For CEOs in Davos, the focus is on efficient, profitable operations

Bank of America Chairman and CEO Brian Moynihan speaks at the World Economic Forum on industry layoffs, the Federal Reserve’s trajectory and investing in innovation.

Results. It’s the result that executives say they seek, demand—and sell.

Businesses say they prioritize profitability and efficiency in the face of concerns about macroeconomic conditions, whether to achieve their strategic goals, downsize their workforce or streamline operations. In many cases, executives say they want to use new technology to reduce costs, which is a potential boon for vendors of such software.

“We need to be much more strict on costs and achieve the same growth plans with a lot less investment,” Uber Technologies Inc. chief executive Dara Khosrowshahi said on Thursday. “Performance that has been defined as excellent in the past – lots of growth, who cares about profit – is performance that is described as not good enough or mediocre in our new world.”

Uber CEO Dara Khosrowshahi addresses the media at an event in New Delhi, India, Oct. 22, 2019. Uber CEO Dara Khosrowshahi said Thursday in Davos, Switzerland that companies need to focus on cutting costs. Portal/Anushree Fadnavis (Portal/Anushree Fadnavis/Portal)

In recent years, the lure of high-growth opportunities underpinned many companies’ decisions to spend heavily on hiring, expanding businesses, or projects that were years from being profitable. Talks at the World Economic Forum in Davos this week highlight a renewed discipline guiding investment decisions.

HOME DEPOT CO-FOUNDER WARNS THAT THE ‘AWAKED GENERATION’ IS IGNORING THE ‘UNDER-SIDE’ OF THE ECONOMY

“When money was free with 0% interest, many companies invested in crazy pet projects that were neither core to their mission nor core to what they do,” said David Glazer, chief financial officer of Palantir Technologies Inc. “Now, money isn’t free and they’re forced to really think about where they invest.”

He said Palantir has focused on the same core products for the past several years.

Still, the tech industry needs to prepare for tougher times, Microsoft Corp. chief executive Satya Nadella said in Davos this week. The company said Wednesday it would cut about 10,000 jobs.

“We in tech need to be more efficient – ​​it’s not about everyone else doing more with less, we need to do more with less. We need to show our own productivity gains,” he said.

BANK OF AMERICA’S BRIAN MOYNIHAN WARNS ‘WEALTH EFFECT’ THAT COULD FEEL LIKE 2007-08

Even companies that expanded during the pandemic say they are focused on efficiency. At Thermo Fisher Scientific Inc., CEO Marc Casper said that employees throughout the life sciences company must look for ways to make practical improvements to operations.

For example, some employees streamlined a process to reduce the time it takes to change products on a production line. “Every colleague is responsible for making us more effective and efficient,” he said. “It’s not a slogan. This is how we work and this is how we increase productivity.”

As companies focus on profitability, many continue to face higher raw material costs. “Inflation hasn’t changed much yet,” said Ilham Kadri, CEO of Belgian chemical company Solvay SA.

Microsoft CEO Satya Nadella this week urged tech companies to do more with less. (Brian Smale/Microsoft – Wiki Commons) (Brian Smale and Microsoft – Wiki Commons)

Leaders try to set strategies that play “attack and defense simultaneously,” says Bob Sternfels, global managing partner at McKinsey & Co.

Technology could help companies figure out how to navigate a slowdown and emerge better from it, said Tom Sweet, chief financial officer of computing and services provider Dell Technologies Inc. Executives at companies that sell products and services that can help automate, Interpreting or even locating inefficiencies, saying they see opportunities despite the macroeconomic headwinds companies are facing.

“Everyone is looking at efficiency and productivity,” he said. “Companies adjust their cost structures, but they also continue to invest capital in growth opportunities or productivity opportunities.”

LARRY SUMMERS SAYS HE IS ‘STILL CAUTIOUS’ BUT HAS A LITTLE MORE HOPE ABOUT THE ECONOMY

Part of ServiceNow Inc.’s customer appeal is that its software can simplify and automate some business processes and consolidate multiple systems into one. Businesses are receptive, and ServiceNow hasn’t seen a drop in technology spending, said CEO Bill McDermott. “I’m not fighting this headwind,” he said.

Alexander Rinke, co-CEO of Celonis, a company he co-founded in 2011 that uses technology to identify and address operational inefficiencies, said leaders are focused on efforts with quick and clear ROI. “We clearly see that customers are questioning their investments more.”

Bob Sterfels, Global Managing Partner, McKinsey &; The company is testifying via conference call at a House Oversight and Reform Committee hearing on Wednesday, April 27, 2022 in Washington. In Davos this week, Bob Sternfels said executives are striving for (AP Photo/Kevin Wolf / AP Newsroom)

In an effort to cut costs, some companies say they are slowing hiring or cutting projects, executives said. Others stress that teams need to remain disciplined.

Stephen MacMillan, CEO of medical technology company Hologic Inc., urges caution when hiring and asks managers to assess whether each new role is necessary. “What I always tell my team is that anyone can always justify another head,” Mr. MacMillan said. “But are they productive against what you really need?”

ELON MUSK HAS NOT BEEN INVITED TO THE WORLD ECONOMIC FORUM IN YEARS, ORGANIZERS CLAIM

At real estate firm Jones Lang LaSalle Inc., CEO Christian Ulbrich said the company is now considering where to fill some positions – with lower cost markets having an advantage in some cases. For example, if an employee leaves a finance position in a city with high labor costs, the company could potentially replace that position in Mumbai, India, or the Philippines, he said.

Creating long-term value and efficiency is key to any organizational transformation, said Carmine Di Sibio, CEO of Ernst & Young. “We are working on over 30 projects worldwide to help companies transform their business,” he said. “We also make sure they work as efficiently as possible.”

CLICK HERE TO GET THE FOX BUSINESS APP

Supervisory boards are increasing the pressure on CEOs. “We did the Kumbaya during the pandemic,” said Constantine Alexandrakis, CEO of executive search and leadership consulting firm Russell Reynolds Associates. “Now is the time to deliver.”

Kimberly S. Johnson, Bowdeya Tweh, and Sam Schechner contributed to this article.