcostsandelevatedgeopoliticaltensions,itmaycomeasa

surprisethatCEOsfeelslightlymorepositive,withanetnumberofrespondents

agreeingthattheirperformanceoverthenext12monthsislookingbrighterthanatthestartoftheyear.

a

Comparedwiththestartof

2023,howdoyoufeelabout

yourorganization’sfinancial

performanceprospectsover

thenext12months?

Therespondentswereallowedtoselect

oneoption.

Significantlymore

optimistic

15%

Moderatelymore

optimistic

32%

Unchanged

17%

Significantlyless

optimistic

31%

Moderatelyless

optimistic

5%

a

Consideringthecurrentlevels

ofglobalmacroeconomic

uncertainty,whatscenarioareyouplanningforin

connectionwithapotentialeconomicdownturn?

Therespondentswereallowedtoselect

oneoption.

Moderateandtemporarydownturn

Moderateandpersistentdownturn

Severeandtemporarydownturn

Severeandpersistentdownturn

Idonotanticipateadownturn

TheglobaleconomyTheprimarymarketyouoperatein

Currentsurvey(July2023)

Currentsurvey

(July2023)

25%

41%

18%

15%

Sustainabilityfocusslowsinthefaceofotherpriorities

6|EYCEOOutlookPulseSurvey—July2023

22%

22%

22%

22%

34%

34%

33%

32%

27%

28%

25%

25%

13%

14%

12%

11%

However,CEOsarealsohavingtomanageaseriesofinterconnectedexternalriskstowhatwouldhavepreviouslybeenconsideredbusinessasusual,withthemajority

anticipatingaverysignificantorsignificantimpactontheirbusinessoverthenext12months.

a

Towhatextentdoyou

believethatthefollowing

riskswillimpactyour

business’sperformanceoverthenext12months?

Therespondentswereallowedtoselectoneoptionforeachstatement.

Verysignificantimpact

Significantimpact

Moderateimpact

Onlyminimalimpact

Noimpact

Geopoliticalconflictsortradetensions

I

Macroeconomicandmarketvolatility

I

Regulatoryrisks

I

ESGand

sustainabilityrisks

I

Technologyanddigital

disruption,including

cyberrisks

I

24%

35%

25%

12%

6%5%6%6%5%

EYCEOOutlookPulseSurvey—July2023|7

Thepastthreeyearshavebeennotableforthenatureandpaceofthemultiplecrisesconfrontingcompanies.CEOs’andbusinessleaders’significantfocusonprocessingtheprinciplesofthisfast-paced,stackeddisruptionhasledtotwomajorconsequences:

1

Companiesgettrappedina

reactivespiral,adaptingto

fastandfundamentallyfluid

situationsatanincreasingpace.

Thisforcesthemtobecomemoreandmoretacticalandcreatesa

barriertothinkingstrategicallyforthelongerterm.

2

Timeandfocusareincreasingly

wastedontryingtopicturethe

exactshapeandformofpossible

futuresratherthandealingwith

thenecessary,no-regretmoves

theycanmakenow.

Actionstotakenow

Adoptingadvancedmonitoringandscenarioplanningtoplayouttheiractions

andreactionstoanyfurtheraccelerationofexternalheadwindsiskeyforCEOs.

Companiesshouldberegularlyassessingtheirportfolioofassets,operations,

ecosystemsandsupplychains,includingroutestocustomers,andconsideringhoweachaspectoftheirbusinessisimpactedatafundamentallevel.Fine-tuningeach

areatostrategicallymanagethecomplexriskenvironmentwillbringbenefitsacrossthewholeorganization.

Chapter3

Capitalmatters

Focusingcapitalwhereitmatterswillboostlong-termgrowthopportunities.

3

Focusingonthefundamentalsandcontrollingwhatisinbusinessleaders’powertocontrolwillbeCEOs’mosteffectivestrategicandoperationalactionsinthecurrentenvironment.Thiscanalsobeseenincapitalallocationstrategies.

a

Howwouldyoudescribetheprimaryfocusof

yourcompany’scapitalallocationstrategyoverthenext12months?

Therespondentswereallowedtoselectoneoptiononly.

26%

Pursuingmergersandacquisitions(M&A)

25%

Investinginorganicgrowthinitiatives

ders

Aneffectiveallocationisaimedatenablingvaluecreationbyfindingandfundingtherightmixofinvestments,withinfinancialandoperationalconstraints,whilebuildingresilienceandpreparednessforanyunforeseenevents.

Thisprocessimpactsmultipledimensions,includingtimehorizonsanddifferent

organizationlevels.Forexample,long-termcapitalplanninghastoaddressthelonger-termstrategicobjectivesofanorganization–threetofiveyearsout–whileshorter-

termcapitalbudgetingmustspeaktoanear-termhorizonofonetothreeyears,withbothatop-downandabottom-updimension.

Butcapitalallocation,asakeydriverofvaluecreation,hastobeintegratedwithoverallcorporatestrategy.Italsohastoincludeallusesandsourcesofcapital,includinginvestments,returningcapitaltoshareholdersandevendivestitures.

8|EYCEOOutlookPulseSurvey—July2023

Capitalmatters

EYCEOOutlookPulseSurvey—July2023|9

17%

16%

13%

17%

15%

12%

15%

14%

18%

16%

15%

11%

15%

14%

17%

14%

13%

11%

ForthoseCEOswhoselectedeitherorganicgrowthorM&Aastheircompany’s

primarycapitalallocationstrategy,thereisaboldnessintheprimarygoaltheyaretryingtoachievewiththisapproach.

a

YouselectedeitherorganicgrowthorM&Aasyour

company’sprimarycapital

allocationstrategy.What

istheprimarygoalyouare

tryingtoachievewithyour

chosenapproach?

Therespondentswereallowedtoselectupto

tworesponsesandlisttheminorderofpriority.

Improvingtechnologycapabilitiesandinnovation

Introducingnewproductsandservicesorimprovingexistingones

Expandingintonewmarketsorgeographies

Integratingsustainabilityintocoreproductsandservices

Addingnewskillsorcapabilities

Buildingecosystems,alliances,andpartnerships

Global

I

Americas

I

Asia-Pacific

I

Europe

I

17%

16%

13%

17%

12%

14%

Inmanyways,theseareasoffocusmirrorthemajorchallengesthatCEOsnow

face.Beitashiftinggeopoliticallandscape,acceleratingtechnologyinnovationand

disruptionortheneedtobecomeamoresustainablebusiness,CEOsarelookingtobeonthefrontfoot.

Makingsmartcapitalallocationdecisionsthatdrivelong-termgrowthaswellas

increaseshort-termshareholderreturnsandstakeholderconfidenceisessential

fortheC-suite.Toimprovetheircompany’scompetitiveposition,leadingCEOsareremovingbarrierstoagileinvesting.

Adata-driven,consistentandenterprise-wideapproachtocapitalallocationthatfocusesonqualitativeandquantitativemetricscanhelpCEOsmakeobjective

investmentdecisions,navigatedisruptionanddrivelong-termvaluecreation.

Capitalmatters

Sustainedtransformationtofuelfutureprosperity

ThisproactivenessincapitalisreflectedinCEOs’plansfortransformation.

Onlytherespondentswhoselected“acceleratingportfoliotransformation”or“maintaining”(63%)werepermittedtoanswerthisquestion.

a

A)Whatstatement

bestcharacterizesyourapproachtoportfolio

transformation—includingspin-offs,divestituresandacquisitions—overthenext12months?

Therespondentswereallowedtoselectoneoptiononly.

a

B)Whatwillbeyourmainapproachtofinancethistransformation?

13%

Wearereducing

transformation

changes

21%

Weareaccelerating

thelevelof

transformation

changes

42%

Wearemaintaining

ourcurrentlevel

oftransformation

42%

Performanceimprovement

24%

Attractingnewcapital

24%

Wearepausing

transformation

changes

changes

20%

Refinancingorreschedulingexistingdebt

14%

Sellingnon-coreassets

Themajority(63%)ofrespondentsareeithermaintainingoracceleratingtheir

63%

ofrespondentsareeither

maintainingoracceleratingtheirportfoliotransformation.

portfoliotransformation.Ofthisboldercohort,themainsourceoffinancingtheirtransformationwillcomefromperformanceimprovement.Thisreflectshowtheenvironmenthasshiftedoverthepast18monthsfromoneofgrowthatanycost,fueledbyultra-cheapmoneyandelevatedliquidity,toanewparadigmwhere

investmentshavetobesustainable,withaclearpathtoprofitabilityorvaluecreation.

Thecontextforfinancinghaschangedfundamentally.Policyinterventionstomitigatecrisissymptomshavebeenasourceforattractivetemporaryfinancingandsubsidies,andthemarketisstillpartiallyfloodedwiththesefunds.However,morerecent

monetarypolicymovestocontaintheunintendedconsequencesoftoomuchliquidity

–sharplyraisinginterestratesinafightagainsthighinflation–havecreatedanenvironmentwherearesultingcreditsqueezeispossible.

Asaresult,companiesarerefocusingonshort-tomedium-termliquidityandto

furthertheireffortsincontrollingcostsandfinancialrisks.Thisthreatemphasizestheneedforliquidityfocusandtheimmediateissuestheyarefacingmaycenteronunderstandingexposureandexploitinginternalfinancingpotentialtothemaximum.

10|EYCEOOutlookPulseSurvey—July2023

Capitalmatters

Understandingexposure

1

Understandingshort-and

medium-termcapitaland

liquidityneeds(coordination

2

Assessingaccesstocashintheshortterm(balances,borrowingfacilities,capitalcalls)and

3

Assessingexposuretofinancialinstitutionpartners(balances,termsofcashmanagement

withtreasuryforecasts)

coordinatingbackupfundingsources,asneeded

accounts,cashproducts)

Exploitinginternalfinancingpotentialtothemaximumandincreasingresiliencewhilefreeingupcapitalforinvestmentintransformation

1

Optimizingworking

capitalmanagement

2

Reducingdirectandindirectcoststhroughanattitudeofconstantchallenge

3

Strivingforagilecoststructuresandlightassetfootprints

Itisdifficulttopredictexactlyhowallofthiswillplayout.Butonethingisbecomingmorecertain–theavailabilityofexternalfinancingwillcontinuetotightenand

becomemoreexpensive.Andthatwillmeanthatthecheapest,mostaccessibleandreliablesourceoffundingtheircompany’stransformationmaybeintheCEO’sowninternalcostcontrol.

EYCEOOutlookPulseSurvey—July2023|11

Chapter4

Areturntothedealtable?

CEOsshouldre-engagewithM&Aasaroutetonavigatinganuncertainfuture.

4

a

Doyouexpecttoactivelypursueanyofthefollowingtransactioninitiativesoverthenext12months?

Therespondentswereallowedtoselect

multipleresponses.

CEOsareclearlysignalingthattheywanttoincreasethepaceofM&Aoverthenext12months.

Jointventuresorstrategic

allianceswiththirdparties

63%

59%

47%

M&A

Divestmentsspin-offsorinitialpublicofferings(IPOs)

Yes98%

2%No

59%

ofCEOsplananacquisitioninthenext12months,upfrom46%atthestartof2023.

47%

ofCEOsplantodivestassets.

Anear-record-highofalmosttwo-thirdsofCEOs(59%)plananacquisitioninthenext12months,upfrom46%atthestartoftheyear.Almosthalf(47%)plantodivestassets.

Thisstrongsentimentindicatesanaccelerationofdealmakingthroughtherestof2023andinto2024–butcurrentbarrierstodoingdeals,suchasincreasinglyrestrictive

regulationandahighercostofcapital,willlikelymeanmanyofthoseplansstall.

Whilethedealmarketstarted2023verysoftly,therehasbeenapickupofdeals

throughthesecondquarter.CEOsareacceptingthenewrealitiesofdealfundaments,includingbridgingawidervaluationgap,moreexpensivefundingandagreater

likelihoodofregulatoryscrutiny.However,allofthesefactorsstillhavethepotentialtostopdealsgettingovertheline.

DespiteanincreasinglycomplexM&Aenvironmentmakingtransactionsmoredifficult,thefundamentaldealdriversthatacceleratedtheM&Amarketthroughthesecond

halfof2020totheendofthefirsthalfof2022remainintact.Theneedtorespondtotechnology-drivendisruptionisnotgoingawayanytimesoon.

WithAIandnewtechnologiesemergingandmaturingevermorequickly,companiesthatcanleveragethemasinstrumentsofcreativitywillperformbetter.Companies

willneedtodeploytechnologyfastertocatertotheevolvingneedsofcustomers,

employeesandthebusinessecosystem.Thisislikelytoaccelerateinvestmentin

digitalassets–suchasAIcapabilities–leadingtomoretransactions,withcompanieslookingtoimprovetheirvaluepropositionandreinforcetheirmarketposition.

CEOsarealsoleveragingthesetechnologiestostrengthentheirM&Aprocessesthemselves.WhenaskediftheyaremakinguseofAIaspartoftheirapproachtotransactions,onlyatinycohort(5%)indicatedtheyarenotcurrentlyusingthese

capabilitiesorhavenoplansto–andtheyriskbeingoutmaneuveredbythecompetition.

12|EYCEOOutlookPulseSurvey—July2023

Areturntothedealtable?

a

AreyoumakinguseofAI

aspartofyourapproach

totransactions,including

M&Aordivestments(e.g.,

usingAIaspartoftarget

selectionorduediligence)?

Therespondentswereallowedtoselectone

optiononly.

Significantusetodayacrossmainelementsofour

transactionprocess

27%

Initialusetoday—wearepilotingpotentialsolutions

44%

Notcurrently,butweare

evaluatingpotentialsolutions

24%

Notcurrently,andnoplans

todoso

5%

M&Aisacomplex,challengingcombinationofstrategy,capitalandeffectivedeal

executionusedtodrivevalue.Gettingitrightwilllikelykeepcompaniesaheadoftheircompetition.Getitwrong,andtheymaywellfallbehind.

Therealityisthatanincreasinglydata-saturatedworldismakinggettingitright

harderstill.ThefutureofM&Adealmakingmeanssignificantlymoreinformation

nowneedstobecaptured,processed,analyzedandinterpretedthaneverbefore.

Traditionalmeansarenolongereffectiveindeliveringacompetitiveedge.Artificialintelligencecapabilities,deployedcorrectly,maybethekeytounlockingmorevaluethroughM&A.

Focusingnear-termcapitaldecisionsonlong-termreward

CEOsarenavigatingacomplexlandscape,preparingforlong-termsuccesswhileaddressingimmediatechallenges.TheyrecognizethepotentialthatAIoffersandtheneedforsustainabilityactionbutalsounderstandthepotentialrisksassociatedwiththese

transformativechanges.Byadoptingproactivestrategies,data-drivendecision-making,andafocusoncapitalallocationandM&A,CEOscancreatevalue,drivegrowthandensuretheirorganizationsremaincompetitiveinanevolvingbusinessenvironment.Someofthesevalue-creatingactionsinclude:

•Embracethepotentialofartificialintelligencewhilemanagingrisks:

CEOsshouldrecognizethevalueand

positiveoutcomesthatAIcanbring

totheirorganizations.Theyshould

investinunderstandingthescopeas

wellastherisks,definethevalueandcapabilitiesneededforintegratingAI,andensurethatAIisusedresponsiblyandethically.CEOsshouldalsoengagewiththebroaderbusinesscommunitytoaddressthesocial,ethicalandcyberrisksassociatedwithAI.

•Utilizedata-drivencapitalallocationandfocusontransformation:

CEOsshouldadoptadata-driven,consistentandenterprise-wide

approachtocapitalallocation.

Byfocusingonqualitativeand

quantitativemetrics,CEOscanmakeobjectiveinvestmentdecisions,

navigatedisruptionanddrivelong-

termvaluecreation.Theyshouldalso

embracesustainedtransformation

effortsbymaintainingoracceleratingportfoliotransformationandfinancingitthroughperformanceimprovement.

•Giveappropriateweight

tosustainabilityincapital

allocationdecisions:

CEOsshouldrespondtotheincreasingdemandfortransparencyand