According to the "CxO Priorities" survey of 280 top managers conducted by management consultants Horváth, 62% of respondents rate cybersecurity as a very important challenge for management. A further 28% consider this an important topic. This puts cybersecurity, with 90% relevance across all sectors, ahead of sustainability (83%). The digital transformation remains the top priority (95%). Taken in isolation, industrial companies view preventing and responding to cyberattacks as their most important management challenge. The study also shows that cost and earnings structures have become more relevant across all industries, while strategic issues have moved into the background.
"Growing online threats are a negative side effect of the digital transformation, which in turn is a prerequisite for sustainable success. This issue is only now slowly taking hold and could threaten the existence of industrial companies in particular – especially if it was neglected in the past or simply could not be pursued with the necessary priority due to dealing with the consequences of the crisis," says Ralf Sauter, the study's director and partner at the management consultancy Horváth. "With increased connectivity and intelligent control, the risk of cyberattacks increases, which could shut down production for several days."
Price increases are tolerable for companies as long as demand does not collapse
Industrial companies are also being particularly affected by the massive price increases for raw materials and commodities, which they can only partially pass on to their customers, as the survey also shows. The highest factor cost increases compared to 2021 were experienced by following sectors: Oil & Chemicals (+31%), Energy (+30%), and Retail & Consumer Goods (+19%). "Our survey shows that only half to a maximum of two-thirds of the increased factor costs can be passed on," says Sauter. "The remaining additional costs eat into margins, decreasing overall performance by up to 50%. This can only be sustained for a certain amount of time. If margins fall due to declining purchasing power and demand caused by continued high inflation or rising interest rates, the house of cards collapses."
However, the experts at Horváth do not expect to see companies going under before 2023, as most businesses are still liquid and their order books remain full. As the "CxO Priorities 2022" study shows, top executives are currently still comparatively positive about the future. For the current year, 78% of respondents expect to see year-on-year growth. In 2023, 72% are targeting rising sales.
Use the "calm before the storm" to make essential preparations
In view of the current tense and uncertain situation, Horváth's experts nevertheless recommend that executives fundamentally prepare themselves for possible long-term consequences of the crisis, up to and including a recession. This means, above all, optimizing the company's cost and earnings structure as far as possible. "The economy is at a crossroads. If supply bottlenecks ease noticeably at the end of the year, consumer confidence does not plummet, and inflation stabilizes, the forecasts are realistic. If the overlapping crises intensify, things will get tight," says Ralf Sauter. As there is currently little room for maneuver on the purchasing side, he believes that two levers in particular are of great importance. Firstly, according to Sauter it is important to work systematically on pricing and strategies on the sales side. The second lever is the optimization of the cost and earnings structure. In particular, industrial companies are already working flat out on this, as can be seen from the survey results. In the automotive industry, this topic is even considered the most important management issue.
"Overall, it can be observed that cost and earnings structures have become more relevant across all industries and that strategic tasks, such as the further development of the business model, have taken a back seat. It also fits into this picture that more and more companies are scaling back their flexible working models and want to order their employees back to head office," says Sauter.
About the study
For the Horváth study "CxO Priorities 2022 – Managing Overlapping Crises," 280 top managers across industries were surveyed via personal interviews, of which nearly 90% were CxOs. 70% of the sample consists of companies with at least 1,000 employees. More than 90% generate annual sales of at least 100 million euros. The survey was conducted in May and June 2022.