Horváth: Efficiency beats sustainability, and cost optimization becomes the No. 1 priority for companies

• In second place are digital transformation and artificial intelligence, seen as essential levers for efficiency.
• Innovation and investment in research and development (R&D) come in third, being a key concern in the manufacturing sector, focused on optimizing supply chains and industrial capabilities.
• Sustainability drops six places in the 2025 edition of the Horváth “CxO Priorities” study, but most companies remain committed to “net zero” goals.

Optimizing costs and profitability is the top priority for top executives (CxOs) in over 1,000 companies globally. These conclusions come from the sixth edition of the “CxO Priorities” study, entitled “Fundamentals: The New Strategic Advantage – Navigating Trade Conflicts and Tech Disruptions”, conducted by Horváth, an international management consulting company, present on the Romanian market since 2005.

This strategic priority rose to first place, after having already climbed from 4th to 2nd position, from the 2023 to the 2024 edition of the study.

In the current global economic context, marked by trade conflicts and technological disruptions, the Horváth study identified four fundamental aspects that ensure a strategic advantage and determine the performance of companies:

• Operational excellence: increasing efficiency and competitiveness at the cost level;
• Refined product and service portfolio: prioritizing growth and high-value offerings;
• Balanced global value chain: building a resilient and competitive footprint;
• Future-ready core: innovation through technology and artificial intelligence.

The “CxO Priorities” study shows that the majority of the revenue growth forecast for 2025 (73% for manufacturing and 60% for services) will come from volume rather than price, confirming the increased pressure on profit margins. Both manufacturing and services are targeting a 3% cost-to-revenue reduction, demonstrating a shared commitment to cost efficiency and improved financial discipline.

Investments in AI and R&D rise to the top of the list

Digital transformation – including the use of artificial intelligence (AI) – ranks second in the list of priorities, while cybersecurity ranks third for the services industry. In contrast, among manufacturing companies, innovation and research and development (R&D) rank third.

Investments in AI are growing at an accelerated annual rate: in telecoms they reach 1.3% of revenues, in the media production industry it is 0.4% of revenues, and in the services sector it is 0.6% of revenues.

For manufacturing companies, core business excellence is the main strategic priority. This involves refining and diversifying product portfolios to meet customer needs and generate long-term value. In this context, 65% of CxOs at manufacturing companies say they plan to increase their investment in innovation and R&D in the next 12 months.

Strategic workforce themes – talent availability, skills development and leadership culture – rank fourth overall across all industries. While the talent shortage has eased, global manufacturing network strategies and the rapid rise of AI pose new challenges.

In manufacturing, optimizing the manufacturing footprint and supply chains ranks fifth, up three places from last year.

Process reengineering grows in importance, sustainability focus declines

Across all industries, restructuring structures and processes has climbed to fifth place, up from seventh place in 2024. The study shows that 58% of companies plan to implement organizational restructuring in the next two years.

Since 2021, the importance of sustainability has steadily declined. While a few years ago it was in second place, and last year it was in sixth place, in 2025 it is only in 12th place. Overall, 67% of companies remain committed to achieving net zero goals, and one in five have decided to postpone sustainability initiatives, reflecting an uncertain climate and the prevalence of other business objectives.

“As the global economy becomes increasingly fragmented, CEOs are focusing on the real drivers of performance: maintaining competitiveness in established markets with validated products and services, while managing costs to protect profit margins. Companies understand that returning to growth in a context of technological disruption and global economic reset requires a dual focus: excellence and efficiency in the core business, along with proactive structural transformation,” said Maria Boldor, Partner and Managing Director, Horváth Romania.

The Horváth “CxO Priorities 2025” study was conducted by interviewing over 1,000 board members and CEOs from a diverse range of 15 industries, including energy, manufacturing, automotive, retail, technology, financial services and more, between May and June 2025.

Respondents come from 33 countries across North and South America, the Middle East, Asia, Australia and Europe, including Germany, Austria, Switzerland, Poland, Romania and Hungary, providing a comparative perspective at regional and sectoral level. 80% of participating companies generate annual revenues of over €100 million.