Miles To Go
Volume 2 | Issue 1 | Winter 2015
Eight Reasons Why Being CEO in 2015 Will Be Tougher Than Ever Before
As CEOs seek to push performance in the coming year, the top of their agenda is dominated by threats and opportunities taking on a greater urgency than ever before. From managing the demands of their boards and activist investors to effectively leading a sprawling global organization, the CEO’s job has never been tougher.
Some of the factors contributing to the extremely challenging role of the CEO in 2015 will be:
- Cybersecurity and job security: Failure to manage the threat of cyberattacks is the kind of thing that CEOs get fired for – we’ve seen it this past year – and the real concerns around this have only just begun. As attacks have moved beyond the financial sector to other high-profile companies, there will be transformational change in the way companies secure themselves and how much they spend on security. The silver lining is that this investment will drive accelerated innovation and change that will benefit consumers.
- Hard-charging activist community: We are in a new era of corporate activism: what were once “barbarians at the gate” are now the cheered-on advocates for shareholders – much to the despair of CEOs and boards everywhere. Activists have a sense of confidence and purpose like never before, and are taking on companies no matter their size, brand, or stock performance – even targeting those who outperform the stock market.
- Capitalizing on the next emerging market – the U.S.: While most of the news in growth over the past few years has been all about China, Uncle Sam is waking up and in a big new way. The U.S. is becoming a petro economy with the discovery of shale gas and then the liquids that go with it. We are seeing a resurgence in the marketplace – from the Gulf Coast’s investing billions in chemicals to the southern states’ becoming the “new Detroit.” The fall in oil prices and the slow but steady comeback of the housing market is creating an urgent opportunity for many companies who have been looking for growth in emerging markets – and CEOs may find the real growth is right under their feet.
- Pressure to grow: The productivity agenda that reigned since the global financial crisis began has been extremely effective, but there is now massive pressure on CEOs to grow their companies. Investors are calling for more capital expenditures, and are also pushing for M&A to accelerate growth. We’ve seen M&A levels rise to unprecedented levels, and CEOs are on the constant look-out for more acquisition opportunities.
- Need for global talent: We are coming to the end of the dominance of the executive with purely U.S. experience. Boards today are demanding global experience and capabilities in a whole new way – and this is not as simple as doing a short stint in Western Europe. Emerging markets and Asia experiences are at a premium. The future will be about developing truly global executive talent, and the CEO selection criteria will change from “nice to have” global experience to “must have.”
- Creating a culture that unifies the company: When companies entered a new market ten years ago, it was all about establishing a presence and using expats to set up shop. Today, it is about localizing talent and using that talent in the specific geography they know best. The challenge for global companies, then, is how to establish and maintain a company culture and values on a global scale with a whole new crop of executives that come from very diverse backgrounds.
- Board impatience: Boards are ousting underperforming CEOs much faster and more aggressively than in years past. There is an urgency around performance metrics, and an expectation on CEOs to be able to shift quickly on strategy. If CEOs cannot ‘take the board on a journey,’ as they say, or cannot engage with the board around his or her leadership vision, then they will likely fail.
- Evolving board committee landscape: A challenge for CEOs is how to continually engage their boards, even as the boardroom landscape changes. One new development is the emergence of new board committees, such as the technology committee, which pushes certain issues up to a board-level area of focus – how does this affect the CEO’s priorities? Also, compensation committees are starting to focus on more than just compensation – taking on things such as talent management and succession planning. CEOs must be constantly attuned to these types of shifts and how this affects their interaction with the board.