- APEC is at the forefront of rising tension on the political stage.
- Companies that are positioning themselves as digital leaders are overall reporting more confidence despite the geopolitical uncertainty.
- Businesses must find ways to differentiate themselves from their competitors in order to capitalise on the opportunities in the digital economy.
Companies seizing the opportunities in the digital economy in the Asia Pacific remain confident about their growth prospects despite the looming geopolitical instability evident at this year’s APEC summit in Papua New Guinea.
The trend towards protectionism that has emerged over the past year has thrown a series of challenges at chief executives operating in the twenty-one pacific rim countries that make up the Asia Pacific Economic Cooperation forum, findings from PwC’s 2018 APEC CEO Survey show.
Confidence in a
time of upheaval
The two biggest constituents of the group, US and China, are taking increasingly divergent paths, one towards protectionism enabled in part by raising trade tariffs and withdrawal from free trade agreements, and one towards expanding diplomatic and economic influence globally.
Such is the difference in worldview that for the first time in the summit’s near three decade history, the leaders of the member countries failed to agree on the terms of the communique – a joint statement on the summit’s consensus on issues – in Port Moresby, citing country-specific differences that were unable to be reconciled.1
While the political developments may be cause for concern, confidence among CEOs in the Asia Pacific is holding up, the survey results show. Much of this is coming from organisations that are investing heavily in digital, consequently setting themselves up for a success that can withstand geopolitical machinations.
To the digital leaders
go the spoils
A key finding from this year’s survey is that CEOs are increasingly prioritising relevance and competitive ability in the digital world. In response to where chief executives say they will be placing their investments over the next two years digital customer interactions ranked first, followed by skills and development of their workforce, and in third place, overall digital operations.
This finding is evidence of the growing realisation that businesses must be customer-first in order to remain competitive. As PwC’s Consumer Intelligence Series: Experience is Everything report found, customers vote with their wallet in response to their experience with a brand, so getting this right is critical for businesses to succeed in a world of evolving customer expectations.
But those wishing to thrive in today’s digital world may need to reassess these priorities. Delivering a market-leading customer experience will only be enabled by the development and transformation of the workforce – to quote Richard Branson, “if you look after your staff, they’ll look after your customers. It’s that simple”.2 Of course this investment can can only be afforded by dramatically cutting the company’s cost base through digitising its operations.
And as the APEC CEO Survey highlights, there’s still plenty of room for improvement. Just one in 10 CEOs responded that they are ahead of their peers when it comes to managing data risks, workforce skills, customer experience and data operations. Only around half said they believe they are in line with their competitors, raising the question as to how they will stand out among their competitors in the future.
Yet those that get it right, are reaping the benefits. Chief executives that consider their companies to be digital leaders – those that rate their business ‘highly competitive’ in at least five of the six capabilities that define digital competitiveness* – are more confident about growth, (66% vs 35% overall), are increasing their investments (79% vs 54%) and are highly competitive in artificial intelligence, compared with their peers.
Concerningly, despite the growing prominence of AI globally, just 15% of companies in Asia Pacific surveyed say that they are highly competitive when it comes to using this technology: 38% say they’re in line with competitors, and an astonishing one third saying they are not making use of AI technologies at all. This is despite the technology being expected to add US$15 trillion to global GDP by 2030, permeating all industries from health to retail and earning its ranking among PwC’s Essential Eight technologies – those emerging technologies that PwC believes will matter most to business in the next three years.
CEOs are looking to policymakers to help turbocharge the economies in which they operate. In identifying what’s needed from APEC leaders, first and foremost desired was the need for improvement in digital infrastructure, followed closely by the availability of digital ready talent. In order to achieve this, CEOs overwhelming believe governments need to invest heavily in STEM programs in schools to build a strong pipeline of future, digital ready workers.
These sentiments were reflected in the top two ways executives identify for accelerating inclusive growth in APEC: expanding education, and upgrading transport. Both are linked to the enablement of the 4th Industrial Revolution, where technology is rapidly reshaping the world we live in and how we live in it.
take the lead
It’s important for business leaders to remember, however, that governments are always followers when it comes to responding to a rapidly evolving digital world, especially in regards to education. Those that wait for government policies therefore risk playing catch-up in an economy where they are not the leaders
The onus is on the business community in the APEC region, in the midst of political turmoil, to take the lead on digital transformation by championing initiatives along the value chain – from training and education through to the customer experience – in order to make the most of everything the digital revolution promises.
For more insights on the findings of the annual APEC survey, visit the 2018 APEC CEO Survey: Shaping the digital future in Asia Pacific website.
*The digital capabilities surveyed were managing data risks, skills and development of the workforce, operations, data infrastructure, digital customer interactions and the development of digital products.