Executive
Perspectives

The CEO Outlook
What Moves Industries in 2023
April 2023

Introduction to this document

We surveyed 759 global C-suite executives across industries inJanuary and February 2023 to gauge sentiment regarding
their company's outlook, their biggest concerns, and how they
set strategic priorities in times of uncertainty.
This second Executive Perspective on the survey results divesinto specific concerns and 2023 action plans for different
industries. We have selected a few industries to demonstrate
the depth of our insights. Please don't hesitate to reach out tous if interested in learning more about your industry.

In this BCG Executive
Perspectives edition, we
share how industries are
responding to
uncertainties differently

You can find the overview of the survey analysis and regional
nuances in our first edition, CEO Outlook—Caution, Optimism,
and Navigating the Road Ahead.
2

Copyright © 2023 by Boston Consulting Group. All rights reserved.

Multiple global challenges such as macroeconomic
uncertainties, inflation, changes in the labor market, etc.,
create a challenging environment for companies in 2023.

Executive summary | Regardless of industry, companies should take action
to build competitive advantage and resilience

Overview

Not surprisingly, cost is the number one priority across industries, with the 2nd and 3rd priorities reflecting eachindustry's nature. This shows that while most companies would love to pursue opportunities, they are still focusing on"defense moves" due to market uncertainties. Nonetheless, while there is high focus and consistency across the defense
actions planned within each industry, ~30% of respondents are planning for bold moves (e.g., top line, M&A) tobuild competitive advantage.
To win in the future, there are two critical questions executives should ask themselves: First, where would I like toinvest strategically to fuel growth? Second, how do we build an adaptable organization to ensure resiliencegiven that it is the key deficiency identified across industries?

Consumer Goods—In addition to cost, top-line actions and digital innovation are critical to drive sales and ensureprofitability in times of inflation and uncertainty.

Selectedindustry
deep dives

Energy—Companies are focusing on financing innovation for the energy transition; however, energy players are
missing out in talent investment, which is a critical lever for a successful energy transition.
Financial Institutions—Recent crisis highlights that there is opportunity to strengthen financial preparedness whileattaining cost excellence.
Industrial Goods—Supply chain is top of mind for C-suite leaders, with multiple actions to address supply chain
challenges; companies need to further invest in proactive supply chain management.
Technology, Media, and Telecom—Talent is top of mind for executives, with heavy investment in people as well asorganization right-sizing; meanwhile, resilience leaders in the industry are actively investing for growth.

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In this section, we provide deep dives into selected industries. For others, we provide a one-page summary in the
appendix.

BCG Executive
Perspectives
AGENDA

Overview

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Selected Industry Deep DivesExecutives across industries recognize inflation as a key risk in 2023;
meanwhile, each industry faces its own mix of challenges

Top 3 risks1

Top 2
opportunities2

Health care

Industrial
goods

Technology/
media/telecom

Transport/infra.
/travel/logistics

Uncertain
economic outlook

Supply chain

Inflation

Uncertain
economic outlook

Inflation

Geopoliticalsituation

Inflation

Labor market

Supply chain

Inflation

Labor market

War inUkraineCyber risk

Inflation

Energy market
disruption

Labor market

Uncertain
economic outlook

Climate andsustainability

Digital/AI/tech
disruption

Climate andsustainability

Digital/AI/tech
disruption

Climate andsustainability

Digital/AI/tech
disruption

Changes in
consumer behavior

Digital/AI/tech
disruption

Consumer

Energy1

Inflation

Inflation

2

Energy market
disruption

3

Uncertain
economic outlook

1

Climate andsustainability

Climate andsustainability

2

Digital/AI/tech
disruption

Energy market
disruption

Financial
institutions

Changes inChanges in
consumer behavior consumer behavior• Across industries, C-suite executives mark inflation as the phenomenon most likely to have a negative business impact in 2023
• While the uncertain economic outlook, energy market disruption, and labor market changes are shared among some industries, each industry faces its
own key challenges• But there is a shared pattern across industries to expect positive business impact from climate and sustainability and digital/AI/tech in 2023
1. Top 3 global phenomena that were rated to have a negative and medium/large impact on the company's performance in 2023 2. Top 2 global phenomena that were rated to have a positive impact
on the company's performance in 2023 Source: BCG analysis based on a global C-suite survey with n = 759 respondents

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Global phenomena marked as key risks or opportunities in 2023 by industry

2023 Actions | Cost actions are the top priority across industries; meanwhile,~30% of respondents are planning growth actions
Actions planned in 2023 by industry~15% - 45% are planning for growth
to increase competitivenessIndustries

Cost
actions

Talent/peopleactions

Consumer

79

57

46

47

Energy64

36

51

Financial institutions

75

67

52

Innovation

Supply chain/
Financial
operations
actions
actionsTop-line
actions

M&A

52

49

15

57

36

30

30

62

23

36

20

Health care

72

67

60

43

43

35

25

Industrial goods

81

53

56

52

65

30

28

Technology/media/
telecommunications

57

70

60

33

24

26

29

Transport/infrastructure/
travel/logistics

74

55

53

38

40

41

22

Highest % by industry

Lowest % by industry

Source: BCG analysis based on a global C-suite survey with n = 759 respondents

Taking cost actions toimprove profitability is criticalin times of inflation anduncertainty, to avoid being left
behind by competitors.

Nonetheless, to createcompetitiveness in the future,companies should ask
themselves “Aside from cost,where do I want to focus inorder to drive growth andwin in the future?”

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% of respondents

Capabilities | Ensuring adaptability within the organization is the biggest
challenge across industries
Resilience capability1 self-assessment by industry

Top 2 capabilities where C-suite leaders see gaps that need to be closed to build resilience2
Capability gaps to build resilience

Details on the gap to be closed• Tech function optimized for efficiency and simplification• Proactive supplier risk management and supply flexibility

Consumer goods

Modular tech

EnergyAdaptable org.

Financial institutions

Adaptable org.

Modular tech

• Employee-centric change management approach• Tech function optimized for efficiency and simplification

Health care

Resilient supply chain

Adaptable org.

• End-to-end supply network visibility, simulation, and analytics• Employee-centric change management approach

Industrial goods

Resilient supply chain

Resilient revenues• End-to-end supply network visibility, simulation, and analytics• Dynamic pricing

Technology/media/telecom

Adaptable org.

Resilient revenues• Lean organization with efficient processes and workforce• Dynamic pricing

Transport/infra./
travel/logistics

Adaptable org.

Resilient supply chain• Agile and empowered cross-functional teams• Lean organization with efficient processes and workforce• Agile and empowered cross-functional teams• Employee-centric change management approach

1. 19 capabilities assessed related to: risk detection and risk management, cash and liquidity management, resilient customer base and revenues, resilient supply chain and operations, safe and modular
technology, adaptable organization and people, business performance transformation, strategy and growth under uncertainty 2. Capabilities identified by highest % of respondents as deficiencies, excluding
respondents marking the capabilities as "not relevant"Source: BCG analysis based on a global C-suite survey with n = 759 respondents

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Industries% of respondents

BCG Executive
Perspectives
AGENDA

Selected Industry Deep Dives
Consumer Goods
EnergyFinancial Institutions
Industrial Goods
Technology/Media/Telecommunications
8

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Overview

Consumer Goods Overview | In addition to cost, top-line actions and digital
innovation are critical to win in times of uncertainty

Actions planned in 2023
A

Cost

79%

Talent/people

57%

Supply chain/ops

52%

Top-lineA

49%

Financial

47%

Innovation

B

46%

M&A

15%

Among top-line actions, pricing strategy can be challenging withhigher cost pressure from inflation and more price-sensitive
consumers. Smart pricing strategy is critical during periods ofinflationB

As companies face digital disruption, heightened consumer
expectation, and intensified competition, innovation is playing a
critical role to win in the future
Resilience leaders in consumer goods1 are actively
investing in digital and technology in order to redesign thecustomer journey/experience to create advantages

1. Defined as a company that has "very good" capabilities in at least half of the categories among 19 resilience capabilities, "good" capabilities in at least half of the rest, and no deficiencies.
11% of consumer goods respondents are categorized as resilience leaders based on their self-assessment.
Source: BCG analysis based on a global C-suite survey, consumer goods n = 159 respondents (35% Asia, 27% Europe, 23% North America)

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% of respondents

While cost is top of mind for companies, consumer goods has thehighest percentage of players taking top-line actions vs. otherindustries (+13ppts)

Top-line Actions | Top-line actions are critical for consumer companies todrive sales and ensure profitability in times of inflation and uncertainty
Facing inflation, consumer players areactively pushing top-line measures% of respondents

X-industry mean

Top-line actions

49%

Distribute budget to high ROI
marketing/sales channels
Launch new
products/services
Increase prices
Create retention
programs
Decrease prices

Create buzz with marketing campaigns• Collaborated with Cactus Plant Flea Market, one of the most on-trend brands in
the US; setting records for digital transactions

35%(Re-)launch popular meals5,6• (Re-)launched McPlant, McDonald's first plant-based burger, and McRib sandwich

34%

Increase price by 10% y-o-y7• Raised prices in the US in response to higher energy and labor costs

33%

Focus on digital loyalty program3• Boosted customer stickiness by offering special deals in app and improved
customer experience by making food-ordering more convenient

20%

12%

McDonald's enjoys a 2x growth rate vs. fast foodmarket in 20221,2 through targeted top-line actions
actions
3,4[As part of] our Camp McDonald’s promotion from last summer…customers got
to experience unique menu hacks, merch, and even weekly concerts in the app.
We gave them a brand experience that happened to be through our app.
—Tariq Hassan, Chief Marketing and CX Officer, McDonald’s USA

1. “McDonald's Q4 2022 Earnings release,” McDonalds.com; 2. “Market size of the quick service restaurant sector in the United States from 2012 to 2021, with a forecast for 2022,” statista.com; 3. “Q4 &FY 2022: McDonald’s Brand Is Stronger Than Ever,” McDonalds.com; 4. “Roses are Red, Violets are Blue, the Cardi B & Offset Meal is Coming to a McDonald’s Near You,” McDonalds.com; 5. “McPlant,”
McDonalds.com; 6.”McRib,” McDonalds.com; 7. “As prices soar, consumers turn to McDonald’s,” CNN.com Source: BCG analysis based on a global C-suite survey, consumer goods n = 159 respondents;"A Conversation with McDonald’s Tariq Hassan on ‘Brand Performance’ Marketing + The Future Of Consumer Empowerment,” Forbes

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ATop-line Actions | Companies continue price increases, while consumers
become more price sensitive—smart pricing strategies are key
Inflation creates contradicting priorities
between companies and consumers

Deploying smart pricing strategies can lay thefoundation for ongoing competitive advantage

Companies are planning for price increases toaddress continued inflation

Three pricing moves can release cost pressure while minimizing
volume decrease% of respondents

33%

of companies plan to raise prices
in 2023

Consumers are becoming more price sensitive

Deaverage
pricing

Make differentiated price increases acrossportfolio to accommodate new shapes ofconsumer demand

LeverageAI

Optimize pricing, packing, promotion, etc., byintegrating insights from forward-looking AI withhistorical data

Reset
price
structure

Evaluate pricing structure holistically, andproactively leverage pricing strategy as abranding method

Net % of respondents that agree with statements

I look for deals andpromotions more often
I shop online more
often to find the best price

70%
24%

Source: “Recessionary Behavior Snapshot #1,” BCG.com, BCG analysis based on a global C-suite survey, consumer goods n = 159 respondents

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A

Innovation| Facing tech disruptions and changing consumer behavior,resilience leaders are building digital capabilities to secure advantages
Consumer players are facing a morechallenging environment today…

1

Research/purchase journeys
increasingly span acrossonline/offline channels

Resilience leaders1 in consumer goods are investing to build
digital capabilities to reinvent the customer journey
Actions planned for 2023 and current investment areas% of respondents
Key to leveragecustomer data
94%

+20ppts

Industry average
Resilience leaders+10ppts

76%

2

Consumers have heightened
expectations—seeking personalized
offers, convenience, differentiatedexperiences, and better service

3

Competition has intensified—
62% of global e-commerce sales are
now through marketplaces

63%

56%

65%

+10ppts

55%

47%
37%

Cybersecurity

Digital & AI
(customer focus)

Investment focus

Digital & AI
(process focus)

30%

Innovate tech

35%

Innovate bus. model

Innovation

1. Defined as a company that has "very good" capabilities in at least half of the categories among 19 resiliencecapabilities, "good" capabilities in at least half of the rest, and no deficiencies. 11% of consumer goods respondents
are categorized as resilience leaders based on their self-assessment.
Source: “Win the Town to Win the Future in Retail,” BCG.com; BCG analysis based on a global C-suite survey,
consumer goods n = 159 respondents, 11% of them are resilience leaders

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B

BCG Executive
Perspectives
AGENDA

Selected Industry Deep Dives
Consumer Goods
EnergyFinancial Institutions
Industrial Goods
Technology/Media/Telecommunications
13

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Overview

Energy | Companies are focusing on financing innovation for energy
transition, but they need to invest more in talent to support the transition

Actions planned in 2023
A

Cost

64%

Financial

A

57%

Innovation

A

51%

Supply chain/ops
Talent/people

While cost is top of mind for companies, energy has the highest
percentage of players taking financial actions vs. other industries(+12ppts) in response to a challenging environment and to fundenergy transition at the same time
• Meanwhile, energy players are actively investing in climate &sustainability and technology to innovate product and process

36%

B

36%

M&A

30%

Top-line

30%

B

Reviewing and reinventing operating models and people strategies
is critical for the success of energy transition1. But compared withother industries, energy players are taking fewer talent actions(-23ppts), posing potential risks to future success

1. "In Oil and Gas, the Energy Transition Requires a People Transition,” BCG.com
Source: BCG analysis based on a global C-suite survey, energy n = 47 respondents (30% Asia, 23% Europe, 13% North America)

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% of respondents

A

Financial Actions + Innovation | Facing energy transition, companies arestrengthening their financial position to fuel technology innovation

Low-carbon solutions become primary
growth opportunity

Energy players strengthen their cash position to fundasset-heavy sustainable transition
Actions planned and investment priority for 2023, % of respondents

Strengthen cash position

low-carbon solutions over the next 5 years by
oil and gas companies1

X-industry average

Invest in C&S transition

68%

I don’t want my company to disappear. […] We
have embarked on a strategy to diversify out of apure oil and gas business model to add anelectricity one.2-- Patrick Pouyanne, CEO, TotalEnergies,
From an interview with Bloomberg

32%
Optimizepayables &receivables

28%

62%

57%

Invest in C&S

Invest inproduction

26%

Secure future
Increasefinancing
cash reserve

Invest inproduct/
serviceinnovation

1. "How Energy Companies Can Organize for the Low-Carbon Era,” BCG.com 2. “Total CEO Doubles Down on
Renewables Amid a Global Energy Crisis,” Sep. 2022, Bloomberg.com
Source: BCG analysis based on a global C-suite survey, energy n = 47 respondents

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$134 billion expected to be invested inTalent/People Actions | Capability concerns regarding organization
adaptability and talent investments pose risks to a successful energy transition

Reviewing and reinventing operating
models and people strategies are
critical for successful energy transition

But ~30% of energy players have reported
deficiencies in building an adaptable organizationand in business transformation

Invest in new talent and up-skill
existing workforce

Moreover, compared with other industries, fewer players
are investing in talent, posing risks to future success

Reset organization to pursue
goals collaboratively

People-related actions in 2023

Establish compelling, inclusive
purpose-11

Shift focus of support functions
toward evolving business needs

30%

Use skills-based mapping forevolving capability needs% of respondents

ppts

vs. X-industry average

Up-/re-skill workforce

-21
ppts

21%
Enhance employee
value proposition

Source: "In Oil and Gas, the Energy Transition Requires a People Transition,” BCG.com;
BCG analysis based on a global C-suite survey, energy n = 47 respondents

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B

BCG Executive
Perspectives
AGENDA

Selected Industry Deep Dives
Consumer Goods
EnergyFinancial Institutions
Industrial Goods
Technology/Media/Telecommunications
17

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Overview

Financial Institutions Overview | Recent crisis highlights there's opportunity
to strengthen financial preparedness while attaining cost excellence

Actions planned in 2023
A

Cost

B

75%

Innovation

58%

Talent/people

58%

FinancialA

Top-line

Supply chain/ops• North American executives have least confidence in cash andliquidity management capability (-16ppts vs. industry average)

55%
35%

M&A

Recent banking crisis shows that there's missed opportunity for
preparedness—less than one-third of the financial institutions
were planning actions to increase their financial resilience at the
beginning of 2023

17%

B

Facing a tough environment with inflation, market uncertainties,
and workforce challenges, financial institutions need to attaincost excellence by optimizing process and organization, andensuring efficient procurement

B

13%

Source: "Responding to the New Reality in Banking: Containing Costs Amid High Inflation,” BCG.com;
BCG analysis based on a global C-suite survey, financial institutions n = 69 respondents (42% Asia, 25% Europe, 19% North America)

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% of respondents

Financial Actions | Banking crisis shows that there's missed opportunity for
preparedness

Collapse of SVB caused a global shock

Only 61% of financial institutions' executives
expected additional global shocks to happen in 2023
when surveyed at beginning of the year
Fewer plan for actions to increase their financial
resilience against global volatility and disruptions% of respondents by actions planned in 2023
20%
14%

Increasecash reserves

Decrease fixed
asset intensity

12%

10%

Reduce debt to Optimize payables
mitigate interest and receivables
rate exposure

Source: BCG analysis based on a global C-suite survey, financial institutions n = 69 respondents

19

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A

Financial Actions | Recent event is a wake-up call for banks to reassess andimprove their risk management abilities

North American executives have least confidence
in cash and liquidity management capability% of respondents stating good/very good capabilities
North America

Europe

Asia

69%

94%
69%

Risk measurement
and management

62%

Banks should build balance sheet modeling,stress testing, and scenario analysis
capabilities across all risk silos• Include pressure test for asset monetization
assumptions in liquidity stress testing

Recent crisis shows that financial institutions not
only face internal compliance risks but are also
impacted by spillover effects from competitors

76%

Banks should take this opportunity to stress test
their risk management capabilities• Assess concentration risk in deposit
portfolios and develop understanding of theinfluence of key stakeholders
76%

Cash and liquidity
management

Banks should establish, review, and regularly
exercise playbook for liquidity crisis• Need to take into account the impact ofsocial media age

Source: "Post-SVB Call to Action for the Banking Industry,” BCG.com; BCG analysis based on a global C-suite survey, financial institutions n = 69 respondents

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ACost + Ops Actions | Facing inflation, market uncertainties, and workforce
challenges, financial institutions need to attain cost excellence

Executives are concerned about inflation andeconomic developments hitting the bottom line
% of respondents expecting negative impact in 2023

Banks need to further focus on cost excellence toweather a high-inflation environment
LeversPlanned actions in 2023
% of respondents

Uncertain
economic outlook

76%

Labor market
changes

71%

Inflation/risinginterest rates

Accelerated
digitization

67%

Invest in digital/AI to
optimize processes

Agile delivery
models58%

Report good/very good
agile capabilities

Simplification

49%

Actively simplify theirorganization structure

Efficient procurementof services

9%

Renegotiate contracts
with current suppliers

61%

Increase in loan-loss provisions
Rise of opex costs, particularly wages

Source: "Responding to the New Reality in Banking: Containing Costs Amid High Inflation,” BCG.com; BCG analysis based on a global C-suite survey, financial institutions n = 69 respondents

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B

BCG Executive
Perspectives
AGENDA

Selected Industry Deep Dives
Consumer Goods
EnergyFinancial Institutions
Industrial Goods
Technology/Media/Telecommunications
22

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Overview

Industrial Goods Overview | Supply chain is top of mind for companies, butthere are still capability gaps in proactive supply chain management% of respondents

Sector highlights
A

Cost

81%

Supply chain/ops A
B

65%

Innovation

56%

Talent/people

53%

Financial

52%

But most actions taken are to address
current supply chain challenges. There arecapability gaps identified toproactively and systematicallymanage supply chain risks

30%

M&A

28%

Automotive
While focus on cost remains
high, executives carefully
shift toward growth actions

Materials and processindustries

B
Top-line

While cost is top of mind for companies,
industrial goods has highest percentage ofplayers taking supply chain actions vs.
other industries (+26ppts)

Asian companies are putting moreemphasis on innovation to increase
supply chain resilience

Source: BCG analysis based on a global C-suite survey, industrial goods n = 119 respondents (31% Asia, 43% Europe, 13% North America)

Strongly impacted by energy
crisis and inflation, C-suite
leaders focus on margin
protection
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Actions planned in 2023

Supply Chain Actions | Companies have taken actions to address supply
chain challenges but need to further invest in proactive supply chain mgmt.
Defense moves:

Offense moves:

Companies are taking immediate actions in
response to supply chain challenges

But companies still face deficiencies inproactively managing supply chain risks% of respondents by actions planned in 2023

% of respondents

Renegotiate contracts

53%

Diversify suppliers forcritical raw materials

49%

Minor deficiencies
Large deficiencies

34%
29%

26%

21%
Redesign production
processes
Innovate to utilize otherraw materials

Uphold suppliercontracts
Increase inventory tocreate supply buffers

34%
29%
24%

Inventory buffer built
in 2022 enables
companies to takefewer inventory
actions in 2023

21%

Source: BCG analysis based on a global C-suite survey, industrial goods n = 119 respondents

24%

20%

5%

6%

Resilience inmanufacturing/
production

Proactive
supplier risk
mgmt. andsupply flexibility

13%
End-to-end
supply network
visibility,
simulation, andanalytics

24

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ASupply Chain Actions | Asian players are redesigning production processes
and products to structurally increase supply chain resilience~50% of Asian players are innovating to improve operational efficiency and to utilize a different
set of raw materials to systematically improve supply chain resilience% of respondents

Asia

Supply chain/operations

Europe70%

61%

Diversify suppliers

57%

45%

Renegotiate
supplier contracts

49%

51%

Redesign production process

49%

27%

Innovate productdesign/engineering

43%

25%

Uphold supplier contracts

30%

North
America

16%

69%
44%
63%

Higher % vs. other regions

In 2023, we're planning to focus on newtechnology and make structural
improvements to our supply chain.
-- APAC CFO, leading automobile company

25%

13%
31%

One of our priorities for 2023 is toredesign and reorg production processes
to increase margins.
-- APAC CFO, leading chemical company

Create inventory buffers

Notes: Asia excludes Middle East

24%

18%

25%

Source: BCG analysis based on a global C-suite survey, industrial goods n = 119 respondents

25

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BAutomotive | To profit tomorrow, executives are shifting toward
growth actions, while the focus on cost remains highDisruptions shift revenues and profits
toward emerging products and services

To capture the opportunity, executives carefully shift toward
growth actions, while the focus on cost remains high% of respondents by action

Key disruptions in automotive

Focus on cost remains high+18% growth actions vs. 2022

+10ppts
Electric
vehicles (EV)Shared ondemandmobility+10ppts+8ppts23%

18%

Autonomousvehicles (AV)

68%
55%

>90%

of revenue and profit growththrough 2035 will be generated byemerging segments connected tomobility disruptions1

Redesign
process/ops
model

Reduceindirect
spend

55%

45%

Renegotiate Innovate Launch new Plan M&A
supplierbus. model
products for extension
contracts/services

1. “How to Profit in Tomorrow’s Automotive and Mobility Industry,” BCG.com
Source: BCG analysis based on a global C-suite survey, automotive n = 40 respondents

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vs. 2022

Materials and Process Industries | Margin protection is the key focus
due to the strong negative impact of inflation and the energy crisis

3 of 5 most energy-intensive
sectors belonging to MPI1 …

In response, executives plan 5 key actions to protect their marginand invest less vs. other industrial goods players…driving strong concerns aroundinflation and energy crisis

Every company plans 2.3 actions on average to defend margin
X-industry average

65%
51%

Expect inflation to have anegative impact on theirbusiness in 2023

49%
36%

31%

78%
Expect energy crisis tohave a negative impact on theirbusiness in 2023

Cut indirect
spend

Reduce direct
spend

Renegotiatewith suppliers

Optimizepayment terms

1. Materials and process industries
Source: BCG analysis based on a global C-suite survey, materials and process industries n = 55 respondents

Increase prices

27

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85%

Actions planned for 2023, % of respondents

BCG Executive
Perspectives
AGENDA

Selected Industry Deep Dives
Consumer Goods
EnergyFinancial Institutions
Industrial Goods
Technology/Media/Telecommunications
28

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Overview

Technology/Media/Telecom Overview | Talent is top of mind for executives;
resilience leaders are actively investing for growth

Sector highlights

Actions planned in 2023

Talent/people

A
B

Innovation

B

70%

Financial

While organization right-sizing is a
hot topic, companies are also
actively investing in talent

60%

Cost

Talent/people is top of mind for
TMT1 executives, with cost being only
the 3rd priority

57%
33%

M&A

B 29%

Top-line

26%

Supply chain/ops

24%

B

Investing freed-up resources fromcost-cutting activities to build
competitive advantage is critical
Resilience leaders2 in TMT1 aretaking more growth actions vs. theindustry to further strengthen market
position• Especially in talent, innovation,and M&A

1. Technology, media, and telecom 2. Defined as a company that has "very good" capabilities in at least half of the categories among
19 resilience capabilities, "good" capabilities in at least half of the rest, and no deficiencies. 19% of TMT respondents are categorized
as resilience leaders based on their self-assessment. Source: BCG analysis based on a global C-suite survey,
technology/media/telecom n = 136 respondents (22% Asia, 29% Europe, 36% North America)

Software and services
C-suite leaders should
better leverage the fullbreadth of cost actions inaddition to organizationright-sizing

29

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A% of respondents

Talent/People Actions | Companies are not only taking actions fororganization right-sizing, but also actively investing in talent
Mass media coverage of tech firms
taking actions for org. right-sizing …

… shows only part of tech companies' reality
Yes, some are right-sizing their organization…
but more are investing in talent and people
Actions/investments planned for 2023, % of respondents
Invest in talent retention/
development

75%

Enhance employee value
proposition

51%

Up-/re-skill talents

44%

Slow down/stop hiring
Lay off >10% of total workforce

33%
13%

Source: BCG analysis based on a global C-suite survey, technology/media/telecom n = 136 respondents

30

Copyright © 2023 by Boston Consulting Group. All rights reserved.

A

Talent/People Actions + Innovation | Companies that have reduced costs in
2022 are now building advantages by investing the freed-up resources
Cost cutting in 2022 has helped to fuel investment
in growth in 2023

Reduce costs and invest
actively in future growth

Growth action
in 2023

Decreasing costs in 2022-2023• Org. right-sizing—Reduce headcount by 10,000
while continuing to hire in strategic areas1• Concentrating capital allocation in strategicareas—Create higher density across workspaces,
optimize hardware product portfolio2, etc.

Companies didn’t takecost actions in 2022

Companies took costactions in 2022

Up-/re-skill
workers

31%+20ppts

51%

Create retention
programs

2%+16ppts

18%

Launch new
products

9%+12ppts

21%

Innovate business
model

42%

+6ppts48%

Total # of growthactions in 2023

2.3

+35%

3.1

Investing in future growth• AI investment—$10B investment in partnership with
ChatGPT creator OpenAI3• Cloud partnership—10-year partnership with LSEG4
to develop next-generation financial market analytics
and cloud solution5, etc.
• Gaming M&A—$68.7B acquisition planned to takeover game developer Activision Blizzard6

1. “Microsoft to cut 10,000 jobs in push to bring down cost,” FT.com; 2. “Subject: Focusing on our short- and long-term opportunity,” Microsoft.com; 3. “Microsoft Invests $10 Billion in ChatGPT Maker
OpenAI,” Bloomberg.com; 4. London Stock Exchange Group; 5. “LSEG and Microsoft launch 10-year strategic partnership for next-generation data and analytics and cloud infrastructure solutions;
Microsoft to make equity investment in LSEG through acquisition of shares,” Mircosoft.com; 6. “Microsoft to acquire Activision Blizzard to bring the joy and community of gaming to everyone, acrossevery device,” Microsoft.com
Source: BCG analysis based on a global C-suite survey, technology/media/telecom n = 136 respondents

31

Copyright © 2023 by Boston Consulting Group. All rights reserved.

B

Talent/People Actions + Innovation + M&A | Resilience leaders are investingin talent and innovation to further strengthen their competitive position
Resilience leaders1 in TMT2 are taking more growth actions
vs. the industry average to build competitive advantage
Actions planned in 2023, % of respondents

Industry average
Resilience leaders+13ppts+14ppts

62%
49%

58%
50%

47%

44%

43%

54%
35%

33%

27%

23%
11%
0%
Enhance EVP

Up/re-skill
talents

Slow down
hiringTalentLay off >10%

Innovatebus. model

Innovate
technology

Innovation

M&A

For our 2023 priorities, we want toaccelerate in growth areas…
Data and AI are at the heart ofour innovation model to offer a
reinvented customer
experience…
We’re tackling the skills challenge
so that we become one of themost attractive employers…
-- CTO, leading telecom player

M&A

1. Defined as a company that has "very good" capabilities in at least half of the categories among 19 resiliencecapabilities, "good" capabilities in at least half of the rest, and no deficiencies. 19% of TMT respondents are categorized
as resilience leaders based on their self-assessment. 2. Technology, media, and telecom
Source: BCG analysis based on a global C-suite survey, technology/media/telecom n = 136 respondents

32

Copyright © 2023 by Boston Consulting Group. All rights reserved.

B

Software and Services | Software executives should better leverage
the full breadth of cost actions to improve profitability
While profitability is a priority…

… few leverage the full breadth of cost actions
Executives are taking ~45% fewer cost actions vs. global average...

… and often focus only on organization-related optimization
Cost actions taken by software companies, % of respondents
Delta to
X-industry mean

Slow down/stop hiring

36%+11ppts

Redesign processes/ops model

33%-19ppts

Simplify org. structure

33%-14ppts

Cut indirect spend (e.g., cloud services)14%-29ppts

Optimize payment terms

14%-12ppts

Lay off >10% of total workforce

11%+3ppts

1. “Spotify cuts 6% of its workforce—read the memo CEO Daniel Ek sent to staff,” CNBC.com
Source: BCG analysis based on a global C-suite survey, software and services n = 36 respondents

33

Copyright © 2023 by Boston Consulting Group. All rights reserved.

While we have made great progress in
improving speed in the last few years,
we haven’t focused as much on
improving efficiency. [...] And in achallenging economic environment,
efficiency takes on greater
importance.
-- Daniel Ek, CEO, Spotify1

To learn more on how to navigate uncertainty in 2023, explore BCG’s recent
resilience insights or reach out directly to the Central Resilience TeamThe CEO Outlook—Caution, Optimism, andNavigating the Road Ahead
This first edition of the CEO Outlook provides an
overview with regional nuances and shows how
resilience leaders create competitive advantage
Click here

dive into specific actions to navigate your company through uncertainty

For any questions, reach out to
BCG's Central Resilience Team
Ryoji Kimura
Global Leader—Corporate
Finance & Strategy
Kimura.Ryoji@BCG.com
Tokyo

Alexander Roos
Global Co-Leader—Center for
CFO Excellence
Roos.Alexander@BCG.com
BerlinJessica Apotheker
Managing Director & Partner
Apotheker.Jessica@BCG.com
Paris

Daniel Feldkamp

Building Resilience ThroughCompetitive Cost Position

Preparing Your Supply
Chain for Resilience

How to Win Market Sharein a Downturn

Click here

Click here

Click here

For more insights, explore BCG’s Business Resilience page

Managing Director & Partner
Feldkamp.Daniel@BCG.com
MunichGideon Walter
Managing Director & SeniorPartnerWalter.Gideon@BCG.com
34
New Jersey
23

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Understand how C-suite leaders across industries approach 2023, or…

35
Copyright © 2022 by Boston Consulting Group. All rights reserved.

AppendixHealth Care Overview | Resilience leaders are shifting from crisis
management to business innovation

Actions planned in 2023
A

% of respondents
Cost

72%

Talent/people

•

67%

A

Financial

Resilience leaders1 in health care spearhead the shift as
89% pursue innovation and only 44% take cost actions

60%
43%

Supply chain/ops B

40%

Top-line

35%

M&A

25%

B

With pandemic easing, health care companies are seeing lesssupply chain pressure, leading to only 40% taking supply chain
actions in 2023
But more than 1/4 of health care players have reported
deficiencies in supply chain, particularly around E2E supply
chain visibility, posing risks to future pandemic preparedness

1. Defined as a company that has "very good" capabilities in at least half of the categories among 19 resilience capabilities, "good" capabilities in at least half of the rest, and no deficiencies. 13% of healthcare
respondents are categorized as resilience leaders based on their self-assessment. Source: BCG analysis based on a global C-suite survey, health care n = 81 respondents (26% Asia, 15% Europe, 46%
North America)

36

Copyright © 2023 by Boston Consulting Group. All rights reserved.

Innovation

In a more optimistic outlook for 2023, health care has the highest
percentage of players taking innovation actions vs. crossindustries average (+6ppts)

Infrastructure/Transportation/Logistics Overview | Investing in talent, digital,and climate & sustainability is critical for future successA% of respondents

Cost

79%

Talent/people

A

54%

Innovation

B

51%

Supply chain/ops

43%

Financial

39%

Top-line

38%

M&A

23%

Labor shortages caused by demographic changes and a lack ofdiversity drive companies to prioritize talent after cost actions.
54% of respondents take talent/people actions to attract skilledemployees and stay competitive•

B

Talent actions are backed with investments—74% marktalent retention/development as significant investment area

Faced with rising consumer demands for digital, sustainable
solutions, executives continue to focus on innovation. In 2022
and 2023, >50% of respondents report taking innovation actions
Companies that fund top-line growth in sustainability withdigital efficiency enhancements will be best equipped to build acompetitive advantage

Source: BCG analysis based on a global C-suite survey, infrastructure/transportation/logistics n = 61 respondents (28% Asia, 41% Europe, 20% North America)

37

Copyright © 2023 by Boston Consulting Group. All rights reserved.

Actions planned in 2023

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