The CEOs Guide for the 2020s

Worldwide companies are entering 2020 after a decade of large-scale digital expansion and transformation, not forgetting the major changes and polarization of the political scene. “There are many uncertainties and concerns: we expect increased political and economic volatilities, growing social discontent and further slowdown in growth. Nevertheless, the opportunities are palpable in the atmosphere. Managers recognize that to take advantage of them, they and their companies must be open to changes,” notes Ramon Baeza, Managing Director & Senior Partner at Boston Consulting Group.

Increasingly, managers are being influenced by this change, especially from those whose companies are most prepared to be successful in the next decade. The six key issues on the agendas of top managers will be:

 

There will be no place for mediocrity
In the business world, fortune is uncertain. The speed at which a company moves from the top to the bottom has doubled in the last 20 years. The most audacious CEOs react by managing the risk of incurring losses (which involves resizing operations in declining businesses and maximizing cash flow) while investing with determination where it really matters. Investing to be successful in new areas often requires broad-based bets where focus, decisiveness and speed to scale are vital. There will be no room for second-rate teams in the future.

Seek opportunities to change the rules of the game
The best managers try to get a view of what’s coming. They look for the cracks in major trends to detect opportunities and materialize dramatic changes that have the potential to double, triple or quadruple the size or value of the company. Companies can use many skills to identify opportunities: they can build a future for themselves; innovate through a series of iterations; and analyze patent data in detail. They can look closely at trends in the venture capital industry and what new companies are doing, especially in less fashionable places such as the Greater Bay Area of China and Israel. The more adventurous managers also look for certain types of acquisitions, e.g. buyouts of loss-making or failing businesses that could complement the portfolio of a strong company.

All companies will be technological, independently of the sector
Most companies need to reorganize to take advantage of new man-machine opportunities, whatever sector they belong to. To be competitive in terms of speed, product and innovation, and to recruit and retain the most talented people in the market, companies will have to adopt a modular technology and data architecture in the back-end, combined with highly scalable processes and Agile equipment in the front-end. We know of financial services companies that are digitizing their mass sales and “relationship management through applications” businesses. Large industrial companies are working to become bionic and are creating units to develop software and technology platforms, while gaining value from their traditional assets. Let’s face it: all companies will be technological.

All business will remain people’s business

The mainstreaming of technology as an enabler is crucial for companies in all economic sectors. But at the end, it is people who will continue to make a difference. Transformation can only happen if most of the team is mobilized and trained, data and technology specialists are brought in, and the most talented employees are retained. In the end, it will be the people who must redefine and rebuild all the processes and business models. This will require motivated teams and a lot of enthusiasm – ensuring that the company is a workplace that attracts and retains the brightest people, no matter how traditional or analogue the industry.

Be more flexible in organizing and managing work

So many companies don’t know how to get out of their old ways of organizing work. They should all be faster at reorganizing work, exchanging teams (and leaders) and validating new developments quickly. Agile@Scale should be the way to go. The most successful companies are always making quick adjustments, rather than waiting and making big moves. Forward-thinking managers often wonder whether a company should own all its business units and functions. Perhaps one can be more agile, grow faster and increase profitability by segregating certain operations and turning them into independent businesses in which it invests through private equity firms or other external sources of capital.

Be multilocal and define a beneficial purpose for society
Successful companies are increasingly addressing local issues that are directly related to public policy and people’s lives. Think of the technological giants and the huge amounts of data they hold, and how data protection issues place these companies at the center of important and controversial political, legislative and social debates. The best companies will position themselves as local, empathetic and resourceful players in societies and communities around the world. They will leverage their unique capabilities to help governments, institutions and civic organizations achieve social goals, in addition to pursuing their own business goals.

 

“In resume, leaders who want to be prepared for the challenges of the next decade must be quick to change mentality and approach, independently of their current success,” concludes Ramon Baeza.