There are companies of all sizes in this group, but those at the smaller end of our sample (with revenues below US$100 million) are represented more heavily. When it comes to venturing beyond sector boundaries, agility matters. Among the sectors CEOs say they are moving into are business services (with new competitors coming from technology, telecommunications and media), health services (with new competitors coming from insurance, tech and telecom), and consumer markets (with new competitors coming from pharmaceuticals, banking and media). These findings ring true. Consider, for example, moves by telecom companies to generate additional revenue by offering business customers a range of services beyond connectivity, or moves by health insurers into healthcare provision, or moves by banks to offer consumers additional fee-based services. We expect industry reconfiguration to accelerate in the decade to come. For CEOs, the challenge is to envision the ecosystem in which their company will operate in the future. This means thinking through the impacts of megatrends (notably, but not only, climate change and AI), how customer needs will change, how value pools will shift and what roles distinct types of companies will play. Alliances and partnerships are essential sources of learning (as well as revenue) on the journey towards new domains of growth. New expertise within the executive team may also be needed, although hiring one or two new functional leaders is never the full solution. Navigating industry reconfiguration is a job for the top team as a whole, with strong support from the board. Leading a company during a period of great change requires decision-making that is well informed, disciplined and unbiased. Yet many CEOs tell us that their company’s strategic decision-making processes are inconsistent at best. For example, proven practices for countering confirmation bias include making decision criteria transparent in advance, deliberately canvassing alternative points of view and intentionally seeking out information that contradicts the investment hypothesis. Only about half of companies regularly employ the full suite of these techniques for strategic decisions. Similarly, almost six in ten CEOs told us that they usually judge strategic decisions by their outcomes, not by the quality of the process. The only thing leaders can fully control is the quality of the decision-making process. Our survey results suggest that CEOs are leaving money on the table by not following the best practices of decision-making: companies with higher-quality processes for making strategic decisions report higher profit margins. Decisions sometimes need to be made quickly, before every box has been ticked. But there is compelling evidence that stronger decision-making processes typically result in better decisions—especially under conditions of uncertainty, when intuition and experience are unreliable guides. In the current environment, with very high levels of uncertainty across multiple dimensions, decision quality is paramount. Thorough, fact-based decision-making also comes into its own when emotions run high. On climate change, for example, CEOs are under scrutiny from customers, employees, investors and even family members. The same goes for how CEOs handle decisions related to AI, and questions about the future of legacy businesses in the face of industry reconfiguration. In these circumstances, robust decision-making processes can break deadlocks and support a bias to action. Our survey data confirms this: CEOs who report stronger decision processes also report more reinvention actions. Dynamic resource reallocation is a prerequisite for reinvention. For example, it is impossible to rapidly build a large new business without actively reallocating resources from lower-priority projects. Yet a large majority of companies lack agility when it comes to moving financial investments and people between projects and business units. About half of CEOs tell us that they reallocate 10% or less of financial and human resources from year to year. More than two-thirds say they reallocate less than 20%, a finding similar to that of last year’s survey. Active reallocation of people, in particular, is associated with higher profitability. The difference in profit margin between low human resource reallocation (less than 10%) and high reallocation (30–40%) is more than 2 percentage points. There is also a strong link between higher levels of resource reallocation (both financial and human resources) and the amount of revenue coming from distinct new businesses—underlining that reinvention and dynamic resource reallocation go hand in hand. Why don’t companies reallocate resources more actively from year to year when the evidence in favour of doing so is so consistent? Cognitive biases are at work. These include anchoring (an overreliance on arbitrary benchmarks, such as last year’s budget numbers) and naive diversification (the tendency to allocate resources equally across available options instead of weighting investments strategically). Organisational psychologist Robert Sutton reminded us that poorly designed incentives are also a factor: ‘In so many organisations, when a manager has more people reporting to him or her, they get paid more. So, literally, we have incentives for people building larger and larger fiefdoms.’ For CEOs, the solution lies in budgeting practices that minimise the impact of these psychological factors on resource allocation. For example, power dynamics can be reduced by holding project review meetings with small groups of stakeholders who have a high degree of independence. Also consider ranking projects company-wide by profitability or return on capital to create a common fact base for discussion. About half of CEOs believe that GenAI will increase the profitability of their company in the year ahead. At the same time, only a third (33%) say they have a high degree of trust in having AI embedded into key processes. As you might expect, CEOs who trust AI reported higher gains from GenAI over the last 12 months and expect higher gains from the technology in the year ahead. They are also more likely to be moving forward with integration of GenAI into technology platforms, business processes and workflows. The wide distribution of CEO trust in AI mirrors that among the wider population. A key difference is that CEO opinions can have bigger consequences. The question for CEOs at the low end of the trust spectrum is whether they are actively working to understand and address the issues—or simply allowing their scepticism to get in the way of the opportunity. At this early stage of GenAI’s development, ‘bounded optimism’ feels like an appropriate stance. Uninformed pessimism does not.