The world has been changing dramatically over the past few years, and with it, the demands on the CEO. What CEOs need to succeed in today’s changing world goes much further than just setting the vision and strategy of the business, having the best team in place and listening to staff, customers, suppliers and other stakeholders.
The pandemic changed the way people think about working – a combination of enforced isolation during lockdowns, and the discovery that working from home did not always kill productivity, coupled with increasing demands from staff as workforces shrank, partly through cutbacks by business and partly through employees looking at their work-life balance.
Climate change is forcing us to rethink everything – as the climate becomes more unstable, supply chains need closer scrutiny, as do buildings, food availability, and so on. This affects every business in different ways.
Global instability and the after-effects of the pandemic and climate change are driving inflation to levels not experienced for some decades, with fears of recession, while high energy costs appear to be ‘a new normal’ for the foreseeable future, too. There is also growing concern over China’s designs on Taiwan and the effect this could have on the global chip market.
And then there is the changing set of cultural norms accelerated, in part, by social media, with increasing polarisation, shown through such things as cancel culture, and increasing calls for great transparency in all matters related to business.
So, while traditionally the CEO focused on strategy, growth & profitability, and internal issues related to staffing and costs, this changed during the past decade to increasingly looking at matters outside the business, so that today more than half the role is externally focused – looking at what external stakeholders expect in terms of ethics, the environment, social issues and the like.
If we look back, say, 50 years, the primary drivers for company success were really about physical issues: factories, mineral resources, and so on, and management was about having the workforce be, in effect, better cogs in the vast machine that was the company.
Today, however, most value is created by people – global gross domestic product in 2020 had risen to nearly two-thirds (65.73%) being from services, while industry had dropped to 26.33% and agriculture just 4.39% as shown here – and this is what’s driven most of the changes in leadership style.
And with millennials (those born between 1981 and 1996) making up the largest segment of the workforce today, their value systems are vital to the success of companies – whether as employees or customers – and they expect both their employers and the brands / companies they support to share these values.
So, while, as I wrote in July 2021, the CEO’s mindset needs to be around six dimensions: corporate strategy, organisational alignment, team and processes, board engagement, external stakeholders and personal working norms, it’s how the CEO approaches these that will allow them to succeed, or not.
The skills that today’s CEOs need, therefore, include:
Communication – the importance of this has been true for decades, but the nature has changed from being a top-down communication ability to an inclusive, 360-degree one. Today’s CEO needs to actively seek out the opinions of others and to take these into account, while being open and honest in all communications, letting stakeholders know what is happening in the business, how it is progressing towards its vision and what changes are being made along the way to achieve this. It’s now about inspiring and motivating the workforce rather than simply telling them what to do.
The CEO also needs to be able to effectively communicate the vision, and state of progress, to external stakeholders, and to listen to their input, too, especially with around half the modern CEO’s time being taken up with external matters.
The issue of ESG feeds in here, too, and is of increasing importance to businesses of all sizes. Companies are expected to operate with concern for, and care of, the environment, social issues and overall good governance. As Niall Fitzgerald, former CEO of Unilever said, “Corporate social responsibility is a hard-edged business decision. Not because it is a nice thing to do or because people are forcing us to do it… because it is good for our business.”
Or, look at what the giant, and somewhat traditionally conservative company, Walmart is doing in this area with its Project Gigaton – working with thousands of its suppliers to hit Net Zero targets by 2050. But it goes further than that: it is trying to reduce, or avoid, one billion metric tons (a gigaton) of greenhouse gases by 2030, and as at the end of 2021 was already 57% of the way there, having saved over 574 million tons since it started the project in 2017.
Trust – this works both ways, in that the leader must be seen as trustworthy by the team and must also trust them enough to do their jobs and stay out of their way. Any desires to micromanage people must be firmly ignored. To build and ensure trust, the CEO must be seen to be approachable, discrete, honest and open, and to have empathy with others. This is a significant difference to what happened in the past, where CEOs were not really seen as approachable and open.
Delegation / Accountability – one of the most difficult things for many CEOs to do is delegate. But, it is essential – not just from a time-management perspective, but to show trust in others. A culture of accountability, from top to bottom of the business, will facilitate this – the CEO being held accountable by the team and the board, and, in turn, all others in the business being held accountable for their tasks. In the past, while the team might have been held accountable by the CEO and management, there was little upstream accountability.
Ethics / Morality – this is another key area, and one that did not really feature strongly in previous decades. Not only is any unethical behaviour expected to be rooted out, no matter where it occurs in the organisation, but stakeholders, both internal and external, expect the leadership to act with sound moral principles at all times.
A good example here is what shipping giant Maersk did following the Russian invasion of Ukraine on 24 February. Within just 4 days, the company not only had a leadership team meeting, but resolved to immediately halt serving Russia, and so took a $700 million write-down in the first-quarter alone.
Of course, Maersk was not the only company taking action – most western multinationals have followed suit and disengaged with Russia, whether by closing their businesses there or simply cutting ties with their erstwhile partners in the country, where the companies did not have offices there.
While in the past, shareholders and other stakeholders might have objected to this on the basis of reduced (short-term) profitability, nowadays, they are supportive of such actions.
As you would expect, these added dimensions to the CEO’s role often lead to additional stress for the executives – especially in the early days of implementation – and research has shown two strong trends that CEOs are utilising to deal with this.
The first is exercise. It started during the pandemic and has persisted since. The well-established benefits, including improved mood, judgement, stamina and mental sharpness became evident. But another emerged too: with many of the regimens undertaken by CEOs being repetitive in nature. The CEOs did not feel the need, nor want to engage in more competition or stress, and the exercise became a form of meditation, helping the CEOs to reduce stress still further.
The second is coaching. Again, the initial uptick started with the pandemic as CEOs were often more isolated from their peers and the leadership team with whom they had previously engaged. It really is lonely at the top and CEOs need to be able to confidentially discuss issues and concerns with others that can understand these. What transpired in the pandemic was how useful executive coaches could be in filling this need, and it continues to this day, as the CEOs have found it a place where they can say anything and get honest feedback safely.
Research by the global executive recruiter giant, Heidrick & Struggles, found the majority of the CEOs they work with now have identified an external coach with whom they work.
By paying attention to these additional dimensions, and taking advantage of regular exercise regimens and an executive coach, today’s CEO can not only succeed in this changing world, but thrive.
And, as Matthew Smith, former chief learning officer at McKinsey, and now an executive coach, said, “Leaders who adapt and pivot with speed in the face of opportunities will outperform those who are over-reliant on the skills and habits that got them to the top.”
Following a career spanning nearly 50 years in the technology industry across three continents, with three decades in CxO roles leading significant, sustained growth in revenue and profitability, I now work with successful owner-led businesses to further enhance their growth, profitability and business value.
If you’d like to discuss your business goals, culture or anything else related to your business, book a confidential free 30-minute call with me here.
I’d be delighted to talk with you.
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