The difficulty in establishing a strategy is reflected by where organizations sit on the AI maturity curve. Only 7% of CEOs think that their organizations are leading in this space. However, nearly half (43%) believe that they are successfully leveraging GenAI and are on par with competitors. Meanwhile, 39% are 'optimizing’, such that they are making progress in GenAI capabilities but not yet realizing significant value from their investments.
Although CEOs are at different stages of integrating AI into their business operations and strategies, the overall trend towards greater adoption and leveraging of AI capabilities is clear. This is reflected in their investment plans, with almost all CEOs (98%) planning significant investments in GenAI. While this is in alignment with the sentiments of their global counterparts, Asia-Pacific CEOs expect to adopt a slightly different approach when it comes to funding those AI investments.
While almost a quarter (23%) of global CEOs prefer raising new capital for their AI investments, only 15% of Asia-Pacific CEOs share this approach. Instead, 42% of Asia-Pacific CEOs indicate they will reallocate capital from other investment budgets, and another 32% prefer will draw from their existing technology budgets.
The differing approaches to funding could be due to the more mature capital markets globally, where venture capital is more readily available. In fact, a higher percentage of global CEOs (70%) plan to increase spending on corporate venture capital in 2024 compared to Asia-Pacific CEOs (63%).
CEOs approach M&A with caution, but Asia-Pacific stands out for attracting global capital
As adoption of GenAI and other technologies moves at a rapid pace, CEOs globally are strategically channeling their investments into areas that can fuel their organizations' expansion and innovation. Asia-Pacific CEOs are planning for increased spending in 2024 in areas such as research and development, capex, acquisitions, and corporate venture capital.
However, stagnant global growth and a higher cost of capital is weighing on deal sentiment. Overall, the appetite to transact remains robust, with 84% of Asia-Pacific CEOs looking to M&A, divestments, or joint ventures to gain or focus on the capabilities required to fast-track their growth ambitions. While the US has led a rebound in mergers and acquisitions (M&A) this year, the tailwind for Asia-Pacific is yet to arrive, as is reflected in our survey: 23% of Asia-Pacific CEOs plan M&A over the next 12 months (compared to 56% in July 2023), substantially lower than the 52% of US CEOs.
Economic drivers and the broader risk environment see CEOs take a more nuanced approach to where they might invest. Asia-Pacific CEOs show a strong preference for expansion within their own region, with all their top five preferred investment destinations being Asia-Pacific countries. The same holds true for CEOs globally, with their top five expansion destinations also in the Asia-Pacific region. This underlines the attractiveness of Asia-Pacific with its strong growth prospects, critical role in global supply chains, technological developments, and a young and skilled workforce. It also reflects the regional focus of Asia-Pacific CEOs, who are looking to capitalize on opportunities and synergies in this diverse and dynamic region.
Five strategic moves for Asia-Pacific CEOs in the AI era
As CEOs brace themselves for continuous change in the business landscape, they must strike a balance between operational resilience and strategic foresight. Here are five ideas:
- Invest strategically in AI: view AI not just as another technology, but as a strategic investment that can redefine business operations, customer experiences, and competitive dynamics.
- Develop an AI-ready workforce: prioritize upskilling existing talent, attracting AI-specialized talent, and fostering a culture that supports continuous learning and adaptation to new technologies.
- Distinguish between AI hype and reality: stay informed and educated about the latest developments in AI, make fact-based decisions, and avoid getting swept up in trends that don't align with business goals or provide tangible value.
- Optimize or exit: given anticipated stagnant economic trends over the next three to five years, there's no room to retain lagging assets or operate in unprofitable markets.
- Pursue growth through strategic transactions: consider strategic M&A and JVs to acquire new capabilities, access new markets, or enhance AI prowess.
