As every captain knows, waves on the ocean surface can capsize a ship and so must be carefully navigated. But it’s the currents – the more enduring forces that are sometimes harder to see – that ultimately determine a ship’s direction of travel.

PwC’s 26th Annual Global CEO Survey makes clear this dual imperative. CEOs see profound near-term disruptions: inflation, macroeconomic volatility, geopolitical conflict, and a deeply pessimistic outlook for the global economy. In the survey, 73% of CEOs expect economic growth to decline in the next 12 months.

However, CEOs also see the need for deep, long-term transformation – transformation that truly delivers results. Shockingly, almost 4 in 10 don’t think their organization will be economically viable in 10 years if they continue on their current course.

The potential danger is that leaders can be so distracted by near-term waves that they fail to navigate deeper change.

At PwC, through our work with clients and their business partners and through our CEO Survey, we’re seeing some of the ways that CEOs are managing today’s turbulence while also reinventing their businesses for the future. Here are four of these approaches, along with actions business leaders can take to get the balance right.

1. CEOs are pursuing profound reinvention

As we’ve seen, almost 40% of CEOs believe their companies will not be viable in 10 years’ time without a sharp change in direction. This finding holds true across sectors from tech to healthcare to manufacturing. CEOs see a range of forces that will sweep away those who do not adapt, such as changing customer demand, regulatory changes, skills shortages and tech disruption/data explosion.

We’re seeing far-sighted CEOs rethink their company’s place in a world that is changing under our feet. For example,at PwC, we have helped a global retailer reinvent itself from a chain of offline stores into an online, multi-channel company; and we’ve helped a global automaker diversify into car subscriptions to meet changing customer demands.

Action: Reimagine the firm’s value proposition.Reinventing a company for long-term success requires a willingness to answer the most elemental questions about a company, such as: “What unique value do we contribute in today’s world – and tomorrow’s?”

2. CEOs are cutting costs, but not people

52% of CEOs we surveyed said they were cutting costs in response to near-term economic pressures, but only 16% are currently reducing the size of their workforces. The rationale was clear: leaders told us they expect employee attrition to stay the same or worsen, suggesting they see no end in sight to the Great Resignation and the consequent competition to attract talent with the right skills for the future. As a result, CEOs – with an eye on keeping their companies afloat in the longer term – are maintaining their investments in people despite acute near-term cost pressures. I believe this is the right approach; at PwC, despite economic headwinds, we invested over half a billion dollars last year in building our highly skilled workforce.

Action: Attract and retain talent by delivering what today’s workforce truly wants. This year we asked 52,000 workers globally why thy chose and changed jobs. We found compensation is important, as always, but employees also want flexibility or hybrid working, new skills to remain relevant and the chance to contribute to a larger purpose (75% said they want to work for an organization that contributes positively to society). The lesson for CEOs? Keep investing in everything it takes to get and keep great people.

3. CEOs are building supply-chain resilience

Our CEO survey shows that leaders who believe their companies are exposed to geopolitical risks are taking actions such as adjusting their geographic footprint and supply chains (46% are doing this). Companies are not simply exiting the territories in question en masse; for example, the 2022 China Business Report, developed in partnership with PwC, confirms that only 17% of US companies are considering moving operations out of China in the next three years. This suggests some CEOs are seeking to mitigate potential impacts from geopolitical tensions while keeping their eyes on the long game of China’s economic importance. So instead of leaving, many business leaders are applying a range of strategies to build supply-chain resilience.

Action: Stormproof the supply chain. We’re seeing companies build diversification and redudancy into their supply chains and expand their reserve inventory (moving from just-in-time inventory to just-in-case). Firms are making their supply chains cleaner and greener, and they are embedding data and technology into them more than ever before, for example, with artificial intelligence-enabled control towers that enable nimble adaptation to shifting risks.