Business sites make for grim reading these days. Inflation, recession, ongoing supply chain issues, threats of industrial action etc. The press is permeated with doom and gloom. But in between, there’s regular excitement as another CEO’s halo fades and we get a glimpse of boardroom turmoil, boardroom-making, strange behavior and, in some cases, the illusion of full. To the casual observer, it would appear that the highest positions in the corporate world are occupied by despots, delinquents or con artists. The reality is very different. Hundreds of CEOs come in every day and give their sincere best efforts to lead their businesses through one of the most disrupted periods in modern history.
What makes a modern leader?
These days we tend to deal with extremes. The same is true when evaluating CEO performance and behavior. At one end we have the strange, at the other the amazing. At AlixPartners we have encountered all types of leaders. We’ve seen the powerful impact of the long shadow that charismatic leaders cast over their businesses—for better or for worse. We have applied our learning to inform the evaluation criteria used by Chief Executive Magazine to select ‘CEO of the Year’, a 35-year annual event. The list of winners is filled with exemplary business leaders. This year’s winner, Salesforce’s Marc Benioff, is no exception, except that he comes from a sector — technology — with more than its fair share of leadership horror stories.
While we love to glamorize failures, Benioff, like many of his predecessors, is an excellent case study in what makes an effective, modern transformational leader.
In essence, the defining characteristics of a transformational leader have changed very little. The role has become more complex and has far greater nuances and ambiguities to manage. However, the role is still defined by well-known traits such as strategic vision and the ability to rapidly influence change, build and empower high-performing teams. The ability to learn and adapt and a focus on building a strong, foundational culture have also emerged as essential skills. It is through these lenses that the evaluation panel for Executive Director of the Year makes its decision.
This combination of skills is unusual. Most leaders excel in one or two areas, but may be found wanting in others. Historically, financial performance and operational effectiveness have dominated the evaluation of effective CEOs. Recently, however, the ability to attract the best talent, motivate and align that talent, and unleash the power of teams are the skills most closely associated with financial success and human capital.
We are also seeing a growing need for certain qualities. These are not skills in themselves and, in some cases, can be very difficult to learn. They are resilience, adaptability and emotional intelligence and reflect a distinct, ongoing trend towards a very special profile for a CEO.
The age of the professional CEO
The traditional value placed on financial and operational expertise is understandable. Friedman’s focus on delivering shareholder returns naturally favors these skills. They are also easy to measure. It’s there in black and white, and the ability to drive positive trends in QBRs remains an essential skill among transformational leaders. However, the way this is done has become increasingly complex and this creates an increasing need for professional CEOs. These are more than exceptional technicians who have risen to the top. They are purpose-built, developed specifically for people leaders (or people management).
Much of the emphasis for this development will be on what are more dismissively referred to as ‘soft skills’. They are anything but. They are the key to unlocking exceptional performance, retaining talent and leading businesses through turbulent times. It is a very specific and increasingly specialized skill set.
Being at home in the gray areas
Ambiguity and disruption define the modern business landscape, so inevitably, being comfortable in the gray areas is now a prerequisite for leadership success. The subject is black and white, but it’s the gray areas that define true success.
CEOs today preside over a complex mix of stakeholders. Within their organization, they are dealing with the conflicting demands of multiple generations. On the outside they have investors to keep happy, as well as a host of controllers, critics, competitors and other stakeholders. Balancing the needs of this extremely diverse collection is virtually impossible.
So what are we seeing that makes CEOs like Marc Benioff stand out? They offer outstanding commercial performance undoubtedly; this is a table pin. They also create a compelling vision of the future and provide critical context so that stakeholders fully understand why things are happening. The transformational leader’s comfort with the gray area and allaying others’ discomfort with it through clear, persuasive and transparent communication is, without a doubt, the defining characteristic of a modern transformational leader.
Bringing the business together
The ability to contextualize business decisions for stakeholders enables transformational leaders to connect with their organizations. They can connect their people through a sense of shared values, goals, and objectives, regardless of their differences. They can connect the business with its stakeholders through an assessment of commercial success or the considered aspiration to improve in certain areas (ESG is an obvious example) and, significantly, they can connect the business their with society. This last point enables businesses to take positions on key social issues authentically and become attractive to future talent.
Making these connections is something we see more and more in the world’s most successful leaders. As we navigate further waves of disruption and uncertainty, this critical skill will be non-negotiable for all transformational leaders. So, in a way, it’s not surprising that this year’s CEO is a man whose entire business is based on connections.
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