Strategy in the UK Recession - What 69 UK CEOs Did About It

There are some fascinating surveys coming out at the moment, and another one has just landed in my inbox from my former colleagues at PricewaterhouseCoopers. This one - the UK Snapshot from the 13th Annual Global CEO Survey - is a fantastic research resource for students preparing for BUSS4 in June 2010 and January 2011.

The CEO survey can be found here. I have summarised some of the ley learning points which students might want to consider during their research below:

The recession in the UK was a painful experience for UK CEOs

- Many had to make dramatic changes to their organisations (link to BUSS4 spec - change management)
- Short-term objectives and actions were the focus: reducing headcount; selling off assets; preserving cash (link to BUSS3 spec - financial objectives; cost minimisation)
- CEOs had to reassess their attitude and approach to risk and contingency planning (link to BUSS4 spec - managing risk; planning for uncertainty)
- 96% of UK CEOs implemented cost-reduction exercises - 62% of which involved reducing headcount. The drive has been for an improvement in efficiency

UK CEOs believe that there has been a significant shift in consumer behaviour

- Shifts in consumer spending (predictable, given the nature of the recession) - but 36 of UK CEOs think the shift in demand in their existing markets is a serious threat to their growth prospects
- 75% of UK CEOs expect UK consumers to spend less in the future and save more
- More active involvement of consumers in new product development
- Greater consumer interest in environmental & CSR activities and records of companies

Coming out of the recession - growth will be largely organic and financed internally

- A clear and well-understood to differentiate products or services in the face of much-increased competition (link to BUSS2 marketing competitiveness, BUSS3 marketing strategies)
- Growth expected to be funded by internally generated cash (link to BUSS3 - selecting financial strategies)
- Organic growth rather than acquisitive growth is the predominant growth strategy for CEOs - a clear focus on better penetration of existing markets (link to BUSS3/4 - Ansoff)
- 74% of CEOs in the UK are committed to continued cost-cutting in 2010
- Only 14% of CEOs see acquisitions (external growth) as the main opportunity to grow their business (but this is up from just 7% in 2009). The proportion of UK CEOs expecting to make acquisitions back in 2008 was 23%. [note: a key question for BUSS4 students - why are acquisitions so much more unpopular than just two years ago?]

Risk management will become a much more important part of the strategic management process

- CEOs expect a much more restrictive regulatory environment (link to BUSS4 - legal environment)
- A cultural shift is taking place- linking reward structures closer to risk management (link to BUSS4 corporate culture / change management)
- The emergence of a new box in the organisational structures of larger, more complex businesses - the CRO (Chief Risk Officer)
- CEOs increasingly looking for their businesses to work closer with suppliers to manage risks (link to BUSS2 - working with suppliers)

A change in the culture of managing people is taking place

- Over half (52%) of UK CEOs expect to make significant changes to their strategies for employee motivation
- 65% plan to increase spending on leadership training
- 74% of CEOs plan to change their firm’s organisational structure in 2010 as we exit the recession
- 41% of UK CEOs have outsourced a business process or function during the recession - 39% plan to do more outsourcing in 2010

...and finally - what are the major lessons that UK CEOs have learned from the recent recession in the UK?

- The challenge of the recession has been to make their firms more resilient (the survival instinct) without missing out on opportunities as they emerge
- CEOs have learned more about their business models - how and why they make money (or not); which aspects of the operations & functions add real value
- Need to stay disciplined on costs, but still incur them to support innovation
- Ask the banks for finance, but dont assume you will get it
- Long-term planning is still critical - but business planning needs to assume greater volatility in the external environment