This week, PwC shared the results of their 22nd Annual Global CEO Survey. As we can already infer from its title, “CEOs’ Curbed Confidence Spells Caution,” a key message of the report is that CEOs’ confidence has dropped significantly compared to last year. This is a bit of a gloomy message. After all, we want our CEOs to be confident leaders, right? To find out what is behind this and whether there is a way to increase our CEOs’ confidence, I had a deeper look at the report’s results.
Interestingly, the report actually contains two stories about CEOs’ lack of confidence. First, there is the story about confidence in the sense of being optimistic about the future. As the report shows, after last year’s optimism, CEOs this year have turned much more pessimistic about the outlook of their companies and are concerned about the ongoing issues in the global arena. Because of developments such as nationalism, increasing regulation, Brexit, the US-China trade war, etc. they are more pessimistic than before.
This type of confidence refers to being pretty certain about the future not being as bright as before. Trying to increase this kind of confidence would be fooling ourselves. As the numbers in the report show, CEOs are pretty good at predicting whether their companies’ returns and the economy will be going up or down. This means this first type of lack of confidence is just what it is. We might not like it, but there’s not so much we – and they – can do about it.
But there is also a second story. This is the story about confidence in the sense of feeling too uncertain to confidently make decisions because of a lack of information. It is this second type of confidence that I’d like to have a deeper look at because that is most certainly something that we – and they – can do something about.
The report contains an interesting section on the gap that CEOs experience between information that is critical for their decision making and information that they currently receive in an adequate, comprehensive form. As it turns out, there is a huge gap between the information they need and the information they get. Here are some striking numbers from the report, reflecting the information CEOs find critical versus the extent to which they feel they receive this in adequate form:
- Data about customers’ preferences and needs: 94 % vs. 15 %
- Financial forecasts and projections: 92 % vs. 41 %
- Data about brand and reputation: 90 % vs. 24 %
- Data about the risks to which the business is exposed: 87 % vs. 22 %
- Data about employees’ views and needs: 86 % vs. 29 %
- Benchmarking data on peer performance: 84 % vs. 18 %
- Data about the effectiveness of R&D processes: 70 % vs. 17 %
- Data about the supply chain: 66 % vs. 21 %
Those are really big gaps, showing that the CEOs feel far from confident enough about key aspects of their business.
This begs the question what can we do about this. PwC’s report gives us three solutions: better data, better technology and better skills. As the report shows, companies lack adequate data, are slow in adopting artificial intelligence, and their staff lacks information-related skills. Along those lines, the report points us at three things CEOs can do to increase their confidence: 1. collect better data, 2. adopt modern AI and other data-oriented technology and 3. hire and train employees so that they have the right information skills.
Those findings and suggested solutions make sense. And they are not really unique or surprising. They reflect the kind of solutions most of us are looking for and we read about elsewhere. This shouldn’t surprise us. After all, the report summarizes the results of a broad survey amongst CEOs and as such reflect the main, common line of thinking.
What is most interesting about this, is what is not mentioned in the report and what has not been part of the study. The three factors above are all relevant. They are necessary ingredients for confident decision-making. Having better data, better (information) technology and better (information) skills helps. But it is not sufficient. You need a fourth ingredient for that.
This fourth ingredient are frameworks or methods that help connect the dots. Sure, having advanced technology and skilled people helps to interpret the vasts amounts of data that are around. But to really make sense of that data, you need to know what to look for in the first place and how to connect one piece of information to the other. This means you need tools that guide how you are going to look at the data and that help you make sense of them.
This omission in PwC’s report is not surprising. It is an omnipresent omission. But it is a glaring omission. Sure, with AI and information skills you can look at the data and try to let them speak for themselves. In this way you can make interesting insights that help us move forward. But you can really boost your confidence if you actually develop a deep and systematic understanding of what is going on. And for that you need sensemaking tools that help you guide what data to look for, and how to interpret and connect it so that you better understand what is going on in your business and the world around you.
Frameworks like the “Business Model Canvas” or the “Strategy Sketch” are a good start. They show you what kind of topics you need data about and how these topics relate to each other. As such, they help making sense of your business. But that is hardly enough. Business nowadays is too complex to analyze manually with brown paper and post-it sessions around “canvasses” like these. We need more advanced, software-based tools that take these frameworks to the next level and that allow us to truly understand what is going on and what to do about it.
Unfortunately, such advanced sensemaking tools are hardly around yet. Therefore, what we can do to increase our CEOs confidence is to develop such sensemaking tools for them.
This post was published earlier here on my forbes.com page.
Image credit: Getty