The Conference Board’s CEO Challenge 2006: Top 10 Challenges
surveyed 658 global CEOs from 40 countries. The report showed that health-care costs rank seventh on the list of U.S. CEOs’ top 10 challenges, but only 52nd globally. The top worry for CEOs worldwide is sustained and steady top-line growth, with 37.5% of those surveyed naming it their top challenge.
“Corporate America clearly feels the health-care pinch,” says Richard E. Cavanagh, president and CEO of The Conference Board. As in the past, CEOs outside the U.S. don’t view health care as a competitive challenge.”
The annual CEO Challenge Top 10
report details specific challenges that CEOs face across regions, as well as by the company’s size, industry, and level of success—all factors affecting the concerns of CEOs. Key Findings by Region
- CEOs in Asia rank profit growth as their top concern (42.2%), followed closely by sustained and steady top-line growth (41.3%); speed, flexibility, and adaptability to change (41.3%); customer loyalty/retention (35.6%); speed to market (33.3%); and corporate reputation (33.3%).
- CEOs based in Europe are most concerned with speed, flexibility, and adaptability to change (39.4%); followed by profit growth (38.4%); and sustained and steady top-line growth (37.0%).
- In the U.S., the top four challenges are sustained and steady top-line growth (39.4%); consistent execution of strategy by top management (38.4%); customer loyalty/retention (37.0%); and profit growth (27.2%).
- Across the globe, CEOs in a group of “more successful” companies were more likely to consider customer loyalty/retention as a chief concern. The report classifies 189 of the 658 companies as more or less successful based on their average return on assets. CEOs of “less successful” companies rank speed to market notably higher as a major challenge than the “more successful” firms and ahead of customer loyalty/retention. While lack of pricing power appears on the Top 10 list of CEOs’ concerns in the “less successful” firms, it doesn’t rank in the Top 10 concerns of “more successful” companies.
“Less successful companies are likely more concerned with speed to market because of their more pressing need to improve their business growth,” says Linda Barrington, Research Director and Labor Economist at The Conference Board.
- More CEOs than last year have increased the importance of faster speed to market, keeping up with new technologies, industry consolidation, seizing opportunities for expansion/growth in North and South America, outsourcing and facing non-traditional competitors in their business. Security of plant, operations and employees also rose in the relative rankings, driven in part by the proximity of the survey to the July 7 London bombings.
- Among those challenges falling in relative ranking over the past year are: realizing gains from mergers, acquisitions and alliances and concerns about ethics. Cash management, short-term performance pressure, cost of capital, debt burden and transnational regulation issues also fell.
Other Key Findings
- While product innovation is 6th in the top 10 rankings of CEOs in both Europe and the U.S., it is only 25th among CEOs in Asia.
- Sustained and steady top-line growth and consistent execution of strategy by top management were the top concerns of CEOs across all sizes of business.
- Among the higher ranked challenges of CEOs of companies with more than $5 billion in worldwide sales are stimulating innovation/creativity/enabling entrepreneurship, and speed, flexibility, adaptability to change.
The Conference Board’s CEO Challenge Survey 2006 was conducted during July and August 2005.