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The CEO Imperative series
Disruption never sleeps. And corporate transformation should never stand still. According to our January 2025 EY-Parthenon CEO Outlook Survey, the most confident CEOs recognize this. They have finely tuned their risk radars to understand what is most likely to challenge their business models – and are prepared to act boldly to bypass any bumps in the road.
The most confident executives also understand that true transformation is multifaceted. It is a combination of organic and inorganic actions – and M&A is likely to be a transformation accelerant in 2025. In a highly competitive environment, unlocking value from deals becomes more of an imperative. The most confident CEOs see that clearly, with seven out of 10 signaling a strong M&A appetite for the next 12 months, while only 17% of the least confident business leaders have the same ambitions.
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The inaugural EY Global CEO Confidence Index finds broad consensus among CEOs that economic conditions, investment opportunities and their ability to grow will be positive over the next 12 months. This mirrors the recent outlook from EY economists (via EY.com US), who anticipate a modest 3.1% increase in global GDP in 2024, and a slight acceleration to 3.2% in 2025.
The results vary by region, country and sector, but no countries or sectors are anticipating a severe downturn.
The survey finds CEOs confident, but not overly so, in their near-term outlook. They are not assuming strong economic tailwinds, but they see a path forward. And they are prepared to act and adapt to take advantage and grow in this ever-shifting business environment.
CEOs are more confident about growth in their own sector than at either the global or local level. This is not surprising. CEOs often feel more confident about growth in their own sector because of their experienced knowledge and direct influence. They have deep insights into industry trends, competitive dynamics and market opportunities specific to their field.
This is in line with the EY CEO survey in April, in which CEOs resilience had fueled a more positive outlook about growth and profitability, and greater comfort in navigating external challenges outside their own authority.
Similarly, there is also a slight difference in their optimism about organic investments and their technology transformation compared to inorganic measures, such as M&A or joint ventures (JVs).
This broad confidence by CEOs is important for the global economy. History shows that a lack of confidence among business leaders can significantly contribute to or worsen economic downturns. When leaders lose faith in future prospects, they tend to postpone or cancel investments, reduce hiring and cut costs. A more cautious approach often leads to decreased spending on capital goods, research and expansion, slowing economic growth. Reduced hiring and potential layoffs increase unemployment, reducing consumer spending power.
The ripple effect of businesses scaling back operations is felt throughout the supply chain, affecting other companies and sectors. This pessimism can become a self-fulfilling prophecy, as reduced economic activity confirms leaders’ initial fears, further eroding confidence and perpetuating the cycle of economic contraction, potentially deepening a recession, or prolonging a downturn.
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The CEO Confidence Index measures executives’ outlook on the macroeconomic environment and company performance, which is part of the EY-Parthenon CEO Outlook Survey series. Higher Index values indicate a more positive sentiment regarding the future state of the economy and their businesses. The latest Global CEO Confidence Index shows a modest three-point increase since September 2024, indicating strengthening CEOs' optimism about the next 12 months. CEOs are not yet overly bullish about the future, but improvements in growth expectations, access to talent, and investment opportunities are driving this increase.
CEOs’ areas of focus are a reflection of the rapidly evolving business landscape, and our survey shows their eyes are on emerging technology and AI, changing customer behaviors and macroeconomic uncertainty as key disruptive forces. Emerging technologies, particularly AI, are transforming industries at an unprecedented pace, offering new possibilities for innovation, efficiency, and competitive advantage. AI’s potential to automate processes, enhance decision-making and create novel products and services is compelling CEOs to re-evaluate their business models and strategies. The fear of being left behind is driving significant investment and focus.
Simultaneously, customer behaviors and demands are shifting dramatically, influenced by technological advancements, social changes and global events. The rise of digital platforms, personalized experiences and sustainability concerns is reshaping consumer expectations. Failing to adapt to these changing preferences could result in lost market share and relevance.
Macroeconomic uncertainty and geopolitical tensions add another layer of complexity. Global economic challenges, trade disputes and political instability create unpredictable market conditions that can significantly impact business operations, supply chains and growth prospects. CEOs are navigating these uncertainties while making long-term strategic decisions, which adds to the disruptive nature of these forces.
The interplay between these three factors amplifies their disruptive potential. For instance, emerging technologies are enabling new ways to meet changing customer demands, while geopolitical tensions can influence both technological development and consumer behavior. This interconnectedness creates a dynamic and challenging environment that CEOs must constantly monitor and accommodate.
In today’s fast-paced business world, CEOs recognize that harnessing emerging technologies is vital for survival and growth. Their top strategic priorities reflect a balanced approach to innovation, implementation and financial prudence.
CEOs prioritize leveraging new technologies to gain an innovation edge and transform work practices. This proactive stance allows companies to disrupt markets and redefine customer experiences, potentially boosting market share and revenue. However, it risks investing in technologies that may quickly become obsolete or face internal resistance.
Executives also focus on rapidly adopting disruptive technologies to create viable business models. This structured approach enables quick scaling and adaptation to market changes. Risks include misaligning technology with business goals and overlooking regulatory issues.
Developing strong business cases and ROI projections for disruptive technology investments is crucial. This practice mitigates overinvestment risks and aligns initiatives with strategic goals. It allows informed decision-making, balancing potential gains with financial risks to maintain financial health and investor confidence.
By embracing these strategies, CEOs position their companies to thrive in an increasingly technology-driven business landscape.
CEO confidence is apparent in how emerging technologies are likely to be leveraged, with the least confident CEOs less likely to prioritize the rapid adoption or direct merging of the disruptive technology for innovation compared with their more confident peers.
Geopolitics – and political risk more broadly – is a prime contributor to the rapidly shifting market context that CEOs face today. More than one-third of business leaders expect geopolitical disruption and the shifting economic environment to be among the top disruptive forces in the next 12 months. And a similar share point to regulatory pressures as likely to drive significant change in their markets and industries.
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