The business pages make for grim reading these days. Inflation, recession, ongoing supply chain issues, threats of industrial action and so on. The press is pervaded by doom and gloom. But, in amongst this, there is a regular frisson of excitement as yet another CEO’s halo falls away and we get a glimpse of boardroom turmoil, boardroom bro-ism, outlandish behavior and, in some cases, outright delusion. To the casual observer, it would seem the loftiest positions in the corporate world are occupied by despots, delinquents, or deception artists. The reality is very different. Hundreds of CEOs turn up every day and give their honest best effort to guide their businesses through one of the most disrupted eras in modern history.
What makes a modern leader?
These days we tend to deal in extremes. The same is true when assessing CEO performance and behavior. At one end we have the aberrant, at the other the amazing. At AlixPartners we’ve encountered all types of leaders. We’ve seen the powerful impact of the long shadow that charismatic leaders cast over their businesses – for good and for bad. We’ve applied our learning to inform the assessment criteria used by Chief Executive Magazine to pick its ‘CEO of the Year’, a 35-year annual event. The list of winners is replete with exemplary business leaders. This year’s winner, Salesforce’s Marc Benioff, is no exception, save for he comes from a sector – tech – with more than its fair share of leadership horror stories.
While we love to fascinate over the failures, Benioff, like so many of his predecessors, is a fine case study for what makes an effective, modern transformative leader.
The defining characteristics
In essence, the defining characteristics of a transformative leader have changed very little. The role has become more complex and there is much greater nuance and ambiguity to manage. Nevertheless, the role is still defined by familiar traits such as strategic vision and the ability to rapidly effect change, building and empowering high-performing teams. The ability to learn and adapt and a focus on building a strong, underlying culture have also emerged as core skills. It is through these lenses that the assessment panel for the CEO of the Year makes its decision.
This combination of skills is unusual. Most leaders excel in one or two areas but may be found wanting in others. Historically, financial performance and operational effectiveness have prevailed in the appraisal of effective CEOs. More recently, however, the ability to attract the very best talent, to motivate and align that talent, and to unleash the power of teams are the capabilities most highly correlated with financial and human capital success.
We are also seeing a growing need for certain qualities. These are not skills per se and, in some cases, can be very hard to learn. They are resilience, adaptability and emotional intelligence and they reflect a distinct, ongoing trend towards a very particular profile for a CEO.
The age of the Professional CEO
The traditional value placed on financial and operational expertise is understandable. The Friedman-esque focus on delivering shareholder returns naturally favors these skills. They’re also easy to measure. It’s there in black and white and the ability to drive positive trends in QBRs remains a core skill among transformative leaders. However, how this is done has become increasingly complex and it harks the rise of the need for professional CEOs. These are more than exceptional technicians who’ve risen to the top. They are built for purpose, developed specifically for leading people (or people leadership).
Much of the emphasis for this development will be on what have rather dismissively been referred to as ‘soft skills’. They are anything but. They are the key to unlocking outstanding performance, retaining talent, and leading businesses through turbulent times. It is a very specific skill set and one that is increasingly specialized.
Being at home in the grey areas
Ambiguity and disruption define the modern business landscape, so, inevitably, being comfortable in the grey areas is now a prerequisite for leadership success. The black and white matter, but it’s the grey areas that determine true success.
CEOs today preside over a complex mix of stakeholders. Within their organization, they are dealing with the conflicting demands of multiple generations. Externally they have investors to keep happy, as well as a mass of scrutineers, critics, competitors, and other stakeholders. Balancing the needs of this wildly diverse collection is practically impossible.
So, what are we seeing that makes CEOs like Marc Benioff stand out? They deliver outstanding commercial performance obviously; that’s a table stake. They also create a compelling vision of the future and give critical context, so that stakeholders can fully understand why things are happening. The transformative leader’s comfort with the grey area and assuaging others’ discomfort with it through clear, compelling, and transparent communication is, arguably, the defining characteristic of a modern transformative leader.
Bringing the business together
The ability to contextualize business decisions for stakeholders enables transformative leaders to connect to their organizations. They can connect their people through a sense of shared values, purpose, and goals, regardless of their differences. They can connect the business with its stakeholders through an appreciation of commercial success or considered aspiration to improve in certain areas (ESG being an obvious example) and, significantly, they can connect their business to society. This last point enables businesses to take positions on key social issues authentically and become attractive to future talent.
Creating these connections is something we increasingly see in the world’s most successful leaders. As we navigate further waves of disruption and uncertainty, this critical skill will be a non-negotiable in all transformative leaders. In some ways, therefore, it’s of little surprise that this year’s CEO of the Year is a man whose entire business is based on connection.