How are leading CEOs acting on their strategic agenda for 2023?

CEOs worldwide have led their organizations through post-pandemic disruptions in the past three years. In our recent article, we identified five areas of focus for CEOs in 2023, including protecting profits, driving digital transformation, organising for the future, securing supply chains and striving for sustainability.

As we approach the start of the new financial year 2023-24, Kanvic Consulting reviews the progress CEOs have made in implementing their strategic agendas for 2023.

This article provides an update on our previous research, highlighting the actions CEOs are taking in improving performance and making their companies future ready.

What actions are CEOs taking to protect profits?

In a slowing global growth, India remains a beacon of hope. However, stubborn inflation, uneven recovery across income groups and weak exports have posed a challenge for a large number of companies to protect and grow their profits. Some notable examples in spite of the economic headwinds are consumer goods company Nestle, a leading hospital chain Fortis and a major footwear retailer Bata.

Nestle had an enormous challenge in 2022 when it faced commodity inflation of 18.5% compared to an average of 3% between 2018 and 2020. To overcome the challenge, the Swiss multinational took a number of steps which included unleashing the power its SHARK programme to deconstruct the entire value chain of the company, making calibrated consumer insight-based pricing decisions and showing courage, and exceptional teamwork.

Its SHARK programme has yielded for the company almost 20 billion rupees of savings in the last couple of years and on an annualised basis, gave about 1.5 to 1.6% of savings in 2022. As a result, it could maintain its profit margins at 20% which is the long run average.

In the healthcare industry, Fortis has controlled costs by bringing in operating efficiency, improving productivity and through better negotiation. It has also kept its focus on the brownfield expansion which comes at a lower capex and has relatively shorter period to get into a profitable zone

Nestle's SHARK programme has yielded for the company almost 20 billion rupees of savings.

Bata, a leading footwear retailer, has achieved significant cost savings by optimising its supply chain and closing unprofitable or smaller stores. Ultimately, businesses that prioritise financial strategies and manage expenses and investments well are better positioned to safeguard their profits and ensure their company's longevity.

What is next on digital transformation?

Companies are investing in digital transformation initiatives to stay relevant in the constantly evolving digital landscape while enhancing their competitiveness and agility. While the COVID pandemic made it clear that digital is a necessity not a luxury, India’s continuously improving digital infrastructure, innovations by start-ups and shift in consumer behaviour make digital a journey not a destination.

The disruptive Generative AI technology in ChatGPT ushers in a new era of digital transformation.

Air India plans to employ ChatGPT's newest version, GPT4, to boost its website and enhance customer experience. The generative artificial intelligence-based chatbot will not merely be superficial but a pragmatic upgrade to the airline's operations to improve its functions.

Aditya Birla’s Grasim Industries has approved a plan to enter the B2B e-commerce market for building materials. They will allocate around ₹2,000 crores over the next five years to invest in the digital domain, focusing on providing a comprehensive procurement solution. This solution will include timely delivery, a wide range of high-quality products, and competitive pricing.

In the healthcare domain, Fortis' digitisation efforts have been yielding positive results, with a year-on-year increase in digital revenue of nearly 12% from channels such as their website, app, and digital campaigns.

These channels now contribute 23% to the overall hospital revenue. Fortis has also implemented an EMR (electronic medical record) system that will substantially improve patient care by providing rapid access to healthcare records and faster diagnosis and treatment. 

How does the future of organisation look like?

Hybrid working, moonlighting and the Great Resignation dominated the future of work coversations in last few years. Leading CEOs have taken several steps to deal with these challenges.

For example, to train its salesforce, Bharti Airtel established virtual teams that specialise in different industries such as banking and financial services, IT, and ITES. Each team has a virtual project or leader assigned to manufacturing and distribution. To streamline the organisation, account managers directly report to the domestic enterprise head overseeing customer accounts.

On the other hand, CEOs’ efforts to bring people back in office seem to be bearing fruits. According to a LinkedIn report, 78% Indian professionals prefer going to the office to interact and connect with their colleagues on a social level.

Out of the 1001 respondents surveyed in a research conducted by Censuswide in India, 43% reported going to the office for social interactions, 42% to have more productive face-to-face meetings with colleagues, and 41% to cultivate work relationships.

What steps are helping in making supply chains resilient?

Businesses are using a combination of strategies and technologies to secure their supply chains, reduce risks, and improve efficiency. Leading CEOs have adopted various strategies to build resilience in their supply chains.

One of the primary strategies is to diversify the sourcing of raw materials and components by working with multiple suppliers and manufacturing facilities in different regions.

Another strategy is bringing manufacturing closer to the source of raw materials and the end customers. This helps reduce transportation costs and delivery times and provides greater control over the production process.

In the retail industry, Bata has transformed its largest retail warehouse out of four into a third-party logistics (3PL) facility to create a more agile supply chain. The company aims to enhance its supply chain further by relocating closer to sourcing areas.

Technology is also playing a key role in securing supply chains. For example, businesses are using predictive analytics and machine learning algorithms to forecast demand, optimize inventory levels, and improve production planning.

Robotics and automation technologies are helping streamline production processes, reduce labour costs, and improve efficiency while Blockchain technology is helping increase transparency and traceability in supply chains, allowing businesses to track the movement of goods from the source to the end customer.

What are leading companies doing to improve sustainability?

Finally, leading companies recognize that sustainability is not just a moral but a business imperative. Businesses have understood that they cannot operate by ignoring their operations' environmental and social impacts.

Numerous companies have acknowledged sustainability's importance and integrated this concept into their strategies. Some noteworthy initiatives towards creating a sustainable environment are:

• Akzo Nobel integrates ESG considerations throughout its value chain to drive business growth. Its initiatives include creating a sustainable supply chain, adapting to changing environmental regulations, and positively impacting communities in underdeveloped regions.
• Indian Oil has made a target to become a Net Zero Emission company by 2046. It is making significant progress in transforming from a large national oil and gas company to an integrative energy solutions provider with a growing portfolio of cutting-edge green energy products and services. It is also making strategic investments in creating technologies for sustainable solutions.
• Shree Cement constantly modifies and improves its sustainable processes and policies. They are focussing on minimising groundwater withdrawal, using renewable energy sources, switching from fossil fuels to alternative fuel sources, and reusing and recycling materials to reduce waste and benefit the community.
• Mahindra was the first firm in India to internalise a carbon price, which it used to decarbonise its energy use, cut waste, and improve water security. It is running programmes for waste-to-energy, renewable energy, auto recycling, green buildings, micro-irrigation, and electric vehicles in its green portfolio.

Leading CEOs are taking a number of steps to drive their strategic agenda for 2023 amidst uneven economic recovery, geo-political tensions and persistent inflation, helping them make their business models robust and preparing them well for the new financial year.