Leader: Are You Enough to Effectively Navigate Your Complex World?

Egon Zehnder is an executive advisory firm that I was recently introduced to. Something that they do about every three years is a widespread survey of CEOs. Their most recent report was released in 2021 (see https://www.egonzehnder.com/it-starts-with-the-ceo/highlights).

At a high level, here is what they found:

• CEOs are struggling in two ways: (1) they are struggling to effectively navigate their complexity, and (2) they are turning over at increasing levels
• CEOs are learning two things: (1) succeeding as a CEO requires improving their capacity to transform themselves, and (2) carrying a primary focus on organizational success by the numbers (e.g., revenue, profitability, EBIT, percentage growth) puts them on a path of struggle (i.e., a different and higher-ordered focus is needed).

Below, I dive into these key points.

CEOs are Struggling

Egon Zehnder’s former Chair, Jill Ader, reports that many CEOs are questioning “Am I enough?” for their role. This suggests that that many CEOs are feeling like they are not big enough for their britches.

And, turnover statistics suggests that they may not be big enough for their britches.

Consider these statistics:

• Publicly traded companies worldwide found that half of them appointed three or more CEOs in the decade from 2011 to 2020.
• Almost every year since 2011 has set a new record for CEO departures.
• 39% of CEO departures are emergency departures. This means that there was a surprise that they left for a variety of reasons including being fired, contract not renewed by the board unexpectedly, resigning, or experiencing unexpected health issues.

Clearly, a large percentage of CEOs are struggling.

So, what have they learned that they can do about it?

What CEOs are Learning About How to Be an Effective CEO

Get this: In 2018, only 26% of CEOs strongly agreed that they need the capacity to transform themselves as well as their organization. In 2021, 80% strongly agreed.

CEOs are learning that in order for them to be an effective CEO, they must focus on and learn how to transform themselves and their organization. The reality is that if they do not significantly transform, they will fall on their face.

So, what does this look like?

Egon Zehnder reports that in the face of complexity, many CEOs are choosing to slow down and consider how to do things differently. One quote that they provide from a respondent is: “You can’t expect everything to change whilst you stay the same. Leadership takes personal development and evolution.”

Further, Egon Zehnder reports that CEOs are learning that if they want to succeed, they can’t focus on what leaders have typically focused on and what they are incentivized to focus on: the numbers (e.g., revenue, profit, growth, EBIT). Egon Zehnder writes: “The most forward-looking leaders are looking beyond traditional markers of performance and putting increasing focus on game-changing innovation, longer-term growth, and broader stakeholder interests.”

So, if CEOs are moving away from focusing on the numbers, what are they focusing on? They are learning that the only way to be successful with the numbers, they need to focus on imagination, courage, and working on their systems (rather than in the systems). Egon Zehnder states, “Visionary CEOs embrace the role of architect rather than operator; in doing so, they can inspire their organizations, drive value-creating change, and find meaning in their evolving role.”

And, the way to embrace imagination, courage, and working on the systems requires that leaders shift from being numbers-focused to being purpose-focused, with the purpose being related to the “prosperity for the many.”

What Egon Zehnder is Describing is Vertical Development

Everything that Egon Zehnder is describing is that in order to succeed as a CEO, CEOs need to upgrade themselves from being Mind 2.0 results-focused leaders to being Mind 3.0 value-creating leaders.

If you want to learn more about these different leadership levels, vertical development, and how to help leaders elevate, check out these resources:

• TD Magazine Cover Article: Go Vertical
• Video: What is Vertical Development?
• Video: Investigating the Sophistication of Your Executive Team

And, I just so happen to specialize in helping leaders vertically develop to operate as Mind 3.0 leaders, which is required for CEO effectiveness. If you would like to explore working with me to help you elevate your leaders, let’s connect.