Are You Using Your Team’s Self-optimizing Power?
Analysis & Data from 5 Perspectives
The post pandemic optimism has been short-lived. Today, the mood among CEOs ranges from caution to alarm. This is reflected in a new agenda for 2023-24, with 7 key themes emerging.
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 leaders across our client base, asking them about their 2023-24 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 2023-24 are explored here.
1. Resource constraints
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:
- The Great Resignation – A record number of people (4 million per month) have been leaving their jobs since the beginning of the pandemic3. One in five workers plan to quit their jobs in 2022, according to one of the largest surveys of the global workforce4.
- Quiet Quitting – Many employees suffering pandemic burnout say they've just stopped working as hard. Economists link this to a fall of almost 5% in U.S. productivity numbers (output per labor hour) in Quarter 2 of 2022.5
- A Slow-down in Hiring – Many high profile organization (such as Google and Facebook) who were once throwing new talent at business opportunities or challenges are now changing tack. Realizing that hiring is only half the challenge they are planning to hire less and align people better.
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
2. Focus & Prioritization
Many CEOs are concerned that their organizations have too many projects & initiatives competing for scarce time, attention & resources. The demand is for more disciplined 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:
- First, the organization can ‘de-clutter' – stopping or slowing those projects and initiatives that are not a priority.
- Second, it can apply itself with a new focus and intensity to those key priorities, projects and initiatives that matter most.
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
3. Key Priorities & Projects – A New Intensity
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:
- Aligning people and resources with key business priorities and in support of those strategies and initiatives that are critical to success. Inevitably, that means moving resources from elsewhere.
- Greater urgency around ‘making things happen'- an impatience to see greater process – to achieve better results faster9.
- Creating an ‘unstoppable momentum' behind key initiatives
- ‘Making it real' or ‘bringing it to life' including getting some quick wins or tangible early benefits
- ‘More action and less talking' or ‘less focus on obstacles and impediments and more focus on removing them'
- The need for greater speed and agility, as well as collaboration (cross-functional) and innovation (as explored below).
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.
4. Back to Basics – Efficiency & Costs
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:
5. Hybrid Working – finding ‘a new normal’
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:
- Will culture, collaboration and innovation suffer?
- What are the long term implications for the fabric of teams?
- Is managing a virtual team different – what new skills and capabilities do leaders require as a result?
- How much freedom to give individuals and their managers around hybrid working?
- How far can organizations tighten the rules on virtual working without losing or disengaging talent?
- How to reconcile the needs of different generations in the workforce (e.g. Gen Z who may want to be in the office most), etc.
- How to balance the positive and negative implications for employee engagement and well-being (e.g. people gain the time they lost to commuting, but suffer from blurring lines between work and home)?
- What is the right balance the need for visibility and control, with freedom and autonomy? See the panel below.
‘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.
6. Culture Change – organizational dynamism
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.
7. The ‘One Big Team’ Ideal
‘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).
What is Your 2023-24 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 2023-24 agenda balance caution with pragmatism in your determination to sustain performance.
SOLUTIONS & SERVICES: Here are some of the ways that our research & insights are put to work by our clients:
- Based on pitstops with 36 senior leaders in Global Corporations over the period September-October 2022.
- In June 2022, there were 10.7 million job openings and nearly two vacancies for every unemployed worker, according to US Labor Department figures show. See PAUL DAVIDSON of USA TODAY, 14/08/22: https://eu.usatoday.com/story/money/2022/08/14/what-is-quiet-quitting/10304956002/
- Definition by the World Economic Forum, See: https://www.weforum.org/agenda/2022/06/the-great-resignation-is-not-over/
- PwC’s Global Workforce Hopes and Fears Survey May 2022, Link: https://www.pwc.com/gx/en/issues/workforce/hopes-and-fears-2022.html#overview
- See: Quiet quitting: Employees suffering pandemic burnout say they've just stopped working as hard by PAUL DAVIDSON of USA TODAY, 14/08/22. Link: https://eu.usatoday.com/story/money/2022/08/14/what-is-quiet-quitting/10304956002/
- See: Google CEO tells employees productivity and focus must improve, launches ‘Simplicity Sprint’ to gather employee feedback on efficiency, By Jennifer Elias on CNBC.com, Sun, Jul 31 2022. Link: https://www.cnbc.com/2022/07/31/google-ceo-to-employees-productivity-and-focus-must-improve.html
- In Just 3 Words, Google CEO Sundar Pichai Taught a Leadership Lesson to Every CEO, on INC.com BY MINDA ZETLIN, https://incafrica.com/article/minda-zetlin-google-ceo-sundar-pichai-memo-hiring-slowdown-inspiration/
- BBC News – PM TV debate: The candidates step up their attacks https://www.bbc.co.uk/news/uk-politics-62200222
- It is important to point out it is not a frenetic or ‘headless' urgency (there tends to be enough of that!
- ‘Visibly frustrated’ Mark Zuckerberg responds to staff questions about extra vacation days’, by Johanna Chisholm of the UK Independent newspaper on Thursday 28 July 2022. Link: https://www.independent.co.uk/tech/mark-zuckerberg-meeting-vacation-annoyed-b2133661.html
- Google CEO tells employees productivity and focus must improve, launches ‘Simplicity Sprint’ to gather employee feedback on efficiency' by Jennifer Elias on CNBC.com, Sun, Jul 31 2022. Link: https://www.cnbc.com/2022/07/31/google-ceo-to-employees-productivity-and-focus-must-improve.html
- PWC survey as reported in the media: ‘Half of US companies gearing up for layoffs, survey suggests' on the New York Post'By Lydia Moynihan, August 19, 2022: https://nypost.com/2022/08/19/half-of-companies-to-lay-people-off-survey-suggests/ Take care: This survey involved only 700 respondents, although it got featured in the national press.
- Read more on Tech sector layoffs at the LA TIMES at https://www.latimes.com/business/story/2022-08-31/after-a-golden-era-at-snap-and-other-tech-firms-its-back-to-reality-for-workers
- See the list of big name organizations who have laid off staff here: https://www.businessinsider.com/layoffs-sweeping-the-us-these-are-the-companies-making-cuts-2022-5?r=US&IR=T
- See: https://www.npr.org/2022/09/21/1124218263/the-u-s-dollar-is-strong-right-now-but-not-everyone-is-happy-about-that
- ‘The Rise of the Worker Productivity Score' By Jodi Kantor and Arya Sundaram, Aug. 14, 2022 Link: https://www.nytimes.com/interactive/2022/08/14/business/worker-productivity-tracking.html
- This builds on the concept of Rita Gunther McGrath & Clayton Christensen, ‘Seeing Around Corners: How to Spot Inflection Points in Business Before They Happen’, Houghton Mifflin Harcourt, 2019.
- This Seeing Around Corners Index (SACI) – is also an acronym for Speed, Agility, Collaboration & Innovation
- See for example: Darrell Rigby, Sarah Elk & Steve Berez, ‘Doing Agile Right: Transformation Without Chaos', Harvard Business Review Press, 2020.