It wasn’t so long ago that a CEO was considered effective if they could keep the board of directors happy, appease shareholders, and steer clear of major reputational issues.
Not so anymore.
The job description for the CEO of today is being crowdsourced, with nearly every segment of society — employees, customers, suppliers, governments, and activists — registering their expectations and demands.
Today’s challenges, from the pandemic to ESG to ongoing efforts to address racial inequity, have only woven business and society more tightly together. Indeed, 86% of CEOs and board members see business and society becoming more interconnected, and two thirds of the American public want CEOs to take a stand on social issues.
To better understand the implications of this shift, our firm, Korn Ferry, spoke with 105 board directors, many of whom are also CEOs, from 311 North American companies across 11 industries.
Our research shows that as the job description for CEOs changes, so too does the playbook for successful leadership. The stakeholder landscape is much more vast and rugged, meaning there’s more room for missteps and error. What was once out of scope is now in scope, forcing difficult decisions about who and what to prioritize. And the skills required to be successful extend beyond traditional command-and-control tactics to things like influencing without formal authority.
If CEOs are to deliver against their new job description, they must become a different type of CEO: an enterprise leader who also stewards the ecosystem in which their business operates, including customers, suppliers, partners, competitors, governments, and their local community. While few CEOs have assumed this role in full — it’s early enough that very few of us have it figured out — our research shows that these five steps are key to getting started:
1. Know the players.
CEOs of the future will need to demonstrate an insatiable appetite for learning like no generation before them.
Much like an ecologist in the Great Barrier Reef would study the interrelationships of birds, corals, fish, and mollusks to one another and to their environment, a CEO must map her ecosystem. While these organisms compete with one another, they are also interdependent. The same is true for the CEO and the broader ecosystem in which she operates, which is why she must seek to understand:
- The strengths, vulnerabilities, and relative contributions of each ecosystem member
- The linkages that make entities dependent on one another
- How outside influences could compromise the ecosystem’s ability to function
- The extent to which ecosystem members are able to adapt to a changing environment
- And perhaps most importantly, where there are opportunities for mutual benefit, competition notwithstanding
CEOs who step into an expanded role leading and shepherding the ecosystem must unite their various stakeholders around an objective that is advantageous for each player individually, as well as for the broader ecosystem. It could be a shared interest or a shared pain point, but more and more, it’s a shared purpose, with companies desiring to enter into mission-driven partnerships that advance business objectives while serving the greater good.
Consider, for example, the Valuable 500, a coalition of 500 CEOs who are innovating for disability inclusion in the workplace, or OneTen, which brings CEOs together with a common goal of advancing one million Black individuals who do not have four-year degrees into family-sustaining careers over the next 10 years.
2. Empower your senior leaders.
Time spent influencing the enterprise ecosystem means time away from running the business. If CEOs are going to move beyond their traditional remits, they need a team that can embrace bigger roles — seasoned talent who have been groomed to not only lead their functions but to be enterprise leaders.
Many CEOs have already gotten better at building an empowered network of leaders, a necessity during Covid, when the pace and volume of change required faster decision making than perhaps ever before. Our research shows that companies would do well to formalize these distributed models. The most effective CEOs focus primarily on inspiring a sense of direction that unleashes collective energy and shared purpose across the organization, rather than involving themselves in day-to-day affairs.
While CEOs will continue to be the accountable ones, they need to become first among equals — empowering their senior leaders to be thought partners, surrogates, and successors who can hold their own with investors, board members, and employees. This is the type of talent that will allow a CEO the time and space to elevate in place and architect both enterprise and ecosystem strategy.
3. Cultivate an enterprise mindset and an ecosystem skillset.
This requires CEOs to consider not only the success of their enterprise but also how they can help architect a healthy network in which their business, and broader society, can thrive.
This combined mindset and skillset emerged for many CEOs at the height of Covid. Consider how some of New York City’s most elite hotels offered free rooms to local health care first responders. While the right thing to do, it was also an ecosystem decision — unless health care professionals were rested and healthy, Covid patients wouldn’t be treated. And unless Covid patients could be treated and vaccines pursued, people would continue to stay at home. With people afraid to travel, the hospitality industry would continue to suffer. In this way, opening hotels to health care workers was a double bottom-line decision, benefiting not just business but the entire hospitality ecosystem and communities at large.
Similarly, an ecosystem skillset enables CEOs to act beyond their typical sphere of influence to build networks that serve both business and broader society. Specifically, today’s CEOs must focus on building four core abilities:
- The ability to be emotionally intelligent — radically human, even — demonstrating curiosity, openness, and vulnerability and responding to others with genuine interest and empathy.
- The ability to balance stakeholder needs, seeking opportunities to generate shared value and to turn competitors into collaborators. Think back to Tim Cook’s (Apple) and Sundar Pichai’s (Google) partnership on Covid contact-tracing technology in early 2020 as a means to help save lives.
- The ability to lead by influence with little to no formal authority, relying on reputation and the respect of peers, a mastery of the ecosystem landscape, a commitment to win-win outcomes, and a willingness to compromise when they aren’t possible.
- The ability to take on a public persona and answer to a much larger group of stakeholders. This requires poise, confidence, fluency in ecosystem issues, and, frankly, thick skin.
4. Build the infrastructure.
While companies are built from the ground up to enable collaboration toward an end goal, ecosystems are often disconnected, made up of discrete parts, often loosely organized, and without formal governance.
CEOs and non-corporate leaders are partnering to fill the void with a superlayer that sits above individual entities and helps to coordinate, if not govern, the efforts of an ecosystem. Industry coalitions, public-private partnerships, and various societal movements are springing up and looking to CEOs for leadership. Entities like the CEO Water Resilience Coalition, the Global Food Safety Initiative, and the Network for Greening the Financial System reflect the desire to impose structure on ecosystem change efforts.
CEO Action for Diversity & Inclusion is one example of an ecosystem effort that has benefitted from being formally organized. The forum was founded “on a shared belief that diversity, equity, and inclusion is a societal issue, not a competitive one, and that collaboration and bold action from the business community — especially CEOs — is vital to driving change at scale.” Specifically, CEO Action is benefitting from:
- A committed network of CEOs, including those from highly visible and influential companies
- The opportunity for people to pledge their support and a growing list of signatories
- Both forum-sponsored and company-led efforts that advance the forum’s agenda
- Workshops, tools, and resources that allow like-minded individuals to get involved
- Collaboration between companies and local organizations, NGOs, and government policy makers
- A platform that allows members to take actions and openly share successes and challenges with each other
The coalition believes it’s the public sharing of valuable and meaningful actions that helps translate members’ achievement of diversity, equity, and inclusion goals faster than they would have without the shared purpose, commitments, and platform.
5. Anticipate risk.
CEOs who choose to accept the call to action from stakeholders beyond the four walls of their businesses do so with some risk.
They are wading into new or unfamiliar territory. They may be signing up to tackle controversial ecosystem issues for which there are no easy answers. They may have to deal with investors who give lip service to social responsibility but have little patience for sacrificing short-term gains for long-term value creation.
Almost all are signing up to navigate a messy set of social and political interests with the potential to disappoint and even alienate some stakeholders. And there’s always the risk of taking on so much between the home front and the ecosystem that CEOs deliver a lot of activity but little impact.
To mitigate these risks, CEOs should be thoughtful about which ecosystem waters they wade into. Working in consultation with the board, industry experts, trusted advisors, and peers at other organizations, they must decide where their efforts will have the biggest payoff. They must maintain a frequent and open dialogue with stakeholder groups, and, even with a trusted senior team of enterprise leaders, they mustn’t step too far away from their day jobs.
While the risks are real, so is the potential for upside. CEOs may benefit from positive public sentiment stemming from their efforts; the attraction of customers and employees who support a multi-stakeholder approach; deeper, more productive relationships with communities, governments, and societal institutions; and innovative solutions that can only come from diverse coalitions working cooperatively.
In today’s world, the most effective CEOs recognize that no one is an island: no CEO, no company, no industry, no country. The lines have permanently blurred, and chief executives must embrace the opportunity to help shape our shared future — as enterprise leaders who are moving across and beyond — to influence entire ecosystems.
