The CEO’s sojourn from stagnation to reinvention
CEOs should understand the business and social ecosystem within which they operate. This would help them identify suitable business partners with shared goals and business strategy
The current business landscape is witnessing rapid changes brought about by technological advancements, climate change, social instability, and other long-term megatrends. Many CEOs are reflecting on the last few years and trying to develop a roadmap for the future based on how they have been transforming their organisations ahead of others. While others, who are late in adopting technological transformation, have risked the future of their organisation to fade into oblivion.
An analysis conducted by PwC revealed that 52% of the companies that were listed on the Fortune 500 in 2003 have since ceased to exist as listed companies today. While some of the companies filed for bankruptcy, others were acquired by another organisation, and some shut down their business. Therefore, the risk of fading into oblivion is real.
The positive news is that many CEOs in Bangladesh are aware of this risk. In fact, their doubts about the long-term survival of their own business have increased. In the 27th Annual Global CEO Survey, 57% of the CEOs in Bangladesh stated that they anticipate their business to survive less than 10 years if they continue to run it as-is, up from 50%, as expressed in the same survey conducted by PwC last year.
If we look at these findings collectively, the imperative to reinvent the business model becomes paramount. The CEOs and their leadership teams must address this imperative by emphasising their focus on innovation. Even those who have been running their transformation journey successfully in the last couple of years have little room for complacency.
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However, reinventing businesses requires a well-structured approach comprising multiple components of transformation. A CEO should carefully consider all scenarios and then plan their strategy. First, a CEO should articulate the core functions of their business—how the organisation creates new products or services, serves the customers, and, more importantly, how it makes money. Subsequently, the CEOs should be able to identify the areas that require certain fundamental changes and other areas that require radical transformation.
For example, the challenges posed by climate change will likely require the organisation to lower the carbon footprint of their products and services. This is going to be a fundamental change because this is how the stakeholders of the future would expect the organisation to do it. Even if a CEO chooses to remain indifferent to climate change, the customers and regulators will become formidable forces who will drive this fundamental change.
On the other hand, an organisation may decide to change how it makes money from its products—from selling their products at a price payable at the time of sale to deploying their products against a recurring monthly fee over a period. Such a radical change is likely to disrupt the market and is likely to create a competitive advantage for the organisation.
A wise CEO should plan to implement both fundamental changes and radical transformation. Innovation across all levels of the organisation will be the key to driving success in both. This is why the CEO should also don the hat of an innovation leader or support the existing innovation leader to drive innovative strategies across the organisation. Not just the organisation, CEOs should also focus on the customers. The changing needs of the customers can indicate where the business needs to reinvent itself. Fundamental questions related to customers experiences can generate useful indicators for developing the CEOs' strategy.
Secondly, a CEO should be watchful about the external triggers that can potentially disrupt the business. A CEO's ability to foresee the challenges and opportunities from these megatrends and address them through fundamental changes and radical transformations will be pivotal to the reinvention of a successful organisation.
Finally, CEOs should understand the business and social ecosystem within which they operate. This would help them in identifying suitable business partners with shared goals and business strategy. A CEO with a collaborative mindset will be able to successfully reinvent the business and remain relevant in the future.
Arijit Chakraborti is a partner with PwC.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.
