When the modern corporation took shape in the early/mid 20th century, life was relatively simple.
The only stakeholder you needed to concern yourself with was the shareholder or investor. The competitive environment was slow to evolve. And you could count on a relatively stable and benign environment for the purposes of strategic planning.
It was efficient to structure organisations into functional silos, led by subject matter experts in those functions. The CEO was often a heroic figure, a visionary conductor steering the symphony to success.
The situation began to change from the 1970s. There was a cascade of technology innovation with tech becoming a much more important part of business operations. The voice of the investor became more prominent, with ‘shareholder value’ trend driving the importance of financial strategy, risk management and capital allocation.
More recently, we have seen the rise of customer-centricity and superior customer experience as the basis for competitive advantage. Software is now a cloud-based subscription service. We’ve seen the rise of the EDI agenda, a war for talent and the rise of the employee-centric paradigm. In many industries, regulation and compliance has moved from a peripheral to a central concern.
We can now look forward to the rise of AI and automation, some forecasting the disappearance or transformation of many white-collar jobs, with the prospect of decentralised, transhuman leadership, enabled by AI.
We can take it as given that the contextual complexity and speed of decision-making required of leadership teams is only going to go up.
The breadth of factors (multiple stakeholders, impact of tech/AI, geopolitical instability etc) makes it very challenging to shape and deliver strategy.
Do we believe that current governance structures and executive profiles are fit for purpose? It’s a rhetorical question.
Many c-suite executive team members have been promoted through functional silos such as finance, sales or marketing. They are accustomed to methodical, hierarchical decision making.
Many can only consider or deliver linear change in response to exponential contextual change, and that creates the very real risk of being eclipsed by events.
It’s no longer enough to simply master your own domain. You need an appreciation of technology (especially digital transformation), product, customer, HR and EDI.
As well as setting objectives and providing resources, leaders now need to connect and orchestrate the many moving parts. The most valuable attributes for an executive are more to do with soft than hard skills; things like collaboration, facilitation, appreciation, communication, optimism, bias to action (‘what matters is what happens’), growth mindset, outcome-driven (not process-driven).
And there is another significant challenge – overcrowding.
Large corporations may now have more than a dozen ‘chiefs’ of various hues. Even in the age of distributed leadership, there is surely a limit to how big a team can or should be in order to function?
How do we set up and configure our executive leadership for success?
If we design from the future backwards, what sort of team do we need, how big can it be and what are key attributes of members?
Obviously the answer will be highly context-sensitive, according to size, sector, level of maturity, ownership structure etc. But let’s have a go at some initial shapes.
First, some desirable attributes for all players:
Collaborative team players who value the contribution from colleagues and believe that collaboration will deliver better outcomes
Emotionally intelligent, able to understand the motivations and concerns of others
Outcome driven, more concerned about delivery and impact than process
Guided by purpose; attuned to and aligned with the organisation’s purpose
‘Drawing pin’ knowledge, with a spike of expertise in a certain area but a broad appreciation of all key business functions, especially digital technology
If we look at the desirable structure for an executive team, the key point is to base it on end-to-end cross-enterprise horizontal connections rather than the functional silos of the past. In order to retain a governable span of control, we also need to limit the size to fewer than ten.
Here’s what it could look like:
Co-CEOs Two senior leaders with complementary skill sets and roles, willingly working alongside one another with full shared accountability for overall performance. They get on well together, with shared values and complete consistency and transparency of communication (appearance of unity), so any attempts to divide and conquer will fail.
Chief Financial or Value Officer We still need a CFO to own financial strategy, financial reporting, risk management and capital allocation across the portfolio. But perhaps there should be a broader take on the concept of ‘value’? Value is a long-term concept and one that is aligned to the creation of sustainable organisations – with value created not just for investors and financial stakeholders, but also customers, employees, regulators and communities.
Chief Curation Officer The CCO is responsible for nurturing and driving the performance of today’s business, making the most of what we have and accountable for operating revenue, cost and margin. The role is an evolution of today’s Chief Operating Officer, with additional responsibility for marketing, sales, customer experience and human capital
Chief Transformation Officer While the CCO operates on Horizon 1, the CTO looks after Horizons 2 and 3. This includes blue-sky innovation/R&D, as well as the evolution of the current business, whether incremental or step-change transformation. There will be inherent tension and competition for resource between the CTO and CCO, to be mediated by the Co-CEOs
Chief Data Officer The CDO is responsible for the quality, quantity, timeliness and critical interpretation of the data that underpins strategy and operations. While much of the data will be financial, the role covers all corners of the balanced scorecard, from future trends through to customer satisfaction, intellectual property development and human capital development. The CDO looks after the technology that provides the data too.
Chief Collaboration Officer The Chief Collaboration Officer is responsible for ensuring that all participants play nicely together in the enterprise’s extended ecosystem. That includes internal collaboration and conflict management between business functions, as well as external collaboration and negotiation with customers, suppliers and partners. A lot of the role is about defining the values and encouraging the behaviours of collaboration, resulting in a more dynamic and agile enterprise
Chief Stakeholder Engagement Officer The CSEO is responsible for managing the dialogue of the enterprise with key stakeholder groups, including employees, regulators, investors, lobby groups and government. Whereas the Collaboration Officer is more focused on day-to-day operation, the CSEO is more focused on longer term policy
Who have we lost?
Well, there is no longer a CIO or CTO because everyone is (and is expected to be) sufficiently IT literate. And software is now almost entirely cloud-based subscription, so it no longer has a heavy Capex and infrastructure profile.
We’ve also lost discrete marketing, customer, supply chain and innovation roles which are now distributed across the end-to-end curation and transformation roles.
How do we get there?
Many of the moves towards the new c-suite envisioned above are already underway. There is a body of research on the benefits of the Co-CEO model and a recent BDO article proposed the evolution of CFO to CVO .
Making further progress requires several leaps
an inversion of priority between functional silo versus end-to-end business process – tipping the matrix by 90 degrees
a new approach to executive education and career development, with stints in adjacent functions seen as crucial rather than optional or accidental
a refreshment of ‘what good looks like’ for corporate governance
Summary
Historically, corporate focus was on shareholders, with CEOs leading hierarchical structures. However, technological advancements, customer-centricity, and regulatory shifts have altered this paradigm.
The future necessitates AI integration, emphasising soft skills over hard skills for leaders.
A revamped executive structure would emphasise collaboration and cross-functional expertise. This includes roles like Co-CEOs, a Chief Financial or Value Officer, a Chief Curation Officer, a Chief Transformation Officer, a Chief Data Officer, a Chief Collaboration Officer, and a Chief Stakeholder Engagement Officer.
A consequence would be eliminating roles like CIO and CTO due to widespread IT literacy and cloud-based software.
We would need to see shifts in corporate governance, executive education, and career development to facilitate this transition.
Overall, the envisioned executive team prioritises agility, collaboration and holistic understanding of business functions in navigating complex, evolving environments.