Redefining success in a fast changing world (PWC Study)

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Redifining success

PWC recently issued the 2016 edition of their “Global CEO Survey”. With no surprise, we learn that their major concern is the extreme volatility of their environment made of fast changes and wide zones of uncertainty. This is not a new trend but it’s reaching such a high that it’s questioning many fundamentals : while the usual question is about knowing how to be successful, it appears that one the main takes of the study is to start by redefining what success is.

According to PWC, businesses must focus on three main issues.

1°) Being able to address greater expectations

Not only businesses have more and more stakeholders but the latter have greater expectations and more means to weight. While satisfying both the customer and the shareholder at the same time used to be a tough challenge, new players are joining the party, making it even more difficult than ever : customers, employees, governments, investors, activists…

 

Attentes des parties prenantes
Source : PWC 19th CEO Survey

It’s not only about the economy but ethics, trust and values.

It has two main consequences. Not only businesses must reevaluate their mission and the way they articulate it but they must also redefine what success is. One thing is sure : success won’t be measured by financials indicators only. Easier said that done though : making new expectations coexist with the profitability imperative is something CEOs are struggling at.

In the end, it’s a kind of “back to basics” and the need to “start with why” : many businesses will have to wonder about their mission, their promise, what they stand for.

une mission elargie
Source : PWC 19th CEO Survey

2°) Mobilize technology and talents to meet these expectations

Businesses are convinced that technology will help them to address these new expectations from their stakeholders and solve the ageless dilemma that consists of building the future while operating in the present with no additional costs.

difficulte a repondre aux attentes
Source : PWC 19th CEO Study

Seeing C-Level people convinced, in 2016, that technology alone can help to adapt to a changing world may is quite surprising to me. Even more since we know the growing importance of values in stakeholder’s expectations. But there’s a kind of logic behind the idea : they’re betting on technology to understand and decipher their environment. Data and analytics are at the heart of the challenge and logically rank high when leaders are asked what technologies will have the greatest return on on stakeholder engagement.

retour de la technologie pour parties prenantes
Source : PWC 19th CEO Study

That’s, in fact, the way leaders are considering digitization : the use of data into processes to favor innovation and lower costs.

However businesses are still struggling with the following competing imperatives : innovate to satisfy the customer, increase the social value their deliver and sustain profitability at the same time.

To face this challenge, they admit that the solution is people, talents with more intrapreneurial mindset.  So the priority is to hire skilled and adaptable people at every level, even in the front of the customer. Technology brings what it brings but businesses are still run by people and people are in charge in front of the customer.

Anyway, it raises new imperatives in terms of talent management.

Last human challenge : the leaders ability to communicate the vision and align.

 

strategie pour les talents
Source : PWC 19th CEO Study

3°) Methods to communicate and measure the success

There are new expectations in this field too. While leaders love to communicate on quantifiable issues and admit their lacks when it comes to soft ones, they’re being asked to address both the emotional and the rational side of their stakeholders.

mesurer et communiquer
source : PWC 19th CEO Study

The challenge is to measure things that were not measured so far : from innovation to environmental impact, including risks, employee practices, non financial indicators. And, of course, they’re counting on data to solve their problems. Leaders believe that, one day, nearly everything will be measurable with enough confidence.

In the end the final question is on how to communicate on these indicators, knowing that we’re entering an era of transparency which is the only way to drive trust and engagement.

Now, my comments…

Refining success is key today. Nearly everyone agrees that performance is not financial only but must encompass the company’s global footprint on its environment, and even beyond. If what matters changes, a new framework must be built. But, even if some initiatives exist – like Danone for carbon neutrality – the point still complex to address at a global level. Technology will surely help but long is the road. Let me also point at the importance of measuring intangible capital, which is still a hard-to-deliver promise.

Another interesting point is the evolution of the posture regarding to digital. It’s not seen anymore as a factor of complexity but as a part of the answer. Concerns are moving from the “what” to the “how” and that’s a good thing even if I’m not sure that businesses get technology well enough. Vision is nothing without execution but execution without understanding is not better.

The study shows very well the paradoxical injunctions leaders are facing. Ironically, I’d be tempted to say that they’re experiencing the hell they’ve created for their employees without caring a lot about that. Taking into account the expectations of many stakeholders is good but the real questions is : to what extent ? Or, in other words, where to place the cursor on each priority to make evolution possible, even if it means neglecting one for a moment. A perfect balance and equal attention paid to each priority may lead to a kind of standstill while moving often requires a kind of momentary imbalance.

Ginny Rometti, the CEO if IBM, once shared one of her motto : “don’t protect the past”. I’d even add “don’t hesitate to harm the present”. Improving hard and soft performance; building the future while reducing costs and keeping profitability high all along the journey is a dream. Any progress on one stream will happen at the momentary detriment of another. It’s up to you to choose which one.

If leaders seem to understand the potential of technology and data, I’m afraid they see it as a magic wand that will solve anything. A solutionist approach. Data helps to understand , to automate business decisions but does not make any strategic decision : it’s the job of leaders. Information does not waive courage.

A good point to end : the place of humans in the approach. “In the end people are running the business and are in front of the client”. What justifies the need for new profiles at every level and not only for  HQ’s white collar positions. That said, the discourse on diversity is nothing new but it’s obvious that businesses still struggling at hiring other people than clones.

In conclusion that’s a good piece, worth reading, but less insightful than last year’s edition.