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The Chief Executive of Today - Fortune Favours the Bold
CEO Succession - Five Steps to Best Practice
With the world facing the most disruptive period in history, the chief executives of today are either shaping the business models of tomorrow, and creating new growth engines, or watching in horror as their traditional revenue streams dwindle to a trickle.
At Johnson, our role has been to anticipate the rapidly changing direction of commerce, and find leaders who are comfortable with uncertainty. Such leaders are ambidextrous — able to strike out into unchartered territory while simultaneously protecting the core profit-generators needed to fund new business.
The key to surviving and prospering in such an environment is, as always, leadership. And from our firm’s work at the top of the house, we notice that fortune favours those leaders able to imbue a sense of excitement in their teams, as they welcome change with open minds and willing hearts and drive their businesses to rapidly transform their business models to ensure they remain relevant.
The best of these “new chiefs” are ‘global citizens’ who are driven by an insatiable curiosity, often taking themselves out of their places of origin to wherever in the world change is happening, and where they feel they can make a difference. To them, there is no “offshore”, they are simply living and working in “the world” and “home” is wherever the challenge lies.
Take the softly spoken Satya Nadella, whose ambition drove him to leave India with a degree in electrical engineering, and travel to the United States to study computer science, going on to work at Sun Microsystems, before joining Microsoft. He rapidly rose to the top, taking over from Steve Ballmer as CEO just as the Windows franchise was waning, but still being defended at all costs.
Or the New York-born Australian CEO of Westpac, Brian Hartzer, who earned his strategy stripes with First Manhattan Consulting Group in the United States, joined ANZ during a time of transformation, then left for Britain to drive one of the most significant financial services turnarounds of all time at Royal Bank of Scotland in the wake of the global financial crisis.
Hartzer, like Nadella, has vowed to transform his organisation through a relentless focus on customers and technology. Hartzer showed his “digital cred” by posting a selfie of himself with Nadella on the enterprise social networking service, Yammer, while attending the World Economic Forum meeting in Davos, Switzerland.
He has read the best books on robotics and artificial intelligence — The Rise of the Robots, by Martin Ford and The Second Machine Age, by Erik Brynjolfsson and Andrew McAfee — and converses regularly with tech leaders.
Each leader, in their own way, is advancing diversity. Nadella’s appointment reflects a wider acceptance of multiculturalism at the top of United States corporations — he’s just one of a rising wave of Indian leaders — and Hartzer has already hit his target of 50 per cent of leadership roles held by women. The bank is also noted for cultural and generational inclusion.
Richer diversity means a richer exchange of views and is essential for innovation in a creative age. New ideas arise within a culture that fosters greater collaboration, and as “factory age” industries mature and lose their competitive edge, the traditional hierarchies of power are similarly breaking down.
In the past, anyone not “on the bus” would be assessed, marginalised and eventually “managed out”. But now, at a time when the way ahead is not clear, all ideas must be surfaced. This step change in management means fewer managers and more leaders.
Leaders must reassure their teams that they are on a voyage of discovery, with failure a vital part of evolution. Thomas Edison regarded his 3,000 failed theories and experiments discarded on the way to inventing the light bulb as simply “an invention with thousands of different steps”.
We know that command-and-control is out, and collaboration and inclusivity is in. However, the ability to drive innovation is arguably the most sought-after quality. This usually comes from global experience at a senior, transformative level. CEOs need to understand what motivates the many generations currently co-existing in the workplace, with an emphasis on the largest generation ever, the Millennials.
Leading CEOs are often their company’s most prominent brand ambassador. They need not only to generate a strategic vision within, but go beyond the offsite, the whiteboard and the mission statement and to embody the group’s purpose.
Who are these new leaders?
From our experience, the new chief executive for changing times has the following qualities. They are:
Today’s CEO puts the customer at the centre of their strategy, with a true customer obsession key to the fabric of the organisation’s culture and success.
Jeff Bezos of Amazon talks about maintaining a “Day 1” vitality in an organisation to ensure that a company remains relevant and prosperous. “There are many ways to centre a business,” he said in a famous letter to shareholders.2 “You can be competitor-focused, you can be product-focused, you can be technology-focused, you can be business model-focused, and there are more. But in my view, obsessive customer-focus is by far the most protective of Day 1 vitality.”
Why is this? Bezos goes on to explain: “There are many advantages to a customer-centric approach, but here’s the big one. Customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great. Even when they don’t yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf.”
It is no accident that Amazon is now one of the world’s most valuable companies.
Futurists and Innovators
Today’s CEO has a bold vision for the company based on a well-informed view of the future. They need to anticipate what’s ahead of the curve and spot disruptive players anywhere from Silicon Valley to South Africa, who could disintermediate their own key products or delivery channels.
They need to have the strategic nous to craft a strategy which secures the future of the business while ensuring that it remains sufficiently agile to respond to the rapidly changing competitive landscape.
Transformers and silo-busters
A beautiful strategy gets you only so far. It’s no surprise that Harvard Business Review recently named strategy execution as the top concern among today’s business leaders.
Today’s CEO knows that inspiring people around a major transformation is half the battle. Taking them from “we've heard all this before” inertia common in larger enterprises, to the higher ground of a transformation platform, will mean breaking down the walls of bureaucratic thinking, and eliminating hand-break behaviours.
Openness and freedom to speak are essential, as is the need for everyone to see beyond their own cubicle. That may mean adopting the kind of culture exemplified in the famous Ritz-Carlton vision: “To create pride and joy in the workplace, all employees have the right to be involved in the planning of work that affects them.”
Digital natives and technology champions
The disruptive age can push an organisation into irrelevance if they won’t or can’t embrace powerful trends quickly. Jeff Bezos says “If you fight them, you’re probably fighting the future. Embrace them and you have a tailwind.”
The new digitally aware chief executive uses all the technology and data available to extend their understanding of clients and customers and to ensure that business models remain competitive. For example, machine learning and artificial intelligence will have incredible impact over the next decade and leading CEOs are ahead of the curve – testing, trialing and embedding these technologies into all relevant elements of the value chain.
These mega-trends are not hard to see but they can be difficult for large organisations to embrace.
Team builders and culture shapers
The CEO’s choice of leadership team needs to reflect the desired business culture, which today is all about business nous, diversity, and creativity. The team will possess a mix of executives with:
• Learning agility, capable of adapting to an ever-changing competitive landscape
• The ability to articulate the corporate purpose, using a compelling narrative that packages up the vision in an engaging manner
• An understanding of risk not simply in a governance sense, but with the intuitive nose for smelling the smoke under the door before any fire can take hold
• The confidence and humility to liaise with employees, analysts, government, and the wider community with equal comfortability
• An understanding of people from all cultures and backgrounds, from the analytical to the artistic, and how to create an atmosphere of harmony
The ability to assess people accurately, and to put together the right team for the right objective, is fundamental. Such a leader is not self-conscious, but others-conscious, low in hubris, and abundant in humanity.
Confidence without hubris is the hallmark of the CEOs who are successfully leading the way in this millennium of great change. They do not hold the boardroom at bay, but embrace the collective wisdom that resides within. They are not afraid to confess doubt, or to ask for help.
In the words of one prominent chief executive we spoke to, “I have access to seven incredibly smart people, and I've found that just about any strategic or financial issue can be solved if I am open to a good constructive conversation.” The view from the Chairman is similar: “There is an increasing onus on boards to manage risk and compliance, but this goes way beyond regulatory issues — it now includes culture and strategic risk. I need a CEO open to embracing the board in a true spirit of partnership.”
If the expectations of today’s best CEOs sometimes look unreasonable, let’s admit that they are. But our great CEOs have little respect for status quo and will drive their organisations to succeed while competitors fall away.
Who can forget the inspiring words from Steve Jobs in the 1997 “Think Different” campaign?3 “Because the people who are crazy enough to think they can change the world are the ones who do.”