With the initial green shoots of recovery beginning to appear and the IMF forecasting an increase in the UK’s GDP of 1.9% in 2014, it’s surprising that the CEOs we speak to are anything but comfortable.
Finding strong business leaders has always been a challenge. It takes a unique combination of skill and personality to take the top job. Many of us are seeing our markets disrupted through some combination of regulation, consolidation or technology, and facing substantial change just to maintain market share. For the past five years, these efforts have been played out against a backdrop of zero growth and considerable austerity.
Pioneering leaders are needed to ensure organisations stay ahead and this requires real insight into the subtleties of the market place and a radar for what’s coming next. CEOs therefore need a head for dealing with the risk that comes hand-in-hand with innovation and change, the courage to make those decisions, the teams to implement them, and, of course, some luck to make it through.
EMC Leader 2020 describes the context of this change, with over two thirds of CXOs being disrupted by technology, new market entrants and regulation.
In this context, clear and decisive leadership is the order of the day. Indeed, 85 per cent of CXOs claim they’re ready to embrace change, yet over half report they find it hard to handle, which becomes problematic for the CEO.
We found that two-thirds of respondents have reported widespread market disruption and a big problem of this is analysis paralysis, a significant focus on consensus, analysis and data gathering that slows the decision making process.
Despite the fact that most organisations recognise the need for major change, 99 per cent of CXOs said that their senior management team’s inability to make decisions is caused by it to some degree.
Evolve or die
However, a business must change or it will stagnate, and this is why leaders have no choice but to evolve or die. The challenge for modern CEOs is to build a culture of innovation that is both top-down and bottom-up, drawing on the broadest possible pool of talent in a business’ ecosystem. Whether this comes from a company’s own staff, its partners, and subsidiaries, or even further afield.
The CEO needs to nurture innovation and therefore develop a leadership team that will encourage change and allow staff to try new things. However, business leaders also need to find the right balance between providing a clear governance framework and giving staff free reign.
Another challenge for the CEO is the inability to keep up with the accelerated changes brought about by rapid technology developments. Over three quarters of CXOs think the senior management team has a conservative approach to implementing major change and half of them believe they are “rooted in the past”. This makes it very difficult to challenge and embrace innovation.
With regards to skills in this sector, there is definitely a shortfall in CXO skills on technology. UK business leaders agree that a better understanding of technology within the senior management team was important for future growth. Alarmingly fewer than half are building technology skills into succession planning or making it a requirement for recruitment.
Fundamentally, business leadership pressures are starker than ever before. Many CEOs have clearly been unable to meet the ambitious terms of their engagements, and deliver the turnarounds in challenging and changing markets. There is no single formula for success. Instead complexity and challenge will continue to be core components of the everyday reality of business over the next decade.
Albert Einstein defined insanity as doing the same thing over and over again, expecting a different result. It seems that too many organisations have agreed with this ethos and assumed, that if they just carry on doing much of the same thing, results will continue.
As fond as we are of Albert’s E=MC2 theory, I’d suggest that, for a CEO, insanity is doing the same thing over and over again expecting anything other than extinction.
James Petter is UK managing director at EMC.
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