What’s in Store for the CEO of 2023?
The year 2022 will be remembered for numerous events, including the war between Russia and Ukraine, a subsequent severe rise in inflation, and ever-increasing interest rates. CEOs took on many extra responsibilities, including buffering their companies from a potential recession and protecting their supply chains.
The verdict is still out on the current state of the economy. While consumer demand remains high, there are signs of economic distress, especially in the tech industry. Layoffs are now the norm at major tech organizations, including Amazon, Meta, and Twitter. The S&P 500 declined by 18.11% last year, and Bitcoin had a dramatic crash of nearly 65%.
Economists vary in their prediction for a recession. Some say we’re headed for one in 2023, while others believe it’s already arrived. Who is right? Does it matter? One thing is for sure: CEOs will need to pay careful attention to external and internal economic indicators and make the right decisions to support their organizations in 2023.
2023 CEO Trends to Watch
Today’s CEOs should consider the following trends and changes as they enter the new year. While not all of them apply to every business, they can impact supplier and customer relationships.
Greater Focus on Artificial Intelligence
Tech advocates have long touted artificial intelligence (AI) and machine learning as the next technological advancement. While in prior decades, AI was part of the storyline of science fiction films and books, the technology is finally here.
We’re seeing a shift toward all types of AI technology that has the potential to change the world as we know it over the next decade.
Today’s CEOs are wise to do their research to understand AI and machine learning trends that can impact their organization. For instance, tools incorporating AI can assist in addressing customer questions through chatbots or suggest specific products to meet a client’s needs.
While AI and machine learning are still relatively new, we’ll see greater reliance on them in the decades to come. Maintaining an understanding of their capabilities and developments can allow CEOs to determine when it’s appropriate to incorporate them into business processes.
Need for Cost-Cutting Measures
Organizations are facing some economic insecurity. While the Fed has tried to cool a super-hot economy by increasing interest rates, what happens next is anyone’s guess.
Adverse developments in the Russia-Ukraine war could have repercussions worldwide, further increasing gas prices and hampering the supply chain.
There are also concerns about new strains of COVID-19 resistant to available vaccines. A new pandemic could prove disastrous to the world economy and put severe pressure on companies that don’t have much financial cushion to fall back on.
CEOs should consult with their executive teams to look for opportunities for saving money. The more cash their organizations can hold onto, the better. With higher interest rates, borrowing from banks will become much more expensive, and private equity investment opportunities may be few and far between.
Emphasis on DE&I
DE&I was a massive topic of discussion in 2021 and 2022, and most leaders undertook efforts to incorporate initiatives to improve diversity and inclusion in their organizations.
We expect the trend toward DE&I to continue in 2023. CEOs should work in tandem with their CHROs or senior leadership in human resources to ensure there are programs in place to promote a diverse workforce.
It’s essential to incorporate diversity at all levels of the organization. Simply hiring more people from a specific gender or racial background is not enough. Companies that see the most success from DE&I initiatives employ people from all walks of life throughout their most senior positions, including executives.
Once a CEO takes action to develop a more diverse workforce, they must live by the values of DE&I. It can’t only be a talking point. Instead, they must find ways to embed it in the company’s culture.
Securing the Supply Chain
Issues in the supply chain have been a problem since the height of the COVID-19 pandemic.
Many companies followed a just-in-time inventory policy, keeping only enough of a product to support steady demand. When consumer demand increased, they couldn’t meet their customers’ needs, and international lockdowns prevented workers from producing more goods to meet greater needs.
The past few decades have seen significant reliance on outside partners for making our goods, mainly in APAC countries like China. Companies are looking outside China for other suppliers to diversify the supply chain and prevent future damage should similar issues arise.
CEOs of companies responsible for manufacturing goods should look to strengthen their supply chains, especially if they rely on international vendors for critical components. While total domestic production isn’t always possible, differentiating the supply chain can protect companies from reputational damage if a vendor can’t support their needs.
Movement Toward Hiring CEOs with Experience
In prior years, private equity companies had a greater tolerance for hiring shiny new CEOs with grand ideas and lots of charisma.
While some CEOs were highly successful, others needed mentorship and direction to drive a company to reach its objectives.
Today’s private equity organizations are taking a different approach. There is less room for error when hiring a CEO due to the current economic climate. A bad hire can result in a tremendous loss in their investment.
Instead, private equity companies are searching for CEOs with prior experience leading a company. They want people who can deliver results and know how to deftly navigate financial uncertainty.
They don’t want to risk hiring CEOs with no history of running a successful organization.
The CEO of 2023 Must Be Ready for Change
While the CEO is ultimately responsible for a company’s performance, a strong executive team can support their efforts and alert them to critical business issues.
CEOs should maintain good relationships with their C-level team members and regularly interact with them to ensure they’re aware of incoming problems early.
If 2023 is anything like the last few years, we can expect lots of change in the business operating environment.
CEOs must keep abreast of new developments and be ready to respond to them to ensure their organizations remain competitive.
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Learn how we deliver top talent, no matter the need, with our industry-leading research and resources. Discover the strategy that made Cowen Partners the top retained executive search firm in New York, Chicago, Seattle, Atlanta, Dallas, Los Angeles, and beyond.
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