The end of predictability – emergence of new leaders?
We are living in a world of increasing turbulence and complexity. Not only are we experiencing more changes in both local and global markets – the magnitude of these changes is also increasing.
And there are no signs indicating that this will be any different in years to come. According to a recent annual global study, carried out by IBM nine out of 10 CEOs expect a more turbulent business environment over the next five years, and eight out of 10 CEOs believe that the business environment will become more complex over the next five years.
So, the ability to change and adapt has never been more important.
Growth or predictability
Unfortunately, we are also living in a world where predictability is considered to be a major virtue for publicly traded companies. If a CEO of a major company fails to deliver on a yearly, or even a quarterly basis, his or her ability to lead the company is seriously questioned by financial analytics and investors. As such, CEOs today are measured on their ability to predict their business results.
In many companies the pressure of delivering results on an ongoing basis, and maintaining and increasing the value of the shares (whilst running the business) is compromising the will and ability to grow the business by creating extraordinary breakthroughs. As a result, most CEOs think it’s better to promise little and exceed it, than reach for the stars and almost get there – even though the latter is better for the company in the long run. In short, life has become extremely difficult for CEOs as they are still expected to continue to grow the business despite the increasingly unpredictable and turbulent business environment.
Running and growing the business
The answer is to strengthen the focus on growing the business without losing power and momentum in running the organisation. This can be accomplished by increasing the organisation’s capacity to change because this increases its ability to exploit brief windows of opportunity and/or follow radical changes in the market faster and more efficiently than the competition.
Companies can increase their capacity to change by:
- Implementing more flexible and less hierarchical internal structures (in order to be able to rapidly shift direction and focus)
- Orchestrating more frequent and faster strategy processes and reviews (to continuously have the finger on the pulse of the market and the competitors)
- More consequent leadership - dealing with difficult situations as soon as they emerge
- Having clearer and faster ways of executing decisions
- Accepting mistakes (when the pace increases, so does the percentage of errors and wrong decisions)
As a result, there’s now additional pressure on business leaders and CEOs, as they must now acknowledge:
- The fact that planning takes place on much shorter horizons/timescales - and they must learn to love that.
- They need to make more frequent decisions (a right decision taken yesterday can prove wrong tomorrow).
- And finally, they have to be excellent at dealing with difficult situations.
In short, not a job for the faint-hearted, but at the same time an opportunity for executives to outperform their competitors by showing courageous leadership.
Want to know more?
Please contact ACE - Allied Consultants Europe: Klaus Fjalland +45 2338 0059 or download the full range of articles.