What are businesses looking for in their future CEOs?
Change is a constant; the pandemic simply accelerated its pace. But even before the coronavirus struck, we realized that we were in a period of unprecedented disruption — one that would leave an indelible mark on businesses, from increasing digitalization to shifting societal and cultural expectations.
As the world and markets have become more complex, so too have companies, making them ever harder to lead. And, as the pace of change shows no sign of slowing down, companies must prepare now to meet the future challenges that disruptions will continue to create. That means they need leaders in the C-suite and on their boards who are not just competent, but exceptional – the future of business.
With these changes in mind, we decided to take a closer look at leadership to identify what the future CEO will look like. We surveyed 163 European CEOs, then followed up with 66 face-to-face interviews of CEOs and board members from across Europe. We also added insights from futurists, academics and our own in-house experts at the Korn Ferry Institute.
Our work in this study, titled Unprecedented leadership for an unknowable future: An EMEA study, focused on answering three questions:
- What are the principal challenges that European companies and enterprises will face in this period?
- How will future CEOs navigate these challenges and lead their people and companies?
- What does the board need to become and do to enable success?
Here is what we found.
The future of business in 2025: Key challenges facing European companies
Our research found that three key trends will shape the future of the business landscape in 2025: technology, sociopolitical change and the environment. As the pace of change accelerates, businesses must take steps to address these trends, despite rising complexity and the uncertainty of the path forward. Some of these changes will require them to rethink their organizational structure and talent. Companies that fail to act may not survive in the face of rising consumer, employee and investor demands.
The impact of technology will grow for future CEOs
Few, if any, organizations today remain untouched by technology. In fact, technology affects nearly aspect of organizations, from how they develop their products, market their services, interact with their stakeholders, function day to day and plan for the future. As technology continues to advance, it opens up the market, creating an opportunity for startups to rapidly scale and compete and threatening incumbents.
Given the changes we’ve seen in just the last decade, we expect the impact of technology to grow exponentially, requiring future CEOs, boards and businesses to not just respond to this shift but embrace it. Our interviewees suggested that the most successful businesses will lead us into the “Fourth Industrial Revolution.” These are the businesses that will continue to adopt technology such as machine learning, artificial intelligence and automation.
Environmental and sociopolitical change is essential for the future of business
The days of businesses being judged based solely on their financial results are gone. Today, fueled by concerns over climate change and structural inequalities exposed by the COVID pandemic and the Black Lives Matter movement, customers, investors and employees are focused on companies’ triple bottom line: people, planet and profit. Of particular interest are the company’s environmental footprint, societal contributions and governance across the supply chain. That’s because according to our interviewees, employees want to work for a responsible company, customers want to buy goods from a company that cares and investors want to place their capital with a company that puts sustainability at the heart of its strategy.
Several CEOs we spoke with believe that emphasizing ESG is essential to a company’s survival and that these trends will likely intensify leading into 2025. Companies will be assessed less on the value of their pipeline and more on their broader contributions to society. The firms that lead in this area will be the ones that anticipate and make the changes necessary to address ESG issues. Those that don’t demonstrate social accountability will lag behind and face significant reputational, operational and business risk.
Future CEOs will have to evolve the organizational structure
Siloed no more, business entities and the sectors and geographies they operate in will become blurry by 2025. As they do, the corporate ecosystem will expand. To cope, organizations must, out of necessity, become more interdependent, and the boundaries between B2B and B2C companies will fade away.
We predict that in the next five years, sectors and industries will find that not only are they competing with each other but are also finding new ways to collaborate, because they won’t be able to succeed alone. With new competitors coming from every angle and with disruption a constant threat, companies will need to adopt new ways of working, new operating systems and new organizational structures.
One key to adapting to change is a more empowered workforce, which requires a flatter, more collaborative and networked organization. Centralized, hierarchical structures will become a thing of the past for the organizations positioning themselves to be the disruptors rather than the disrupted. To stay relevant, organizations must find new ways to put decision-making closer to the customer. This will require the future CEO role to evolve from command-and-control to mission control. It will also require organizations to focus on embedding their purpose at every level.
Find the right talent to sustain the future of your business
Nearly all interviewees— 90% —cited talent as a critical issue. Organizations are becoming larger; midsize firms are, on average, four times bigger than they were two decades ago. And the largest organizations keep growing. At the same time, European working populations are declining and aging and lacking the skills for the new era. It will become increasingly hard for organizations to find the right talent that they need for the future.
When companies put their purpose, and the good of society, at the heart of their culture, it will become easier for businesses to recruit, engage and motivate their people. The more engaged and motivated their employees, the easier it will be to equip them with the skills they need to navigate ever-increasing complexity and disruption.
The future of CEOs in 2025: How CEOs can become better leaders
What we’ve traditionally looked for in CEOs — strategic vision, financial acumen, focus, intellectual acuity, determination and drive — will not be enough to allow future CEOs to excel. That’s because the CEO role is undergoing a paradigm shift. By 2025, CEOs of the future will be expected to wear not just a few hats, but a closet full of them, all at once. They must ensure their business is meeting day-to-day demands, be prepared for continuous transformation and be mindful of and responsive to all stakeholders.
To be great, future leaders must be attuned to the challenges we mentioned in the last section, from competition to technology to ESG. But they must do more than respond to these changes: they must anticipate what’s next, so they can remain at the forefront of disruption and shape the future. Their role will be larger than it’s ever been, and it presents a unique opportunity to carve out a stronger, more significant and impactful role than ever before. Emerging CEOs and enterprise leaders should start preparing now, because what’s worked in the past will no longer serve the CEO in 2025. And current leadership development methodologies won’t deliver in time.
Boards and nominations committees should take note: the success profiles that have defined the CEOs of the past won’t lead to success in 2025. Cognitive competencies, such as thought leadership, have had their day, but they’ll be relegated to the price of entry for success in 2025. CEOs of the future will need to be more of a connector-in-chief, creating chemistry between people, ideas and institutions.
The following attributes will be table stakes.
Future leaders must be agile and open to change
The five-year plan, a longtime staple of corporate strategy, is no longer relevant. With continuous, constant change and disruption and competition on all sides, organizations need a leader capable of shifting gears at speed. They must think about the short-term and long-term simultaneously, focusing on performing as they transform, even though it’s difficult to predict tomorrow, much less the next year or decade.
But they must also move at a speed that matches that of their employees and other stakeholders. Move too fast, and they’ll leave their workforce, customers and suppliers behind. Move too slow, and they’ll be overtaken by competitors. That’s why nearly two-thirds of our interviewees viewed agility and openness to change as critical traits for CEOs.
To more seamlessly adapt to change, the CEOs of 2025 must always be curious. They must be open to new ideas and set aside time to learn continuously. And they must absorb as much information as they can, because what they learn may serve them in the future as they address new problems.
Purpose and authenticity are key for the future CEO
CEOs of the past were judged on whether they delivered financial results and generated shareholder value. But by 2025, what matters most will be whether they’ve made positive impact on not just their company but society at large. Nearly three-fourths of interviewees (74%) cited a genuine sense of mission and purpose as a vital trait for the CEOs of 2025. Our digital survey respondents agreed, with 94% suggesting that the future business of 2025 will become more focused on moral and ethical leadership.
To achieve these goals, CEOs will need to engage with and motivate a broader group of stakeholders than ever before, even as those stakeholders become more demanding. They must be willing to connect, coordinate and inspire an ecosystem that spans their business, their industry and society. And if they aren’t authentic, they’ll face potentially catastrophic consequences. With near-constant visibility and social media amplifying their every choice, action and word, a CEO’s reputation can be lost in an instant.
That means CEOs must truly know themselves, pursuing the self-insight that breeds self-mastery. They must clarify their own values, set purpose-led goals and follow purpose-driven lives. Doing this work early in their career, and continuing it once they’re in the CEO chair, will help them remain focused on what matters when the going gets tough, whether personally or professionally.
Future CEOs will need to be connected and collaborative
The job of the CEO is already daunting; by 2025, it will be too big and multifaced for one person to handle alone. No one person can know enough to make decisions on behalf of the entire organization. So, more than ever before, CEOs will need to solicit perspective from their senior executive team and board of directors. Already, our survey respondents are citing their “high-performing team and colleagues” as the top factor behind their ability to deliver and sustain peak performance.
To build an effective team, CEOs will need to treat their fellow executives as equals, focusing less on roles and titles and more on impact. They’ll need to build a sense of trust and mutuality and downplay egos and individual achievement. Achieving these goals will require CEOs to model the right behaviors and ensure they share the responsibilities of leadership rather than taking it all on themselves.
To harness the collective intelligence of their team and board, CEOs will need to break down walls and build connections. They’ll need to be open-minded, seeking and embracing a variety of lived experiences in their team. They’ll also need to extend their collaboration efforts outside the organization, as connections with competitors, peers in different industries and startups can deliver innovative ideas that can help them maintain their agility and create new value for all stakeholders.
Future leaders must have exceptional communication skills
By 2025, exceptional communication skills will, arguably, be more important than ever for CEOs. That’s because they’ll have to motivate and inspire employees on top of ensuring that their business stands out to external stakeholders. With the variety of shifts taking place in the workforce — from the rise of Millennials and gig workers to heavy representation by older workers, leaders will need to be able to engage multiple audiences.
CEOs will need to be accessible. They must also be able to articulate their purpose and how they plan to carry out their purpose to deliver good — not just for their employees but for their society and planet. They need to be clear about what their organization is doing, why it matters and what long-term impact their work will have. Their ability to communicate this purpose will cascade throughout the organization, fostering a sense of meaning in people’s daily work and driving greater productivity.
Leaders of the future must have technological acumen
With the prevalence of digitalization and automation, emergent leaders need strong technological skills. Several of our survey respondents mentioned that mastering social media is essential to creating brand awareness, building relationships with consumers and enhancing their organization’s social status.
But, as noted earlier, social media can also destroy a leader’s reputation in a split second, often permanently. That’s why leaders must communicate clearly, authentically and with purpose. And that’s why CEOs need to be assured in who they are and what they stand for, both privately and publicly.
The future of boards in 2025: How they can evolve to ensure success
Boards have an increasingly critical part to play in the new corporate landscape. The rising pressure on businesses and CEO will intensify demands on the board and executive committee. By 2025, boards and their leadership teams will play a vital role—one that requires them to look, think and act differently than they do today. Nearly half (47%) of our interviewees mentioned the critical role played by the board and executive directors and how they expect it to become even more critical by 2025.
In the next five years, senior board leaders will need to think like CEOs. They will need a deep understanding of the organization’s purpose, strategy and goals. And they will need to be able to identify the challenges and prospects that both short and long-term societal shifts present. To take advantage of these future opportunities, boards must lay the foundation now by preparing and planning.
Here are four ways that boards must respond.
1. Strengthen the alignment and cooperation between the board and CEO
Nearly two-thirds (62%) of interviewees mentioned that the relationship between the board and CEO will need to become closer, more supportive and more challenging than it is today. And while directors will need to strengthen their traditional roles such as oversight of regulations, compliance and fiscal responsibility, they’ll also need to expand their role. Future CEOs will need board members who are ready and willing to offer guidance and perspective but also question their decisions rather than just rubber-stamping them.
Future boards will also need to work with CEOs to align the pace of change and organizational transformation. That will mean taking a look at the organization’s systems and structures, confirming that they will support agile decision-making and change.
2. Improve board diversity
Boards will need to become more diverse, with a more expansive worldview, by 2025. They will need to think about diversity more broadly, embracing a variety of races, ethnicities, genders and ages, but also knowledge and acquired experience.
Organizations must also look beyond current customs, such as selecting board members because of their prior role as a CEO. A wider set of skills and experiences that extends beyond the organization and its industry will be imperative. Given the trends we expect to see in 2025, boards should look for experts in technology, digitalization and geopolitical issues. And boards should also seek candidates with a transformative mindset and different thinking styles.
3. Communicate more authentically
Boards and CEOs alike must change the way they communicate, eliminating the structures and barriers to more open discussion among themselves and with the CEO. The board and CEO will have to act as a team, with regular contact and greater accessibility.
Trust and open dialogue are essential. Our interviewees suggested that CEOs will need to be more open about their decisions, strategic focus and concerns for the future. And they will need to be humble, ready to take advice from their leadership teams about both the organization’s direction and their own performance. On the flip side, board members will need to be more engaged and be prepared to share their own perspectives.
4. Boards need to plan for succession of their future CEO
Our interviewees commented, repeatedly, that boards don’t pay enough attention to CEO succession. Many also suggested that greater interaction with the executive committee will enable the board as a whole to take a more informed position on CEO succession.
Boards must start planning now for the future, so they can identify potential candidates and so emerging leaders have time for self-development and preparation for the work ahead. Boards need to work now to identify the necessary characteristics and success profile of their future CEOs, then select potential candidates and monitor their progress. And they need to look deeper in their organization: they should consider managers two or three roles below the CEO, not just immediately below them, who might be poised to develop with the right stewardship.
Boards that delay this process risk falling behind in an intensively competitive, fast-changing environment.
Moving toward 2025: How boards and future CEOs can prepare
Our report explores, in-depth, what’s at stake for organizations and how their CEOs and boards can prepare to meet the challenges of the next five years. To learn about the steps that you can take as a leader to prepare your organization to move forward, including the seven developmental approaches to help current and future CEOs be 2025-ready, download the full report now.
The article was first published here.
Photo by Octavian Rosca on Unsplash.