understand what is happening in the world. How are CEOs currently thinking about the world in which they are leading? Let’s look at the findings from KPMG’s survey of nearly 1,300 global CEOs about their perspectives on leading their companies in today’s world.12
Seventy-two percent of CEOs said that they believe the next three years will be more critical for their industry than the previous 50 years.
Sixty-nine percent of CEOs are concerned about the number of mission- critical business priorities they need to tackle with no prior experience.
Sixty-five percent worry about new entrants disrupting industry business models, and about half of the CEOs are concerned that their companies are not disrupting their own business models quickly enough.
As you look at some of these high-level findings, you might say they paint a grim picture. However, CEOs also expressed a high degree of optimism about their ability to succeed. As we will see later in this book, that attitude is vital for leaders during times of change and disruption. However, leaders will need more than a good dose of optimism because leading change is hard work.
For example, McKinsey found in their research that only 26 percent of senior executives surveyed believe their organizations’ efforts to transform are successful.13 Change and churn have always been a reality in the world of business. No surprise there—however, the pace of change is unrelenting today and is also affecting corporate longevity.
Research conducted by Innosight found that in 1965, corporations stayed on the S&P 500 Index for 33 years.14 By 1990, that number had drastically declined to 20 years, and it is forecast to shrink to 14 years by 2026. If that churn rate continues, they estimate that half of today’s S&P 500 companies will cease to exist in the next decade.
It’s not just companies experiencing churn. CEOs increasingly find themselves in the hot seat, and their shelf life is getting shorter and shorter. Heidrick and Struggles, a leading global search and leadership firm, found that the number of CEOs who exited from their organizations nearly tripled from 2001 to 2016.15
No matter where you look, the story is the same—the world in which leaders are leading is getting more challenging than ever. Leaders need to deeply appreciate the context in which they lead because it matters—I believe now more than ever.
Context Matters When It Comes to Leadership
Harvard Business School professors Anthony J. Mayo and Nitin Nohria wrote a fascinating book called In Their Time: The Greatest Business Leaders of the Twentieth Century.16 In it, they chronicled the stories of some of the most successful business leaders of the twentieth century and found a close relationship between context and leadership. Based on their analysis of hundreds of leaders, they arrived at several key conclusions:
1 When it comes to leadership, context matters. In the end, long-term success comes down to awareness and sensitivity to context and business environment.
2 Leaders and companies do not fail or succeed in a vacuum. The interplay among the context, business environment, and how leaders respond is critical to success.
3 Leaders must understand their emerging context, for it impacts their ability to adapt and spot opportunities that may fuel growth and create value for shareholders and society.
These conclusions point to the need for you as a leader to take the time to understand the context in which you are leading. This is something my teams and I have always helped leaders do in our leadership development programs. Every program is rooted in the current and emerging context of the leaders we work with. We help them learn the skills they need to pay attention to their operating environment and appreciate how they need to step up and lead in times of change. The bottom line is that you need to be clear on what is coming at you, how to make sense of it, and how to lead your team or company through it all.17
The Emerging Context for All Leaders
In all my research and conversations with leaders like you, I’ve come to appreciate the key drivers that are reshaping our world. Collectively, these drivers are changing the old game and bringing about a new one. Below, I touch briefly on what I see as the top five drivers that all leaders need to pay attention to, today and tomorrow (see Figure 1.1). This is by no means an exhaustive list, but in my discussions with senior executives, these seem to be the ones they are paying attention to and even worried about.
Figure 1.1 The Emerging Context for All Leaders
1. Transformative Technologies
Klaus Schwab, the founder and executive chairman of the World Economic Forum, recently wrote: “We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before.”18
Schwab nicely captures today’s reality. Several technologies have emerged that will completely change our world in fundamental ways. Digital technology will continue to transform everything we do, including the way we work and learn. Big data will help organizations better predict business and people issues like nothing we’ve ever seen before. Artificial Intelligence (AI) will enhance decision making and complement the work of leaders and employees. For example, IBM recently announced that it developed an AI predictive attrition program that can predict which employees will leave a job with 95 percent accuracy.19 This kind of data will become more common in the future and will assist managers to better lead their people.
In February of 2019, I gained some valuable insights into how that shaped my thinking about technological change. I took part in the Future Series (FU.SE) conference, held in Milan, Italy. The inaugural event was sponsored by Microsoft, The Boston Consulting Group, and The Adecco Group. The event brought together a broad array of business, technology, government, and policy leaders to discuss a future of work that works for everyone. I was one of the speakers, and also participated in many of the amazing sessions. Brad Smith, president and chief legal officer at Microsoft, spoke eloquently about how technology is reshaping our world and the very nature of work. He shared that technological change always follows a similar pattern. It begins slowly and gradually at first, but then change happens suddenly where the pace picks up and things take hold. He stressed that as leaders we need to not only be aware of the changes that are coming, but also be wary of the hype that typically accompanies the introduction of new technologies. We will need to have a firm grasp of new technologies and the know-how to exploit the benefits while minimizing the threats. We will also need to appreciate that in the future the way we lead will be mediated by technology, as AI will give us insights into the people we lead, what motivates them, and how to better help them succeed.
2. Geopolitical Instability
As I’ve traveled internationally
