If anything can block the life of a company, it is not having clarity about when and how certain decisions should be made. And this is not surprising, because decision-making is so critical that it can even be contradictory. For example, Sir Francis Bacon stated that "the requirement for success is promptness in decisions," but if we turn to Franz Kafka, we can read that "reflecting calmly, very calmly, is better than making decisions." And it is between analysis paralysis and the mistake of making hasty decisions that top business leaders take risks every day.
Recently, the renowned consulting firm EY published a study on the roles of C-suite executives (senior managers in each area) in companies and how they should approach their own structure in the changing environment of challenges they face. "The market demands that large companies innovate differently, embrace digital technology, create ecosystems, and transform customer relationships at a dizzying pace," say the authors of the study. An environment in which the rewards for successful decisions are "exponential," but mistakes quickly lead to "irrelevance." Are C-levels structured in a way that is consistent with this challenge?
Even top executives themselves are not entirely convinced that their structure is the most appropriate. Among both C-suite executives and board members (who are not necessarily the same people), the response is very similar: more than half believe that their structures are only partially responsive to future challenges, and nearly one in ten believe that they are completely unprepared to face the challenges of the immediate future. When corporate investors are asked, the figure rises to more than 60% of respondents who believe that companies are moderately, but not completely, prepared for the "disruption market."
"Today's C-suite model is a legacy of the postwar period, a very different time. In 1964, the average tenure of a company in the S&P 500 was 33 years; today, it is 22 years and heading toward 12 years by 2027. It is not surprising, then, that two-thirds of the participants in our study conclude that the legacy C-suite model is not well suited to the imperatives of the coming 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 of the companies surveyed have added at least one new C-level position in the last five years. The main additions are, logically, related to what are considered new priorities in today's market: innovation, digital, and strategy. Specifically, one in five have hired aChief Innovation Officer, one in six (15%) have done the same with aChief Digital Officer, and almost the same number (14%) have opted for aChief Strategy Officer. The other profiles on this select list are Chief Data Officers (9%),Chief Ethics Officers(7%),Chief Growth Officers(6%), and Chief Risk Officers (5%).
Of course, the changes will continue and intensify, to the point that one in three CEOs say yes: there will be new hires and there will also be changes in profiles. At this point, we must draw attention to two issues: first, that a large part of these changes are aimed at strengthening the customer experience; and second, that here we do note certain tensions between the approaches that may be adopted by C-suite levels, boards of directors, and investors. Watch out, the dance is about to begin.
The three groups largely agree (more than 50% in all cases) that theChief Digital Transformation Officer is a safe and necessary addition in the coming years. However, both boards (40%) and investors (37%) are not as clear as C-Suite executives (53%) that an innovation manager should be hired. In turn, boards show their weakness for managers in two areas: Artificial Intelligence, with 54% support compared to 49% of investors and 43% of C-level executives; 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-level profiles.
Consequences for CEOs? The answer is almost unanimous: their job will become more difficult, "as they will be required to have experience in many areas that were not previously within their expected remit." Thus, top executives will need to "be able to develop and access a broader ecosystem, incorporating it from outside, to fill gaps in knowledge and capacity, 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 of the participants. "In the era of the Fourth Industrial Revolution (...) The next CEO, in addition to having qualities such as integrity and high values, must be an expert in the field."
This has a direct impact on the current (and outdated) C-Suite model. Anyone who wants to thrive in the next decade must reduce the hierarchy in decision-making and create a kind of hybrid C-B-Suite (senior 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 being considered, a figure that is completely disruptive in the current management structure of companies.
Are leaders prepared for something like this? Perhaps not so much will change. As a Welsh proverb says, "He who wants to be a leader must be a bridge." That is what the market demands: senior managers capable of acting as bridges between all stakeholders, generating intelligent, effective decisions and responding to the market with a broader vision than before.
Photo byJake MelaraonUnsplash
