If there is one thing that can block the life of a company, it is not having clarity about when and how certain decisions are to be made. This is not surprising, because decision making is so critical that it can be somewhat contradictory. For example, Sir Francis Bacon stated that "the prerequisite of success is promptness in decisions", but if we go to Franz Kafka we can read that "to reflect calmly, very calmly, is better than to make decisions". And it is between the paralysis of analysis and the mistake of making hasty decisions that top business leaders are at risk every day.
Recently, the renowned consulting firm EY has published a study about the roles in the C-Suite levels (top management of each area) of companies, and how they have to address their own structure in the changing environment of challenges they face. "The market demands that large companies innovate differently, embrace digital, create ecosystems and transform customer relationships at a dizzying pace," say the authors of the study. An environment in which rewards on successful decisions are "exponential," but mistakes quickly lead to "irrelevance." Are C-levels structured in a manner commensurate with this challenge?
The top managers themselves are not entirely convinced that their structure is the most appropriate. Among both C-suite executives and board members (who need not be the same), the response is very similar: more than half believe that their structures only partially meet the challenges of the future, and almost one in ten believe that they are not at all prepared to meet the challenges of the immediate future. When company investors are asked, more than 60% of respondents believe that their companies are only moderately, but not fully, prepared for the "disruption market".
"Today's C-suite model is a legacy of the post-war period, a very different time. In 1964, the average stay of a company in the S&P 500 was 33 years; today, it is 22 years and heading for 12 years by 2027 . It is not surprising, then, that two-thirds of our study participants conclude that the legacy C-suite model is not well suited to the imperatives of the next decade," argues the study's executive summary.
The consequences are already immediate and measurable in a large number of companies, as the vast majority of CEOs in the companies surveyed have added at least one new C-level position in the last five years. The main additions have to do, logically, with what are seen as new priorities in today's market: innovation, digital and strategy. Specifically, 1 in 5 have added aChief Innovation Officer, 1 in 6 (15%) have added aChief Digital Officer, and almost as many (14%) have added aChief Strategy Officer. The other profiles on this select list are Chief Data Officer(Data, 9%),Ethics (Ethics, 7%),Growth (Growth, 6%) and Risk (Risk, 5%).
Of course, the changes will continue and will deepen, to the extent that one in three CEOs say yes: that there will be new hires and that there will also be changes in profiles. And at this point we must draw attention to two issues: one, that a large part of these changes are aimed at strengthening the Customer Experience; and two, that here we do note certain tensions between the approaches that can be adopted by the C-Suite, boards of directors and investors. Watch out, the dance begins.
All three blocks mostly agree (more than 50% in all cases) that the Chief Digital Transformation Officer is a safe and necessary addition in the coming years. However, for both boards (40%) and investors (37%) it is not as clear as for the C-Suite (53%) that a Chief Innovation Officer should be added. In turn, boards are weak on two areas: Artificial Intelligence, 54% support compared to 49% of investors and 43% of C-levels; and data science, which would require a C-Suite according to 9 out of 20 board members (45%), compared to 40% among investors, and only 33% among current C-levels.
Consequences for CEOs? The answer is almost unanimous: their job will be more difficult, "requiring them to have expertise in many areas that were not previously in the scope of their expected competencies". Thus, CEOs will have to "be able to develop and access a broader ecosystem, bring it in from the outside, to fill knowledge and capability gaps, and surround themselves with people who bring all kinds of diversity to ensure more innovative results."
"Gone are the days of Peter Drucker and the belief that anyone can be the CEO of any company," says one participant. "In the era of the Fourth Industrial Revolution (...) The next CEO, in addition to having qualities such as integrity and high values, must be a subject matter expert."
This has a direct impact on the current (and outdated) C-Suite model. Whoever wants to prosper in the next decade must reduce the decision-making hierarchy and create a kind of hybrid C-B-Suite (top management and board of directors), which must also include the voice of the investor and the customer. Even the possibility of a "rotating CEO" is on the table, a figure that is completely disruptive to the current management composition of companies.
Are leaders prepared for something like this? Maybe not so much changes either. As the Welsh proverb says: "If you want to be a leader, you must be a bridge. That is what the market is asking for: top managers who are able to function as bridges between all stakeholders, who generate intelligent, effective decisions and who respond to the market with a broader vision than has been the case to date.
Photo by Jake Melara on Unsplash
