business priorities

Amidst inflation, growth tops the list of business priorities for CEOs and CFOs – Gartner

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In a recent survey conducted by Gartner, Inc., growth emerged as the top strategic business priority for both CEOs and CFOs, reaffirming its significance in driving organizational success. While 45% of CEOs surveyed ranked growth among their top three business priorities in 2023, slightly down from the previous year’s 53%, a notable 62% of CFOs placed it in their top three, indicating a rise from the previous year’s 59%.

Although growth remained the common focus for both executives, the survey revealed intriguing differences in their priorities. 41% of CFOs identified corporate actions, such as mergers and acquisitions, and restructuring as their second top priority, whereas only 27% of CEOs ranked it among their top three.

According to Alexander Bant, Chief of Research with the Gartner Finance practice, CFOs must balance between future growth investments and meeting CEO expectations while maintaining strict control over costs and cash flow. Bant suggested several essential questions that CFOs should educate CEOs and board members on as the business cycle takes a positive turn. These questions include how to prioritize funding for organic and inorganic growth opportunities, the most effective methods to secure capital, and the impact of these decisions on margin and return on invested capital (ROIC).

business priorities

CFOs and CEOs acknowledge the importance of AI

CFOs and CEOs identify artificial intelligence (AI) to have the most impact on their industries over the next three years. This interest in AI is particularly remarkable for CFOs, as a vast majority of finance functions (80%) have adopted AI within the past two years.

The factors driving AI discussions in Q3 2023 are,

  • Expectations from the C-suite leaders to lead AI adoption while safeguarding the organization.
  • Customers’ growing reliance on generative AI for better user experiences.
  • Employee concerns about job security in the face of AI integration.
  • Regulatory pressure for responsible AI usage.
  • Investor demands for new growth sources and improved margins.

CFOs and CEOs prioritize cost optimization to address inflation concerns

Inflation remains a significant factor that is impacting business. According to the survey, a significant proportion of both CFOs (84%) and CEOs (68%) consider inflation among the top three factors negatively impacting their business outlook. 54% of CFOs consider raising prices as a response to inflation. However, there has been an 11-percentage point decrease from the previous year. The number of CEOs considering increasing prices to combat inflation also came down by 15% in 2023. This change is partly driven by customer fatigue from consistent price increases.

In 2023, there has been a significant shift in CFOs’ approach to inflation, with 40% of them now opting for cost optimization as a response. This represents a substantial increase compared to 2022 when only 23% of CFOs favored this strategy. In contrast, just over a third of CEOs (unchanged from the previous year) are currently prioritizing cost optimization as a measure to counter inflation.

In their efforts to combat inflation, CFOs are collaborating with CEOs on various strategies, such as enhancing productivity, efficiency, and automation within their organizations. CFOs are engaging their teams in rigorous discussions about resource and headcount optimization for the remainder of 2023 and into 2024. These joint efforts demonstrate the importance of finding innovative solutions to address the challenges posed by inflationary pressures.

Maintaining a strong CFO-CEO relationship is crucial yet challenging. CFOs, serving as company skeptics and realists, must balance the CEO’s desires with the company’s best interests.

Source: Gartner

Read next: AI, sustainability, capital and M&A find place in CEO priorities in 2023, reveals EY study

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