How have things changed for CEOs in recent years?
How will this impact the CEOs of the future?
What will be needed for someone to become a CEO in 2040?
Max: If you look at what has happened over the last 20 years, companies have grown exponentially, and this growth continues. The increasing size and scale of businesses is becoming a real challenge for many CEOs. And size isn’t the only structural change at work. In addition to getting bigger, companies are becoming flatter, and are having to become smarter to respond to the vast amount of data they now gather. Not only this, but they are having to become broader, embracing omni-channels, and connecting with a global market.
Richard: A number of factors have collided in the last decade which have dramatically changed the way leaders need to think about business. Max has already mentioned the pure scale of international businesses today. Beyond that there is now a degree of volatility and uncertainty that leaders of 10 years ago did not have to deal with. Setting strategy, other than very generally, for more than three years out is challenging. Today companies have to respond to a stream of short term discontinuities brought on by technological change, disruptive new entrants, growing consumer power and associated brand challenges, regulatory “violence” and a seemingly neverending set of problems arising from culture and behaviours.
If you bring these factors together, chief executives have to rethink the way they lead. They need to empower their organisation to respond to all of these short term changes. If the organisation has to wait for the CEO, or even the regional or business unit head, to make the decision it will be too late. Instead organisations have to have values, behaviours and cultures embedded throughout them such that the leaders “know” that every part of the business will react in the most appropriate way to every new challenge. As LRN would say it’s about giving the company Freedom. “Freedom from” process and miring control systems and “freedom to” react quickly and to be self-determining. But this can only happen when values and culture are truly embedded.
Sally: Historically, leaders have typically adopted command and control techniques, but we are seeing a shift towards approaches which instead engage those in the organisation to deliver. Some of our most successful leaders today are highly authentic in their style and really demonstrate that they are listening to not only their customers, but their stakeholders in the widest possible sense. They are genuinely listening and acting on what they hear as opposed to just giving this impression.
In Retail there has been massive change, particularly in the grocery sector. If you read the opening statements of some of the new chief executives that have been appointed it is clear. For example, the new CEO of Morrisons’ first message to staff and customers was “My goal is to listen as hard as I possibly can to as many of our customers as I can… I am very eager to learn.” And everything he has done, and the way he has unwrapped the strategy of the business, has all been centred around that philosophy and approach. I suspect this is quite different to what would have been said 10 years ago.”
Richard: As organisations become more complex and more values led, so we will see more chief executives being promoted from within. Internal appointees will have proven that they believe the values and live the culture. The risks of an external appointment will be even greater than they are now. And they will likely lead for longer, rather than for short bursts. In general, I think we will see the tenure of CEOs increasing.
You don’t get good behaviours just by telling people what the rules are – everyone in banking knows the rules, they have been trained and they all have the booklet, but in some cases they have not been applied. So it’s not about the rules, it’s about the culture, the beliefs and the behaviour sets inside organisations. That’s what CEOs of the future will be gripping. It’s all about those immutable things that make great CEOs: passion, engagement, followership and empowerment.
Sally: Given that culture is so important you want someone to have had experience in a variety of different businesses and environments, but also a variety of different functional areas within an organisation. A trend that will only continue to grow, is the way in which people are moving between functions before being appointed in to general management roles. In the retail sector it used to be that you would come up within operations or you would come up within commercial. Now, particularly because of the level of digital progression, general management capability is required earlier on in one’s career, in addition to a degree of intellectual flexibility. All of this suggests more cross-functional moves and more moves between different businesses – which plays in to the expectations of Millennials versus their predecessors.
Richard: The great leaders will be agile. They will be able to use their past experiences to help them deal with new, first time challenges. They will be intellectually curious and will encourage their organisations to be curious. They will be at ease with ambiguity and with paradox. That probably means that leaders will have had a wide variety of experience in their lives, both personal and professional. They will have worked in different cultures, in different areas of their companies. They may have worked for many different organisations early in their career. This breadth of experience and the different perspectives they will have built will underpin their agility. Furthermore they will have a broad understanding of the breadth of stakeholders that are important to a company’s sustained success and will ensure that they are heard and considered as they set strategies and make decisions.
A CEO of the future needs to be someone that knows that they will never know enough, and therefore are constantly learning and striving to learn and find new things. That hunger for learning and growth is important in leaders.
Max: When leaders get to the top of any organisation, the experience that they are most often lacking is how to make decisions around big trade-offs. For example; “do we spend 10 million on X, or do we spend 10 million on Y?”
Big companies used to be organised by separate business units, and that gave opportunities for people to climb little mountains before they climbed the big mountain. Nowadays with so many organisations having matrix structures, everything is flatter and more integrated so it is more difficult for people to find those roles where they are forced to make a decision. They need the experience of having to stick their neck out and make a judgement call on something where you don’t have all the information you would ideally have to justify the decision. It’s becoming increasingly difficult for people to find the right experiences to practice doing that and so future CEOs need to proactively learn decisiveness as well as developing this skill in their teams.
Richard: You might not see people called ‘chief executive’ any longer, because large organisations will become so complex that one single person won’t be able to run them. It may not go that far, but you will probably have to have a team of people who between them share the accountability of running these incredibly complex businesses. And not the kind of hierarchical team that we might see at the moment in Executive Committees, but a genuine sharing of responsibility. There will probably always be a CEO, but increasingly it will be a team that is almost equal in weight and authority, rather than just one person sitting atop an organisation.
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