Despite the IMF forecasting an increase in the UK’s GDP by 1.4% this year and 1.9% in 2014, and initial green shoots of recovery that are beginning to appear, it is clear from the CEOs we speak to that today’s climate is 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 by regulation, consolidation or technology, and are undergoing substantial change in order to keep or grow our market position. For the past five years, these efforts have been played out against a backdrop of zero growth and 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.
A recent piece of research we put out 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% 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% of CXOs said that their senior management team’s inability to make decisions is caused by it to some degree.
The importance of change
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. Unfortunately 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.
The leaders in a business have a responsibility to serve their organisation with the structures, processes and crucially in instilling a culture which supports change at the most fundamental level. Our own CEO, Joe Tucci, has found a structure for change and growth that has seen EMC go from strength to strength. It is in the structures and culture that demonstrate leadership. Nokia and BlackBerry are both seeing out 2013 as shadows of their former selves, on the market for fractions of their all-time highs. They won’t be the last to vanish in the years ahead.