CEOs of the world’s largest companies are increasingly positive about the prospects for growth and rather than being cowed by uncertainty, CEOs are thriving in a time of turmoil, understanding that volatility is now the new normal in the world of business. Thomas Kuruvilla and Francesco Marsella at Arthur D Little share highlights of their findings.
In the Middle East, the fintech sector will be of primary importance for the future 3-5 years.
61% of Middle East CEOS expect market improvement ahead, with optimism growing more than 4 times since 2023.
The testing conditions of the last 12 months demonstrated that CEOs were underselling the benefits of the structures they had put in
Place.
AI is more than a buzzword in the Middle East; it is a strategic imperative that is receiving boardroom attention.
The CEO Global Insights Study for 2024 by Arthur D Little, with close to 300 global CEOs participating, sheds light on the ambitious plans and diverse strategies of the world’s largest companies, with the Middle East playing a pivotal role in shaping a technology-infused economic future.
In the Middle East, the fintech sector will be of primary importance for the future 3-5 years. 61% of Middle East CEOS expect market improvement ahead, with optimism growing more than 4 times since 2023.
Overall, telecom, travel and transportation CEOs focus shifted from workforce transformation and e-commerce to AI and digital transformation while automotives and energy and utilities leaders see ESG outpacing AI. The report finds a strong push from CEOs to focus on reskilling to meet the needs of the future.
Confidence
The 2024 CEO Insights Study by Arthur D Little reveals economic confidence among leaders in the Middle East. A significant 61% of CEOs are optimistic about economic growth in the next three to five years, a noticeable jump from just 13% last year.
With the world’s economy showing ups and downs, 37% of these leaders still see a steady future, reflecting their trust in the region’s economic strength. Only a small 2% expect a decline, which suggests a shared belief that the Middle East is on the rise after overcoming recent obstacles.
In 2023, half of CEOs expressed confidence that their existing organisational structures were strong enough to navigate business priorities and market volatility, although just 4% classed them as superior.
The testing conditions of the last 12 months demonstrated that CEOs were underselling the benefits of the structures they had put in place; while half still feel their organisations are strong, 16% now see them as superior and none sees them as inadequate.
- Thomas Kuruvilla, Managing Partner, Arthur D Little Middle East
This improved confidence is visible across all sectors, particularly energy and utilities, with 32% of CEOs feeling structures are superior, compared to 3% in 2023, telcos, from 0% superior to 13%, and financial services, up again, from 0% to 10%. Overall, CEOs are confident that they have strong organisational structures in place to move forward and target their growth goals.
Thomas Kuruvilla, Managing Partner at Arthur D Little Middle East, said “In the current times of business and geopolitical shifts, it is inspiring to witness the optimism among the Middle East’s CEOs for what lies ahead.
Francesco Marsella, Managing Partner and Global Leader of Growth and Transformation Practices at Arthur D Little, said, “Given today’s business and geopolitical turmoil, it is extremely heartening to see that the CEOs of the world’s biggest companies are positive for the future.”
Innovation
The study reveals that despite acknowledging the continuing unpredictability, these leaders are confident that with resilient business models, strategic clarity, the embrace of AI, and a focus on upskilling their teams, their companies and markets are poised for enduring growth and will actively contribute to the region’s prosperous future.
Critical to this outlook is the approach towards external growth factors. Globally, technology innovation remains the key growth driver, with raw material prices becoming a surging concern. Yet, in the Middle East, the angst surrounding raw material prices and supply chain stability shows a notable decrease, likely attributed to the region’s rich energy reserves, particularly oil and gas.
The study shows that while they accept that conditions will remain volatile and turbulent, they believe a combination of resilient operating structures, clear strategies, AI innovation, and reskilling their people will enable their businesses to thrive in a sustainable future.
Adoption of AI
AI is more than a buzzword in the Middle East; it is a strategic imperative that is receiving boardroom attention. CEOs are not just adopting AI but are strategically deploying it to unlock a new frontier of possibilities.
The commitment to integrating AI across business operations is seen as crucial to growth and echoes globally, with 54% of Middle East CEOs expressing a strategic vision towards a holistic, company-wide AI deployment while 96% of global CEOS have already deployed AI in some form.
While regionally 31% confirm the implementation of AI strategies across several departments, an ambitious 13% have already realised a compelling, enterprise-wide AI strategy.
Since 2023, AI usage has accelerated dramatically. In many ways, progress has been swift, 96% of executives claim to have implemented an AI strategy within at least one department of their organisation, with 47% having a strategic view toward AI.
However, just 13% have adopted a comprehensive company-wide AI strategy, demonstrating that they are still on a transformation path to fully understand the impact of AI and integrate it across the organisation. Fully benefiting from AI requires enormous structural and workforce change, which is achievable only with time. There are major challenges to moving from a strategic view to a strategy and then implementing it.
Use cases
How are CEOs turning their AI strategies into practice? Analysis shows that they are focused on making core functions better by increasing efficiency and effectiveness, such as through automation.
Efficiency is the leading use case in four out of seven sectors, showing that companies are at a relatively early stage of their AI journey. The exceptions are telcos, travel and transportation, and manufacturing, which are focusing on using AI to create new business models.
However, manufacturing is clearly lagging other sectors on each performance vector, scoring an overall average of less than 50 for AI use. This can be linked to the sector’s pressing need to reskill employees.
The strongest performers by industry and size are those in the financial services, 79% and $10 billion+ organisations, 67%. A clear divide also exists between organisations that feel that they are leading their markets, where 24% have a company-wide strategy in place, and laggards, none of which have implemented such a compelling strategy.
Skills
Importantly, CEOs understand that to get the best from AI, they need to focus on their people. Fifty-nine percent say they have either a strong or very strong need to reskill their workforces to meet changing requirements, up from 13% in 2023. This trend is particularly pressing in sectors such as manufacturing, with a 63% increase in the need to reskill, and financial services, +55%.
While AI is not yet changing corporate structures, it is having an immediate and enormous impact on the skills required for success. To maximise results from AI, CEOs believe they need to transform their workforces, with 59% seeing a strong or very strong requirement to reskill their employees, up from just 13% in 2023.
This demonstrates the speed and wide-ranging impact of AI’s rapid rise. For example, 68% of manufacturing CEOs see a strong need to reskill in 2024 compared to 5% in 2023, attesting to the sector’s lack of AI maturity. Across sectors, less than 1% report no need for reskilling, a fall from 11% in 2023.
In 2023, CEOs reported relying on external sources, primarily head-hunters and cooperation with universities, to provide them with new capabilities and talent to drive growth. In 2024, the focus has shifted, with the largest percentage, 30% looking to internal academies to deliver talent and skills, up from 21% in 2023.
This trend is potentially driven by multiple factors, including the difficulty of finding AI talent due to global skills shortages and a realisation that technical knowledge needs to be married to business understanding to deliver effective results, tailored to the individual company and its objectives.
Reflects Kuruvilla, “Our region is uniquely positioned with technological growth and abundant energy resources, which our CEOs are leveraging to redefine growth models. The emphasis on fintech is not just about financial transactions but about catalysing a tech-savvy economic ecosystem.”
Furthermore, the CEOs’ strategic lens is sharply focused on the rapidly growing fintech sector, signifying a shift towards embracing digital financial services as a cornerstone for future economic expansion in the region.
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