IBM's CEO Sam Palmisano sets the context this way: "In a very short time, we've become aware of global climate change; of the geopolitical issues surrounding energy and water supplies; of the vulnerabilities of supply chains for food, medicine, and even talent; and of sobering threats to global security."
In this complex and interconnected world, what do CEOs like Palmisano worry about? What do they think is essential for future success? What traits do they think their leaders need? Many surveys track the tides of CEO opinion showing us what matters to them and why. Lately these surveys have shown an understandable anxiety about doing business in an increasingly complex, volatile, and unpredictable world. It's not just the Great Recession that worries CEOs; it's a whole range of factors including markets, technology, regulations, globalization, and, yes, talent.
CEOs weigh in
2010's crop of CEO surveys from PricewaterhouseCoopers (PwC), IBM, The Conference Board, and the Business Roundtable reflected a mood of worry as companies struggled to keep profits strong by cutting back on staff and benefits. At the end of 2010, Business Roundtable CEOs said they were less willing to hire new workers than earlier in the year although they did expect to increase capital spending over the next six months?into 2011?to boost productivity. "This is and will continue to be somewhat of a long and uneven recovery," said Ivan Seidenberg, CEO of Verizon Communications, who serves as chairman of the Business Roundtable.
The collective outlook expressed by the global CEOs in a 2010 PwC survey was slightly more optimistic, showing a shift from crisis mode to a growth agenda. Many business leaders are emerging from the recession with a "healthy respect for risk, volatility, and flexibility," the survey found. Responses showed that risk assessment is becoming part of many companies' strategic planning process. "More CEOs intend to change their risk management process than any other element of their strategy, organization, or business model," the report noted.
While many companies in the PwC survey will continue to downsize, more expected to add employees than to cut them in 2011. "CEOs signaled intentions to increase investment in talent, particularly in change management and training programs," the report said. This was in marked contrast to PwC's 2009 CEO survey, which showed more concern about survival than about retaining talent, even though the limited supply of candidates with the right skills was a top concern for 69 percent of those surveyed. In 2009, the top two actions to retain talent were to increase workplace flexibility and redeploy workers inside the organization.
Uncertainty emerged as the top worry of U.S. CEOs surveyed by Vistage International. Its CEO confidence index for the third quarter of 2010, a poll of more than 1,800 executives, showed that while 67 percent believed their companies would post increased sales in 2011, nearly 40 percent cited economic uncertainty as their most pressing issue.
IBM's biannual survey of 1,500 chief executives from 60 countries showed that in 2010, less than half believed their enterprises were adequately prepared to handle a highly volatile, increasingly complex business environment. They confront massive shifts including new government regulations, changes in global economic power centers, accelerated industry transformation, growing volumes of data, and rapidly evolving customer preferences.
More than 60 percent of the CEOs surveyed by IBM believe industry transformation is the top factor contributing to uncertainty. The survey's authors say this finding indicates a need to discover innovative ways of managing an organization's structure, finances, people, and strategy.
What will it take?
What will it take to succeed in an increasingly complex and uncertain world? IBM's survey showed that in 2010, CEOs "believe that?more than rigor, management discipline, integrity, or even vision?successfully navigating an increasingly complex world will require creativity."
Frank Kern, senior vice president of IBM Global Business Services, said "....it is remarkable that CEOs identify creativity as the number one leadership competency of the successful enterprise of the future. But step back and think about it, and this is entirely consistent with the other top finding in our study?that the biggest challenge facing enterprises from here on will be the accelerating complexity and the velocity of a world that is operating as a massively interconnected system."
In this complex world, the study noted, CEOs and their teams must "lead with bold creativity, connect with customers in imaginative ways, and design their operations for speed and flexibility to position their organizations for 21st century success." For the CEOs in the IBM survey, creativity trumps all other leadership characteristics. "Creative leaders are comfortable with ambiguity and experimentation. To connect with and inspire a new generation, they lead and interact in entirely new ways." They change their business models to realize their strategies, invite disruptive innovation, and alter the status quo.
Soft skills, such as creativity, have been gaining in importance for leaders over the past decade, and they continue to matter, according to a 2010 survey by the Institute for Corporate Productivity (i4cp) and the American Management Association. It found the following leadership competencies to be of increasing importance:
- change management, agility, and flexibility
- innovation and creativity communication
- team building and collaboration
- emotional intelligence and empathy.
Reporting on the findings, Mark Vickers, i4cp's vice president for research said, "We predicted, based on prior research, that the top answer would be change management, and it was, and we suspected that innovation and communication would be in the top five. But we didn't expect the term 'emotional intelligence' to make that top-five cut." Subsequent research by i4cp found connections between emotional intelligence and leadership competency.
In their book Judgment: How Winning Leaders Make Great Calls, leadership gurus Noel Tichy and Warren Bennis conclude that the essential genome of leadership is judgment. They recommend that leaders need to develop skill and knowledge in three fundamental areas to make good leadership judgments: people - deciding who is on the team or off the team and how to develop those who are on the team; strategy - deciding what direction to take the organization; and crisis - dealing with the inevitable crises that all organizations face.