The dominant internal issues for CEOs and Board-level directors continue to be around skills, productivity and building a culture which drives high performance. The Chief People Officer (CPO) is more important than ever before, in that it’s a role that touches every part of an organisation.    

It’s not an easy task. In a poll taken at Criticaleye’s CEO Retreat, held in partnership with AlixPartners, Concentrix, Eton Bridge Partners and eightfold.ai, attendees were asked to identify the biggest risks for their businesses. ‘Geopolitics’ was identified as the main threat, followed by ‘pace’, ‘stagnation’ and ‘talent’.

Tim Roberts, Partner & Managing Director at AlixPartners, discussed the complexity faced by both CEOs and Boards. “The idea of classical strategy development is over; it’s no longer fit for purpose in this rapidly changing business world. You can no longer lead a business by analysing the forces at work in your industry, mapping out where you have a competitive advantage, codifying that into your strategy and relaxing as it’s rolled out over the next three to five-year period.”

There is a degree of nervousness too, as CEOs reflect on the new wave of technology and what it means for their business models. Referring to findings in AlixPartners’ latest Disruption Index research report, Tim said that “in the past year senior executives have flipped over into thinking they are more likely to be disrupted, so adopting a more defensive posture, versus seeing themselves as the disrupter”.

In some ways, CEOs are having to become masters of operating at multiple speeds simultaneously. Sean Latus, Group CEO of Calisen, a smart energy technology business, said: “Given the volatility in the market, you can see more scrutiny from the Board around short-term performance. There are questions about how the business is changing and adapting to meet these short-term challenges, so I think you have to be able to get the balance right around performance and longer-term strategy.”

Nathan Coe, Group CEO of Auto Trader Group, a technology company in the automotive market, said: “You do have to evolve your business model and your culture. There are mistakes on both sides of that evolution. Sometimes, you can be too bold, which results in you prematurely abandoning the very thing that has made you successful. On the flipside, if you are too slow or complacent, you might get caught up by disruptors.”

The role of the CEO is to judge the pace of the changes that need to be made. He said: “We're incredibly long-term focused and that is the nature of the business. If you try to be short-term focused in a subscription-based marketplace, you can find yourself chasing your tail.

“We build software and technology and, despite what is often said, these never happen quickly. If you're going after AI, or if you want to look at redesigning a website or building another service, you're typically undertaking a three to five to ten-year journey."

At the same time, Nathan explained how the business is nimble: “We’re quite flexible on strategy, which enables us to be quick on understanding what it is we need to build next and that’s where the organisation is unique. There’s a fluidity in how our software engineering works so that we can reshape the organisation around priorities much faster than many other organisations can.”

Sean described the line that must be walked between ensuring the core business is performing, but also knowing when to push innovation. He said: “When we think about the level of risk and unpredictability in the market, our approach has been to focus on the core parts of the business and make sure they’re anchored to who we are and what we do.

“It's then a case of being careful about the incremental risks that we're taking beyond that core. I do think it’s important to not take on too much risk at the moment as you need capacity to deal with the unexpected risks, which do seem to occur more frequently in the current climate.”
 
Risk and Reward

The Board has a powerful role to play in such discussions. Fiona Ross, a Board Mentor at Criticaleye and Chair of CIÉ, the largest provider of public transport in the Republic of Ireland, argued that a shift in thinking is necessary when evaluating risk.

She explained: “I do think you need to ask yourself the question: ‘How many of your risks are actually issues, or are very close to tipping into that?’ We put so much effort into building a process around risk management that if they've actually tipped over into issues, then it’s a different activity that you’d undertake. I think that's certainly an important point on risk.

“So, I do think you have to prioritise and calibrate as not all risks are created equal. Some will have a similar impact, so not having a succession plan and struggling to recruit a new CEO is pretty significant. However, it does vary and at the same time you need to try to not be blindsided by a possibly low-level risk that could have a huge reputational impact.”

Matthew Blagg, CEO of Criticaleye, reflected on what CEOs and Chairs can achieve when they trust one another and are open to contrasting perspectives. He said: “The risk agenda looms large in numerous organisations, whether it’s driven by technology, people and talent, geopolitics or economics. The danger in this environment is that CEOs and Boards become so defensive and inward-looking that they lose sight of what’s going to drive growth.”

While acknowledging the complexity, Matthew noted that the great Boards and leaders are forward-thinking and embrace external benchmarks or reference points. He continued: “There is a recognition that they don't necessarily have all the skills around the table, so they will look for catalysts to create new ideas and insights. When you don't do that, I think it does limit the debate.”

It’s a new reality for businesses and some executive and independent directors will need to shift their mindset. Fiona commented: “Boards tend to be quite formulaic in the way papers are gone through and the setting of agendas. So, it can be challenging to try to do or think differently about something. Anyone involved on a Board will know each one has its own rhythm and that can make it difficult to create a new agenda item.”

As for CEOs, it falls on their shoulders to try to lead in a world of mixed signals, galvanising stakeholders and deciding on when and where to take risks.  

The successful ones understand that they will not be able to do it on their own.


Marc Barber, Director of Content, Criticaleye