3 transformations of the CEO role

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Cat Mules

The role of the CEO is changing. Accenture New Zealand’s Strategy and Consulting Lead says today’s CEOs must be able to adapt to specialisation, competition, diversity, and be prepared to earn social trust.

All areas of business have been disrupted by digitisation – with the C-Suite arguably the most affected. Business leaders are now required to understand and oversee the new and far-reaching possibilities created by big data, automation and artificial intelligence (AI).  New executive roles such as Chief Relationship Officer, Chief Privacy Officer, Chief Robotics Officer and Chief Automation Officer are emerging.  PWC predicts that by 2025, CEOs will be overseeing even larger and more diverse executive teams.

Reviewing the forces that have shaped previous business leadership allows us to reflect on what the future might hold for these roles.

Changing industry, marketplace and specialisation

Before the industrial revolution in the early 1800s, managerial practices involved coordinating manpower, resource planning and trade. Projects usually involved small scale teams of workers working on discreet projects.

The industrial revolution fundamentally shifted production. Mass became the business mantra, driven by the challenges of resource scarcity and competition. Focus ramped up on execution, standardised systems, quality control, workflow planning, and basic accounting practices.

It was in around 1917 that the term Chief Executive Officer (CEO) is thought to have first been termed. Referring to the highest-ranking manager, this actor bears responsibility for the enterprise’s success or failure.

As the 19th Century neared its end, industrial capitalism was creating larger and more complex organisations.  Technological innovations such as indoor lighting, steam power and steel production changed business, and consequently management practice.

The role of the CEO became gradually leaner and more corporate – managing a team of highly skilled individuals, who each bring their own set of skills and expectations. Organisations are now being built with a greater breadth of product and service offering, using a deeper focus on technology, with specialist leaders toward increasingly complex programs.

In 1955 only one Fortune 200 company was led by a role titled ‘CEO’, with the term President or Chairman preferred. Over the next 20 years that changed. By 1975 almost all companies were headed by CEOs.

The rise of mass media in the form of television from the 1980s accelerated the profile of CEOs.  They emerged from the backroom to become a visible presence  for their customers and shareholders. Media attention and government scrutiny became the new norm. The 20th Century saw the growing need for CEOs to have a public ‘face’. They were as a result also becoming personally aligned to the purpose, activity and impact of their business.  Suraj Sowki, who leads Accenture New Zealand’s Strategy and Consulting practice, explains the trend towards the CEO as “… a public advocate for their people and their work, and ambassadors of the company’s shared culture, corporate mission, and values.”

Since the early 2000s, the media landscape has expanded public attention and expectations of the CEO. Day-by-day, the CEO presence is becoming virtualised through the use of digital tools such as social media engagement, personalised streaming and up-close features.

Where the digital rubber hits the road, CEOs are today both responding to and shaping market pressures. Contemporary CEOs are expected to own a broad composition of business areas such as legal, compliance, finance, human resources, marketing, operations, sales, and, of course, technology.

Valuing disruption

With digital disruption, a re-evaluation of the traditional CEO role has been triggered.  Now iconic companies like the 1980s Microsoft and Google, or the 2000s Facebook have a new sort of CEO. Emerging CEOs present themselves as less formal, more entrepreneurial, and willing to step into territory of the cult of personality.

The shift from physical to intellectual business assets in the 1900s saw the beginnings of the era of ‘knowledge work’.  In the tech sector, the distinction between tech companies and business in beginning to blur as all businesses have technological dimensions.

Sowki explains the impact of such shifts as far-ranging – as CEOs have to make hard decisions about where to drive their resources. “The pace of technological innovation has meant that CEOs constantly need to evaluate their business models and pay close attention to any emerging competitors.”

“New technologies such as AI, VR, AR and machine learning will disrupt businesses and the composition of workforces”.

“The impact of these technologies on how businesses operates will require CEOs to oversee the reskilling and upskilling of many of their people, and on a scale that previous generations of CEOs never had to contemplate.”

As technology has become more automated and accessible, perspectives at the top have broadened, and CEOs have been able to broaden their strategic frames and sense of responsibility toward more insightful long-term thinking.

“CEOs were once regarded as being somewhat removed from their employees but technology has played a large role in flattening the employment hierarchy,” Sowki says. “It is now commonplace for senior leaders and CEOs to host Ask Me Anything events, engage staff with pulse surveys, and to respond to worker enquiries or concerns directly. CEOs also engage more with their workforces and have increasingly prioritised their wellbeing in the work environment.”

The CEO’s remit has expanded to ensure their staff are protected and prioritised during periods of organisational change. “The CEO of the future will be an enabler of people who prioritises worker wellbeing, inclusion and diversity” Sowki says. “They will have high trust in their workforce and be constantly looking for innovative ways to make their business and their people succeed”.

New capabilities are expected from current and future CEOs. The focus on the social or people aspect is the expanding expectations.  It isn’t a matter of CEOs avoiding disruption, but rather one of embracing it. According to Sowki, “The success of modern CEOs is predicated on their ability to acknowledge and evaluate emerging disruptors, while making sure their people are supported to navigate technological uncertainty.”

Diverse stakeholders

In the 1960s Milton Friedman famously summarised the role of corporate management as “to make as much money as possible” for shareholders, while “conforming to the basic rules of society”.

Today CEOs are required to look beyond the financial bottom line to consider the needs of different stakeholders.  This is not limited to employees, customers and investors.  CEOs are actively involved in driving the company’s social value.  As Sowki says, “Business leaders are coming to recognise that they have a role to play to promote an inclusive and supportive workplace culture and act as ambassadors for those values in society.”

Society expects business to play a greater role in social development than it ever did before. To this point, for Sowki, “In recent years, businesses leaders have been expected to take a stand on important issues of our time such as #MeToo and Black Lives Matter.”

Two years ago, Accenture Strategy’s global survey of some 30,000 consumers had found that 62 percent want companies to have a position on global issues such as sustainability, transparency and fair employment practices. Businesses stepping up to the challenge are well positioned to anticipate and align themselves with future concerns. Consumers are no longer passive. More than half (53%) will complain about a social issue, and almost half (47%) will walk away from the brand if its social position does not align with their own

But CEOs are acknowledging that they need to do better. This year, CEOs recognised that their social commitment needs to get back on track. Accenture’s United Global Compact Study on Sustainability in 2009 saw 93% of CEOs placing sustainability as critical to their future success, whereas ten years on less than a quarter (21%) believed that business plays a critical role in contributing to global goals – a sustainable development agenda set out by governments with business and other stakeholders.

With this comes a new sets of challenges, and calls for new kinds of partnered thinking. As Jim Fitterling, Chief Executive Officer of Dow has said, “The business community’s contributions to mankind are just beginning; there are countless innovations still to be developed and boundless challenges to tackle. But, we have to be willing to collectively drive change.”

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Cat Mules

Umbrellar's Digital Journalist, coming from a background in tech reporting and research. Cat's inspired by the epic potential of tech and helping kiwi innovators share their success stories.

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