What tradeoffs are CEOs making this year?

The Debrief: Perspectives on leadership and transformation

Issue 1
One thing that’s clear about 2017 thus far: It’s a time of unprecedented uncertainty and upheaval. CEOs are dealing with shifts in the fundamentals of their industries, unfamiliar policy risks, a changing workforce, and acceleration on every front.

With Q2 underway, we asked leaders at SYPartners: What tradeoffs are CEOs making this year? Here’s what they’re seeing in the field:

Neutrality vs. Taking a stand

As the Hamilton lyric goes: “If you stand for nothing Burr, what will you fall for?”

If this year’s Super Bowl commercials or Mark Zuckerberg’s letter to the community are any indication, organizations are facing a new paradigm around their role in, and responsibilities to, society.

“In the past, being neutral as an organization was a viable path,” Robert Hildreth says, “But the societal changes today are so vast and significant, CEOs are being forced to declare what they believe.”

Barbara Pantuso recalls a recent correspondence with the leadership team of a hospitality company about this very tradeoff. They confided: “We’re not sure how to navigate this reality. Do we stand up for what we believe in, even if it alienates those who don’t share our values?”

To face this challenge, Richard Steele says this year, CEOs will be spending more time with their CMOs to figure out how their brand can convey their core values. “There has never been a better time for leaders to revisit their company’s purpose, brand, and culture and ask, ‘What have we always been true to?’ and then use that truth to steer through volatile times.”

Numbers-driven vs. Purpose-driven

As organizations take a stand, leaders start to reconceive their roles.

“The model of capitalism we have now — which is largely about meeting quarterly earnings expectations — is changing,” Barbara explains, “And CEOs are recognizing their role goes well beyond financial performance. They may have to take a hit in the short term so they can plant seeds for longer-term gains — be it environmental, societal, or aligning around a purpose.”

This is true even in the financial services industry. She reflects on recent conversations with executive leaders at an insurance company who are realizing that operating in a massively changing world with increasingly interconnected global risk means they have to look outside the numbers, and ask: How are humans changing? What do humans value?

“It’s a bit of an identity crisis,” Barbara adds, “To find their place in the market, they have to tap into their own humanity, and that of the people they serve, to find deeper meaning in the work they do.”

Near-term pressures vs. Long-term transformation

What if you have a bold future vision, but need to focus on short-term moves when budgets are tight?

This is the tradeoff Nicolas Maitret is facing alongside a large service organization. The best way forward for them, he explains, is to increase their short-term performance — so they have the means to keep investing — but to do so in a way that points towards long-term transformation.

“Imagine, for example, that you have to transform your brand in a dramatic way, but can’t yet invest in such a change. As you think about upcoming marketing campaigns, can you craft a message, tone, and creative that hints at — and tests — the long-term vision?”

In other words, Nicolas says, “How might you use short-term moves to prototype what the bigger long-view move might be?”

Rapid culture change vs. Constant culture change

Especially in Silicon Valley, time and speed are the prevailing themes Chris Mark is being consulted about — as tech companies struggle to accelerate product-release cycles and shape new markets.

But the solution many leaders are jumping to — rapidly reinventing their culture to deal with speed — might be a problem in itself.

Chris explains: “The key is not so much rapid culture change, as it is rapid prototyping to enable an agile approach to change—and therefore an agile culture.”

For example, instead of calling an all-hands meeting to declare a new set of behaviors that will help the organization move faster, leaders should look for specific areas within teams or workflows to try out new behaviors and see what works. Or, leaders can consider what’s working in one part of the organization that might be valuable to another (e.g., Sales teams are used to moving fast. What can we learn from them? They’re also closest to the customer. What insights about customers would help us make better decisions, faster?).

Executive vs. Team

Imagine a company embarking on a massive digital transformation. The CIO is about to make an enormous investment that will greatly impact stores and customers. The CIO then admits that he rarely meets with the Head of Retail.

Chris recently encountered this scenario. Turns out, it isn’t uncommon.

In the past, Chris explains, “Leaders would work their way up by mastering control over their own function. But they weren’t necessarily trained on (or rewarded for) operating with their peers on the executive team. They behave more like an association than as a true team.”

It’s no surprise, then, that in a live poll at a recent conference Barbara attended for CEOs in health care, the greatest challenge CEOs faced was building trust in high-performing executive leadership teams.

In an increasingly integrated world, the challenge of inventing something wholly new requires a brain-meld of different functions and expertise. More and more, leaders are asking SYP: What should high-performing executive teams really look like?

SYPartners Contributors: Robert Hildreth, Principal; Nicolas Maitret, Principal; Chris Mark, Principal; Barbara Pantuso, Principal; Richard Steele, Principal