The CEO’s job has never been more challenging nor, indeed, more exciting.
Previously, CEO success was determined by factors like the technology revolution, industry consolidation, globalization and increasingly persistent consumer demands. The growing focus on corporate governance, rigidly enforced and ever-intensifying regulatory requirements, increasing involvement of stakeholders and investors, and intensifying competition have significantly changed the rules of the game.
Among the changes cited are the need to focus on innovation, to serve and interact directly with a wider range of audiences, to deal with pressure and scrutiny from regulators and shareholders, work with a diverse workforce spread across countries and, at the same time, champion ethics and integrity throughout the organization.
Illustration: Jayachandran / Mint
As companies grow and move beyond India’s borders, leadership competencies have also needed to expand.
CEOs now need to have a robust international perspective to understand not only global competitive issues but also legal and regulatory challenges, as they differ in various geographies. India is also witnessing the emergence of new domestic consumer segments—be it the youth, the independent urban woman or the vast hinterland market. Companies are realizing that they need to bring in talent that understands these new consumers and can direct strategy at a firm level to address their needs.
Accordingly, a “broad-based” market experience has become a necessity, not an added advantage. Today’s environment also calls for individuals who are innovative and enterprising—constantly on the lookout for new opportunities for the business.
Beyond this, managing in a global environment means managing people who are separated not only by time and distance, but also by cultural, social, and linguistic differences. This scenario calls for a strong cultural ability to manage international workforces at the senior level, as companies increasingly include managers of diverse nationalities to run operations within and outside the country. Thus, managing diversity is the new mantra, and today’s CEO will need to ensure that his or her team is also equipped to deal with this successfully—at the ethnic, cultural, gender and, indeed, age demographic levels.
Equally important as the global mindset is the ability to “think global, act local”. India is a unique country, where parallel markets exist within the same geographies. Every Delhi has a Jalgaon within it, as well as a Ludhiana. These complexities require a well-grounded multi-pronged strategy, which only individuals with local sensibilities can understand.
With the high levels of growth we are witnessing come challenges to the system in terms of team build-out, processes and disproportionate investments. What has become key, therefore, is the ability to deal with scales in an entrepreneurial manner, even in a large organization.
This also requires flexibility, since many businesses are driven by the family ownership structure and entrepreneurship/risk-taking. When combined with the frequent changes in the regulatory climate and challenging infrastructure environment, the Indian CEO needs to be resilient, able to adapt and move forward in the face of adversity.
Last, but not in any way the least, is people management. The existing shortage of talent has made talent retention and attraction a primary focus of any CEO today. And, in order to build an effective workforce, companies will need a leader and a senior management team that can understand people dynamics and establish the balance between levers such as the right compensation and a clear visible career path for top talent.
The right combination
Therefore, it is becoming increasingly challenging to find CEO candidates who meet the new criteria. To compound the problem at hand, CEO shelf life has contracted. CEOs often leave after 3-5 years, frequently because the company is doing well and the CEO wants to go out on top, or the company is troubled, or due to a multiplicity of new opportunities. Increasingly, in India, the lure of entrepreneurship is also a draw.
But all is not lost. While “traditional” candidates with largely operational, technological or financial skills may make the transition, there is an emerging opportunity for “out-of-the-box” CEOs who have along the way almost unwittingly acquired the competencies a CEO might require. Ultimately, what is required is an individual who can effectively divide his or her focus between internal and external issues while satisfying personal growth objectives. He or she needs to combine passion for the work with a clear understanding of the business and the ability to construct a vision for the future.
It is, therefore, essential for a CEO to encourage a culture which accepts change as inevitable and as an opportunity to deal effectively with unfamiliar risks, with the aim of achieving corporate objectives. The CEO needs to possess a number of qualities, including a belief that differences matter; openness to new and different ideas; and cognitive complexity, or the ability to focus on both the “hard” and “soft” metrics in an organization—the hard, quantitative side, along with the softer, people side.
New leaders who meet these challenging criteria are out there and ready to take the helm to navigate companies through the next period of change. It is just a question of finding the right fit.
Anjali Bansal is managing director at Spencer Stuart India.
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