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Six Priorities for Challenging Times

By Alberto Saracho - McKinsey & Company


By Alberto Saracho | Partner - Mon, 03/06/2023 - 09:00

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The most relevant question to be answered right now is what matters most today. We’ve spoken with hundreds of leaders and found six priorities that feature prominently on CEO agendas worldwide. They’re the moves leaders are taking to shore up defenses and gain ground on rivals and competitors, which is very different from the purely defensive agenda that many companies are following.

If an executive had fallen asleep in 2019 and just woke up, he wouldn’t recognize the business world of 2023. The COVID-19 pandemic rewrote the rules, and now a new and potent disruption seems to arrive every other day. Managing complex organizations is much harder today than it was just a few years ago. And the hardest task of all for CEOs is to decide what needs to be done now and what can wait.

  1. Resilience is emerging as a vital “muscle” for companies operating in a world of endless volatility and disruption. The pandemic asked companies to move much faster. Now inflation seems to be here for the duration, thanks in large part to depleted supply chains, especially in energy. That’s causing companies to deploy their newfound speed across all six dimensions of resilience: finance, operations, technology, organization, business model, and reputation. US companies are pursuing one path; European companies are responding slightly differently, as befits their circumstances. For CEOs, the overriding question today is: How resilient is your company?

  2. A second priority: courage. With lots of indicators flashing red, it’s tempting for business leaders to pull back a bit, postpone some initiatives, and scale back on growth plans. Tempting, but wrong (for most companies). The best leaders and companies are ambidextrous: prudent about managing the downside while courageously pursuing the upside. These leaders are thinking about the next decade, not the next month. Many are spurring their organizations to rethink opportunities and reset the strategic gameboard considering the current volatility. As one CEO said, “I don’t want to benchmark our performance to the industry — I want to reinvent the industry.”

  3. More than half of top executives consider business building a Top 3 priority. How do they do it? They begin by setting the bar very high (think unicorns), and then they protect the new business from business as usual. The most fertile ground for new-business building is green technologies; our research has identified 11 such businesses whose collective value could be $12 trillion in a few years. To claim a leading position in these value pools, CEOs need to remember that, in these capital-constrained times, they have an edge that startups do not: they can endow new businesses with the assets needed for success.

  4. CEOs’ fourth priority: new and better technology. It’s true that all the nontech companies that are making the shift are putting software at the heart of their business. And it’s also true for all the companies seeking to get maximum value from their digital transformation. But that’s just the start; technology is always evolving, offering new opportunities to CEOs looking to transform their business. For inspiration, take a look at the top tech trends we’ve identified, working with 100 of the world’s leading experts. Which of these trends will your company use to gain an edge? As I prepare this article, ChatGPT is reshaping the business and information worlds. We must be ready to expect more of this and find ways to leverage it to improve the business ecosystem and the life of all of us.

  5. Fifth CEO priority: The road to net-zero emissions. At COP26 (2021 United Nations Climate Change Conference), business leaders’ pledges to target nearly 90% of CO2 emissions for reduction signaled that the private sector was truly engaged for the first time. Then major new headwinds began swirling — surging inflationwar in Europeenergy insecurity, and a potential global recession. These are the most serious challenges in at least a generation. But there’s some surprisingly good news: the goals of sustainability, economic competitiveness, affordability, and national security dovetail as never before. It’s up to the CEO to adapt, mitigate, and knit these concepts into a vehicle that goes from zero to net zero.

  6. The sixth priority: leaders need to reengage employees. In recent years, the contract with workers has become a little too transactional for anyone’s liking — we pay you, you show up, see you tomorrow. In the wake of the COVID-19 pandemic, CEOs need to find a new plan of engagement. Getting the hybrid work model right is one dimension. But a requirement to spend two days in the office, for example, is going to get old fast without some new incentives. CEOs need to think hard about the office of the future, a place where workers want to be — to see friends, riff on new ideas, and find enough meaning in their work to get them through the next week of video calls. 

The CEO is the company’s ultimate strategist. Less well understood is that she/he is also the ultimate integrator, charged with identifying the issues that span the enterprise and formulating a response that brings all the right resources to bear. To do that well requires a broad range of contradictory perspectives: outside in and inside out; a telescope to see the world and a microscope to break it down; a snapshot view of the immediate issues and a time-lapse series to see into the future.

Photo by:   Alberto Saracho

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