The mood music has changed. The media is continually talking of slowdown and recession, the Ukrainian Invasion, inflation and even the risk of electricity blackouts. But, what is the mood in the C-suite?
We talked to executives across our client base, asking them about their 2023 business agenda1. The results make interesting reading, with leaders adopting an approach that balances caution with pragmatism in their determination to sustain performance.
The 7 key themes that shape the CEO agenda for 2023 are explored here.
There is growing pressure on resources due to a range of factors, including a tight labor market2, economic uncertainty and global supply chain disruption.
Faced with tighter budgets and stricter controls, leaders are increasingly aware of the practical constraints they face in delivering on their ambitious projects and initiatives.
When it comes to people resources, leaders are faced with post-Covid challenges such as:
In the news: In July 2022 Alphabet (Google) CEO Sundar Pichai announced: ‘we’ll be slowing the pace of hiring for the rest of the year …and make sure the great talent we do hire is aligned with our long-term priorities.‘6
Many CEOs are concerned that their organizations have too many projects & initiatives competing for scarce time, attention & resources. The demand is for greater focus and prioritization.
‘Scarcity breeds clarity’ is how Alphabet (Goolge) CEO Sundar Pichai explained the need for focus and prioritization in a memo to employees in June 20227.
When business needs and priorities have been clarified two things happen:
The first frees up resources (time, talent and attention, as well as money) for the second (as explored next).
‘Why are we not spending more on A, B and C?’ asked the host of the TV debate. All the candidates for leader of the UK’s governing political party appeared ready to promise more spending in all the areas mentioned. One defied expectations and said: ‘There are no choices only tradeoffs… If we spend on A, then we will be taking the money from B or from C. We cannot do everything!’ But, did the candidate’s lesson in practical economics pay-off? Well, she didn’t make it to the second TV debate!8
With priorities clarified, organizations can focus with a new intensity on delivering critical strategies, projects & initiatives. But what do leaders mean by ‘a new intensity’? Well, we hear the following:
All this boils down to the leader’s need for greater confidence around the execution of their ambitious strategies and initiatives.
Meta (formerly Facebook) announced plans for ‘disciplined prioritization and work with a high level of intensity to reach goals’ (July 2022)10.
It is ‘back to basics’ for many CEO’s with a focus on boosting efficiency & cutting costs. This is fueled by economic uncertainty and pessimism – including concerns about inflation and the possibility of recession.
As an example Alphabet (Google) CEO Sundar Pichai launched a ‘Simplicity Sprint’ in July 2022 to gather employee feedback on productivity and efficiency11. Another less famous manager used mixed metaphors to describe the new reality of budgets – ‘all the fluff is gone – the budget has been cut to a minimum –there is no fat left’.
The narrative of slowdown and retraction continues to gain momentum. In August 2022 one well-publicized survey suggested that half of all US companies are gearing up for layoffs12 Microsoft, Netflix and Twitter have laid off staff13 and many other big names in more traditional sectors too14. Meanwhile a dramatic rise in the dollar is also having an impact – Salesforce expects revenues to fall by $800m as a result15.
A word of caution:
The pandemic ushered in one of the greatest revolutions in how people work. The overnight shift to virtual working has changed things forever. Little wonder why the return to the office hasn’t been a return to normal.
Leaders are still trying to find the hybrid model that works best for their organization and its people. There are many questions still to be answered, incl:
‘Trust but verify’ were the words famously spoken by Ronald Regan in respect of monitoring the implementation of nuclear arms reduction treaties. Well, many organizations seem to be adopting a similar approach to remote working, with 8 out of 10 of the largest US private sector employers tracking white-collar worker productivity metrics16 For some this is a leap in terms of productivity and efficiency. For others, productivity tracking has the potential to take leadership back one hundred years.
To compete in an increasingly complex and fast-changing world, leaders want their organizations to demonstrate greater speed and agility as well as collaboration and innovation. Such organizational dynamism is seen as essential to embracing the opportunities and challenges of an uncertain future. But how to achieve such an organizational transformation?
‘Straight line acceleration is not an option’ said the CEO at the start of the senior leadership team away-day. ‘The changes that are coming around the bend represent a significant threat to our sustained performance. But, if we are agile and innovative, they can also represent a significant opportunity’. This is yet another example of leaders calling for greater organizational dynamism in response to a fast changing and perhaps even threatening environment. We label this new dynamism ‘seeing around corners’17 and measure / optimize it using a seeing around corners index18.
Organizational re-structures are happening with increased regularity, but experience has taught leaders that restructuring cannot be successful without cultural change too.
Changing the organizational chart won’t be enough to change behaviors. Of itself, it won’t make the organization more nimble or responsive. More direct efforts are likely to be required to change how people work and interact right across the organization and specifically how they work together on key business priorities and strategic projects or initiatives. In this way there is an emerging focus on behaviors and interactions within teams, rather than the traditional top-down approach.
There is an added complication. Many of those calling for greater innovation and agility, are leaders of long-established traditional organizations. They struggle to balance ‘business as usual’ visibility and control (in the core business) with ‘business unusual’ speed and agility (in new and adjacent areas). For them, nirvana is an ‘agility without chaos’19.
‘We are one team’ is the message from many CEOs as they seek to unite the organization’s different departments & functions. They are all too aware of the need to ensure that people are pulling in the same direction, regardless of their department or role.
Most important or innovative strategies cannot be delivered by one or a few departments working in isolation. Taking a new product to market in 6 rather than 16 months requires effective cross-functional collaboration. So too does implement a back-end system or executing on a new strategy.
Leaders are calling for an end to functional silos – for their organizations to be ‘one-team’. However, cross-functional collaboration presents real challenges for organizations that have traditionally been organized from the top-down along functional lines. It requires shifting the shape of the organization – from functional hierarchy to cross-functional matrix or network of teams. More important still it requires a new set of attitudes and behaviors (linked to item 6 on the agenda).
Pause for a moment to reflect on the above agenda items and their implications for your business unit or team. How well does your 2023 agenda balance caution with pragmatism in your determination to sustain performance.