Drawing on a decade of research to provide insights for tomorrow’s business leaders
London & New York, 3rd April 2007 – Today’s chief executives shoulder a heavy burden, as they are expected to take on the roles of guide, interpreter and visionary in order to lead their companies to the promised land of business success.
But life at the top can be lonely and many CEOs seek the counsel of trusted outsiders to help shape their vision and validate their strategic course. For example, Andrew Liveris of Dow Chemical Company describes how he typically contacts a group of ‘wise men’. “I think all of us have, in our lives, go-to people like them. Frankly, I think CEOs need them desperately, because it’s a very lonely job”.
These are just some of the findings from a series of candid interviews with business leaders to celebrate the 10th anniversary of the PricewaterhouseCoopers Global CEO Survey. The insights came after a select group of CEOs was asked to review the last decade of surveys and draw some lessons for today and tomorrow.
So what do CEOs need to do to mark them out as the best, not the rest? Briefly, here are some key actions identified by the panel:
- Capture data from every source, both internal and external. Draw on the knowledge of your front-line staff and get it fresh to the boardroom table
- Dedicate specific resources to the analysis of internal and external data sources with a view to understanding their implications for your firm
- Develop your own “filter” which sifts the relevant data from the less relevant, and use third parties inside and outside the company to shape or validate your conclusions
- Rethink your decision-making processes – and question whether in your sector, you are keeping up with pace of change in your industry
- Encourage a culture – at all levels of the organisation – which accepts change as inevitable and which offers incentives to the ‘risk-takers’
The CEOs identified the ability to anticipate change as the single most important responsibility any business leader should have. “To forecast accurately is without doubt the critical skill of a manager and a key determinant of career success”, says Alexander Bulygin, CEO of RUSAL.
“To have a world view and to lead your organisation accordingly makes a massive difference between those companies that can navigate uncertainty successfully and those who won’t”, suggests Ian Bremmer, President, Eurasia Group. And Andrew Liveris, Chairman and CEO of Dow Chemical Company, starkly describes the challenge facing CEOs: “We’re paid to look around not one corner, but two”.
The CEOs see it as vitally important that they personally take the lead in understanding the longer term global trends in their sector, in order to gain and maintain a competitive business advantage. “My prime task is to discern future trends and to formulate the corresponding strategy” says Ma Weihua, President and Chief Executive Officer of China Merchants Bank.
But what of those unforeseen disasters that can upset the best laid plans? Says Ian Bremmer: “A shock in a far flung part of the world can have much more dramatic implications today than it did 10, 20 or 30 years ago. Shocks come faster and they can be bigger. So if you are lousy at predicting shocks it makes it more imperative that the CEO is ahead of the curve on emerging trends”.
The challenge of preparing firms for the future prompted two distinct points of view amongst the CEO group. “The Forecasters” favour devoting specific resources to long-term prediction and scenario planning, arguing that understanding, interpreting and being able to predict global trends are priorities for the head of a company. These business leaders set aside resource specifically for this task and invest substantial time in the forecasting process. Says Chen Yuan of China Development Bank: “I have thought again and again about what kind of things could happen, and how they could develop. As a result, I have developed an increasingly clearer picture of major events.”
Whereas “The Reactors” say it is increasingly difficult to predict the future and it can be a waste of unfocused resource. Instead they prefer to direct their efforts towards the detection and analysis of trends as they emerge and affect their organisation directly. “Nobody can predict the future,” says Jørgen Tang-Jensen, CEO, Velux. “But if you are not good enough at recognising and responding to change you will be punished.”
All the CEOs express strong convictions about the importance of developing flexible organisations which are able to react swiftly to changes in the business environment. Daniel Novegil, CEO of Ternium, says that “the main challenge is to create an organisation that is flexible and nimble enough to deal effectively in a global environment with cultural differences, multiple production locations, a global supply chain process fully-integrated with a commercial network”.
And on the importance of developing a culture that accepts – and even embraces – change, the CEOs see the empowerment of employees as a key ingredient. Many of the CEOs speak of the need to empower their people with the skills and confidence to take the risks associated with responding to global trends and change – and to reward them accordingly. “You need to have people feel comfortable that they can work as hard as they can on a project and know that if it’s not successful, they’re not going to lose their job’ says Paul Jacobs, CEO of QUALCOMM.
When it comes to strategic thinking, there’s a common pattern among the CEOs we spoke to. They often rely on colleagues and their internal teams for three things: data flows, analysis and a view from the front line of the business. But they also draw on external views to shape the vision and validate their strategic course. It’s as if the CEO builds a picture with his home team; and then discusses it with trusted third parties – often outside the formal structures of the firm.
Andrew Liveris of Dow Chemical Company describes how he typically contacts ‘three or four people whom I call “wise men”. These are people with whom you just pick up the phone’. He concludes: “I think all of us have, in our lives, go-to people like them. Frankly, I think CEOs need them desperately, because it’s a very lonely job”.
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This report is the result of an in-depth analysis of the findings of the past 10 PwC Global CEO Surveys, complemented by 11 in-depth interviews with CEOs about their approaches to the opportunities and challenges of the changing world in which they operate. It is based on the findings of historical analysis of the data gathered by PwC over the years. Learn more at www.pwc.com.Tags: CEOs, PwC, Qualcomm, survey