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CEOs Re-examine their Models and Skills

One of the key lessons learned from the 2008 meltdown and ensuing “Great Recession” is that the business models of most leaders were shaken to the core. And why not? The stock market fell 40% and the global economy lost 35 million jobs as 45% of its wealth evaporated.

The Changing Landscape.  The 2010 IBM Global CEO Study, a survey of over 1,500 business leaders in 60 countries, tells us that the focus on “what’s really important” has shifted dramatically. Change is no longer the most pressing issue. For 90% of CEOs, the paramount concern is now complexity – how to operate in a more volatile, unpredictable, structurally different world. And over half doubt their ability to manage it.

Given that 79% of CEOs anticipate even greater complexity ahead and over half believe their organizations are “not effective” in the areas of strategy, information integration and risk/opportunity management, it’s not surprising they are purposefully seeking to “modify” their business models to address rapidly changing circumstances. Ed Lonegan, CEO of Diversey Inc., sums up the feeling of the respondents: “The complexity our organization must master over the next five years is off the charts – a 100 on a scale from 1 to 5.”

Strategic Intelligence and Foresight.  Reflecting this primary concern, CEOs believe new leadership qualities are needed to confront the new realities, especially as tenure in the corner office becomes shorter and shorter. Since a staggering number of CEOs describe their companies as “data rich but insight poor,” they readily acknowledge that planning and innovation are the key skills required in the C-suite today.

What is needed, more than ever, is strategic intelligence and systems thinking – the ability to both read and re-engineer the organization’s DNA, scan for threats and opportunities and construct scenarios of different futures. In so doing, CEOs must shed out-dated beliefs and practices that are simply incapable of working in times of vicious uncertainty. They require a major overhaul, if not outright retirement. And the IBM study indicates that CEOs worldwide are now more receptive to messengers who think differently.

Blind Spots and Decision Traps.  The IBM report tells us “New threats and emerging opportunities require an ability to see around corners, obliterate blind spots, act despite uncertainty and then start all over again.” The blind spots are more than just a hard-wired consequence of the human condition; it is perhaps moreso an occupational pathology of CEOdom. People believe in their own infallibility in a ratio consistent with their power – the higher they get, the more those around them say “you’re right.” And the less they’re contradicted. This is a recipe for disaster.

Apart from discovering the antidote to “the CEO disease,” today’s leaders must insist on unfettered information sharing, robust dissent and smarter decision methods and tools. They need to know how to foster an environment where the debate is about what is right, not who is right. They need to know what questions to ask, how to utilize experts and when to prudently risk assets to ensure a brighter future.

Where To From Here?  CEOs dealing first hand with the reality of greater complexity, increasing worker disengagement, higher customer expectations and incessant stakeholder demands don’t need the IBM study to tell them what they likely already know. Which is that we live in difficult, troubling, unpredictable and cynical times. Life is not fair, talent doesn’t always count, dedication guarantees nothing, and stuff happens. 

So they need to face an inevitable conclusion: it’s time to “go back to school” to develop new skill sets, savvy insights and the strategic planning tools needed to create a different blueprint for both building and leading more agile, resilient enterprises. Because, in our “black swan” world of largely unavoidable catastrophes, if you’re not rethinking and re-engineering your game, you’re living on borrowed time. 

If learning begins with doubt, the prognosis is optimistic. Knowing what we don’t know is the beginning of wisdom. Embracing our fallibility helps us think more creatively. The cure for complexity is simplicity, from whence comes greater understanding and focus. Learning how to achieve this critically important new focus in business today constitutes the “new rules” for changing the game and ultimate success.

Jim Murray
CEO, optimal solutions international
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