The Directors Cut provides practical insights into the challenges facing Australia’s largest companies, through qualitative and quantitative research with 100 Chairs and CEOs from the ASX 200.
For the first time since the research started, productivity is the top issue of concern for leaders of the ASX200. Chairs and CEOs are looking at productivity through two lenses: by company and for Australia as a country.
“Corporate productivity is the focus for most companies in a challenging growth environment,” said John Meacock, Managing Partner NSW, Deloitte and leader of the research.
“Chairs and CEOs said they were reviewing IT efficiencies, alliances, supply chain arrangements and finance transformation initiatives, but realise that ultimately they cannot cut their way to growth.
“At the macro level, many Chairs and CEOs were concerned about Australia’s competitiveness, especially in the face of economic headwinds and factors such as the high Australian dollar. They believe there is an urgent need to enact reforms, especially in the area of industrial relations, to enhance productivity.”
A significant change from previous editions of the research is that corporations are taking a dual approach to strategy.
Chairs and CEOs are now increasingly operating in two timeframes. They are closely monitoring short-term performance and keeping a tight handle on costs and they are also setting the longer term strategic vision, by understanding the structural changes impacting their industries and trying to make the right investments for the future.
Whilst setting strategy remains fundamentally important for boards, there is a realisation that the execution of that strategy is now equally important and 98% of Chairs interviewed (and 87% of CEOs) say that their board actively monitors the execution of strategy.
“The research showed a much clearer focus on core capabilities and less consideration of adjacent markets than in the past,” observed John Meacock.
“This can limit the opportunities for growth in Australia and for many companies there is now a clear imperative to look to new markets and offshore for growth, particularly to Asia.
“We observed a clear trend amongst companies who are, or are planning to, appoint Asian directors and open offices in Asia. With that in mind we anticipate an increase in Asian investments in the next few years.”
While 77% of Chairs and 72% of CEOs said their organisations were innovative, only 34% of Chairs and 46% of CEOs said that a significant proportion of their revenue was derived from recent innovation.
Indeed, while companies saw themselves as innovative, the interviews highlighted several concerns that Australia has not been innovative as a nation.
The research also highlighted a healthy and balanced relationship between Chairs and CEOs in ASX200 companies.
