Leaders today confront a raft of complexities. Here, we looked at developing events Chief Executive Officers (CEOs) are or should pay attention to as they strive to disrupt successfully.
Over the past several years, chief executive Officers (CEO) have faced mounting uncertainty and 2024 is proving no exception.
There is the going concern about what matters most, amid serial crisis and disruption, and where leaders should focus their energies to enable their organizations to thrive.
Obviously, all of the Chief Executive Officers (CEOs) are grateful for the opportunities and the lives they have. Yet it’s fair to say that it has become a much more difficult time to lead. We are dealing with an endless series of crises. There are two major conflicts.
There is suffering in many parts of the world. There are upcoming elections in many countries. There are concerns about the global economy, with performances varying across different pockets, and there is hesitation and hope around technology.
CEOs in this regard know it’s important to lead with empathy and humanity. one of the biggest issues impacting business today is geopolitics. Economically, there is more and more fragmentation.
There are competing interests among the US, Europe, China when it comes to technology platforms, and we can keep going on.
But it’s fair to say that geopolitics has moved away from being the remit of the chief risk officers and government affairs to take the center stage on the agenda of CEOs and the boards.
1. Generative Artificial Intelligence
Perhaps the story of the decade, and maybe we’re still not done with it, is technology, notably gen AI [generative AI].
We saw just a year ago the launch of very powerful gen AI tools. Today, we are seeing a shift from pilots to enterprise-wide rollouts of an explosion of use cases across every industry as companies try to figure out how to make the most out of gen AI while managing the risk. These disruptions mean that CEOs will have to lead in a new way.
Many organizations are launching their own proprietary gen AI tools to manage some of the risks.
How should CEOs be thinking about gen AI and about how to make the most of its potential? To put it in context, the McKinsey Global Institute estimates that generative AI could be worth more than $4 trillion in value. So it’s something that everyone is talking about constantly.
To what degree is generative AI in use in your organization today?” one would know that it is was already in at least one business function. And that’s in contrast with about half who say AI is in use in one function in some form. So it is absolutely already in use and also very much something that people are investing in going forward.
Although Research has shown, historically at least, that most digital transformations, including some AI-driven transformations, fail to deliver the expected impact. Why is this? And what can leaders do to realize that impact and drive performance?
Despite all the investments, it is estimated that companies on average have captured less than a third of the full potential they should expect from their digital transformations. And seeing the distance between the leaders and the laggards getting bigger. Some leaders are pulling ahead because they are building hard-to-copy capabilities.
They know it’s not just about tech. It’s also a lot about change management. They know it’s not just about what some CEOs called a snackable AI feature. It’s about transformative AI that will build superpowers for their people and for their company.
The compounding effect of gen AI and digital happens when CEOs rewire their organization. And to do that, they must do six things. First, they adopt a digital road map that is business led, not feature led. They ensure they have the right talent.
They adopt an operating model that can scale from the get-go; this is not just about the pilot—you have to have the end-state rollouts and the scaling in mind. They make technology easier for people to use; this is about making the lives of employees, colleagues, and customers easier.
They put experience at the heart of change. And they use data—they embed data everywhere and they focus their leadership and their investments on adoption and enterprise scaling.
But what are compounding effects of generative AI? Leaning on the examples McKinsey, is in order here, according to the Organization, they are using generative AI to give the people superpowers, making it integral to the way we work.
We are training our colleagues on it, and we are changing our colleagues’ behavior. From day one, we ran it with the idea of full-scale adoption.
2. The complexity of climate change
It is a known fact that energy transition requiring the biggest reallocation of capital we expect to see in our lifetime. Since then, costs only seem to be rising. Climate is obviously a complex question that varies by geography.
Climate change is the generation-defining challenge for all of us the recent energy crisis has demonstrated to us that we actually need to go after four interdependent objectives and not just one. We need to reduce the emissions. We need to improve affordability. We need to have energy security, and we need to marry all of that with industrial competitiveness. So we have to run two energy systems in parallel.
On the one hand, we have to scale the new zero- or low-carbon energy system.
There were lots of commitments made at COP: folks committed to triple renewable by 2030, to double the energy efficiency improvement rates, and to establish new standards to enable the global trade in hydrogen.
At the same time, on the other hand, we have to accelerate the decarbonization of existing systems. That was a big part of the discussion at COP.
Estimates suggest that emissions of methane from oil and gas operations could be reduced by 30 percent at no or nearly no net cost.
Of course, the next step is to translate that into measurable actions. Financing will play a big part in the resolution of this equation.
There is a $41 trillion funding gap. Addressing this gap, of course, is critical because the technologies for net zero are largely available today.
There are some estimates suggesting that 90 percent of the carbon abatement that needs to happen could be achieved by using already-proven technologies, but of course we need to have the funding, and we need to focus on adoption. In the meantime, adaptation is critical, and we are seeing countries and companies take real action on health, water, food, and nature.
When comes to the actions leaders should take, perhaps the most important action is to frame these choices and these trade-offs as an end. We should be able to reduce emissions and do it in an economical way, making sure there is affordability and security.
3. A Focus on Growth
This has really been an extraordinary period. Imagine you’re an executive and you run a company and you got yourself through a cyber-crisis where, because of geopolitics, you had a cyber-attack and you were barely able to hold on to your website, which is central to your revenue trajectory.
Then you handled a major commodity price increase, and then you handled a supply chain disruption.
And then you turn around and say, “Oh, wait a minute, I also have to grow.” It has been a very tricky period.
When we say these things intellectually, it’s hard to absorb what it feels like when you’re somebody who has to actually navigate all of these things all at once.
What we find is that only one in four companies can both grow from the top-line point of view, outpacing their peers, and maintain profit growth.
Rising risks on the world stage
4. Geopolitical Tensions
Geopolitical tensions have been escalating, and that introduces significant risk for companies, especially those that are operating internationally.
And 2024 is a major election year, not just in the US. But globally, folks in more than 70 countries are heading to the polls in few months to this time.
For business, geopolitical risk is center stage, especially for CEOs, their teams, and the boards.
As such they we’re advising the clients to do is build both geopolitical muscle and bone.
Geopolitical muscle is all about the capabilities of the executive and the board. The kinds of decisions that the executive team and the boards might be addressing are things like what their supply chain footprint is and how they want to think about flexibility and resilience in their supply chain footprint.
It might also be about how they approach investments in new markets and how they evaluate those investments relative to their risk and return.
It could also be about the technology bets they make and the technology architecture that they have in their organization.
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