In today’s changed business world CEOs are confronted by five unique challenges. From leading in a VUCA environment to managing a new generation of millennials, CEO 3.0 is learning how to overcome them.
• Rapid technological change and increased inter-connectedness of economies are presenting a number of new challenges to CEOs, requiring them to be more adaptable and resilient.
• CEOs are required to be increasingly commercially aware and technologically proficient.
• There is also the expectation of CEOs to become more approachable with the emergence of millennials into the workforce, yet be confident in their vision and robust to high-impact events.
• CEO 3.0 continues to face very different challenges from those that confronted their predecessors. To be effective leaders CEOs must continually adapt and learn how to manage them more effectively.
1. Managing in a VUCA World
CEOs now face a volatile, uncertain, complex and ambiguous (VUCA) world. Whether it’s market volatility caused by fears of a Chinese slowdown or uncertainty over when the US Federal Reserve will raise interest rates, the increased frequency and inter-connectedness of these high-impact events are affecting businesses around the world in new and complex ways. What’s more, they are taking place against the backdrop of unprecedented technological change that is upending whole industries in the blink of an eye.
So how can leaders possibly navigate through this VUCA world?
CEOs are managing in a VUCA world by being both adaptable and resilient. Firstly, CEO 3.0 has made some fundamental changes to how they source information, make decisions and adapt to new and emerging situations. Key to this has been their harnessing the power of peripheral vision to continuously scan the environment, read signals and act at the appropriate time. In particular, they assess how fast the changes can happen, to what degree they are relevant to their own business and whether the changes can have a narrow or a broad impact.
Secondly, CEO 3.0 has realised that forecasting the future is now an almost impossible task. While there remains a need to have a long-term vision and a clear definition of the organisation’s core, CEO 3.0 has switched to shorter planning cycles. For example, Indian e-commerce pioneer Snapdeal develops its business targets every fourth month. The organisational goals are set at the beginning of each trimester and they are immediately cascaded to the functional, team and individual level.
In addition to these shorter planning cycles, CEO 3.0 has learnt to supplement their primary strategies with contingency plans that can be triggered at short notice should circumstances change.
Finally, as competitive advantage becomes increasingly ephemeral, CEOs are no longer waiting for one hundred percent certainty before taking a decision. Rather, they are testing new ideas in the real world and improving upon them based on continuous feedback loops.
The name of the game is, therefore, to be both adaptable and resilient, and develop a frame of mind that is in a constant state of readiness to face emerging challenges.
2. Managing transparency
CEOs of earlier generations operated in an environment where the boardroom was largely impervious and their decisions were rarely challenged. Today’s leaders live in glass houses by comparison, under continual scrutiny and surveillance. Technological innovations, particularly the rise of social and digital media, are contributing to a perpetual sense of urgency and increased pressure for transparency.
CEO 3.0 has had to acquire a new level of awareness and a different skill set to manage this higher degree of transparency.
They have recognised the need to be more aware of the outside world and its influence than ever before, while at the same time they have strived to understand how to better interact, shape, and respond to it.
In this regard CEO 3.0 has embraced new tools like social media as an effective way of engaging both internal and external audiences, while appreciating that they can also become a platform for criticism of their organisation and their leadership.
Embracing new digital and social tools is key to managing transparency in the changed world. D Shivakumar, PepsiCo India’s CEO and Chairman, advocates daily ‘digital listening’ to track consumer sentiment around the company’s brands. This flags-up potential issues early on before they turn into an uncontrollable media storm.
Similarly, Google’s leadership have developed a system for internal listening through their weekly all-staff ‘TGIF’ meetings. During these meetings the CEO, founders and corporate leaders update the entire company on the latest developments and answer challenging questions from employees around the world.
3. Managing paradoxes
As well as contending with a VUCA world and heightened transparency, CEOs also have to manage the paradox of being both human and hero.
On the one hand, the public and employees want their leaders to be more approachable, engaged and caring - to show their “human” side. While on the other hand, they want them to set out a confident vision of the future and take authoritative decisions where required.
CEOs now have to manage the paradox of being both human and hero.
To address this paradox CEO 3.0 has learnt to combine confidence and humility. For example, the decision of Flipkart’s leaders to publicly apologise following problems with its Big Billion Day Sale last year showed the benefits of quickly taking personal responsibility.
Although doubt was often criticised as a sign of weakness by earlier generations of CEO, it can also help leaders become more aware and more inclined to challenge their own thinking. CEO 3.0 puts a positive twist on doubt and uses the questions it raises to first test their ideas. This process of validation subsequently allows them to communicate their final decision with greater personal conviction.
4. Managing at 3-speeds
In today’s world leaders are contending with many powerful forces including the rise of new middle-class consumers in emerging markets, complex geopolitical issues and unprecedented technological disruption.
These external forces require CEOs to manage at 3-speeds. At one speed CEO 3.0 manages the existing business under its current business model. At a second speed, they cultivate emerging businesses that leverage new innovations or exploit new market opportunities. While at another third speed they concurrently nurture experimental research and idea generation about as-yet-unthought-of businesses of the future.
CEO 3.0 is effectively managing the needs of today's business, new emerging opportunities and not yet thought of businesses.
Take for example the retail sector in India, where the established brick and mortar businesses were in rapid expansion mode until online retail arrived. In response, players have tried to rapidly incubate an online business while managing the ongoing growth in the existing operations. However, the integration of online and offline is likely to evolve further in as yet unimagined ways as technology becomes more pervasive. To prepare for this business of the future, resources need to be allocated to track nascent trends and conceptualise new businesses.
5. Managing Millennials
Fifth and finally, CEO 3.0 is mastering the skills required to manage an emerging generation of millennials that are redefining the workplace.
Millennials have already overtaken Gen X as the largest generation in the American workforce earlier this year. Given India’s younger demographic profile, managing and motivating this generation - with their profoundly different needs and expectations for work - will be even more important.
Managing and motivating millennials is very different from managing earlier generations.
For example, RPG Enterprises Chairman Harsh Goenka sent a message to its 20,000 employees to just call him 'Harsh', adding a dose of informality in the workplace.
The first step for CEO 3.0 has been to create an environment of openness and collaboration that allows them to listen and seek out expertise and advice at every level of the organisation. This itself appeals to millennials desire to have their voice heard.
Furthermore, the recency of many technologies has meant that younger ‘digital natives’ are often more expert in using them. Take for example the growth of data science in recent years. The insights it generates through advanced analytics tools often appear counter-intuitive to long-serving managers with their experience-based understanding.
As a result, CEO 3.0 embraces systems of reverse mentoring that allows managers to get up to speed with new trends and developments via younger colleagues, aiding both their personal development and the organisation’s progress.
The five challenges that CEO 3.0 has to face are very different from those that confronted their predecessors. To be effective leaders CEOs must continually adapt and learn how to manage them more effectively.