CEOs UNDER PRESSURE - Towards Better Capitalism - WEF

People don’t believe in capitalism anymore. Society demands CEOs not only pay attention to shareholders’ concerns but see beyond and include societal concerns into their agenda as well.

At the same time CEOs under enormous pressure to deliver short term financial results. When for example CEOs focus on the long term strategy and on the transformation of their organisation investors become impatience and highly critical.

The challenge is complex and requires multi-perspective approach with involving all the stakeholders:

  • There is a need to educate the investing side on what type of questions they should ask and what kind of dialogues they should have in order to work towards better capitalism.
  • Short term data are purely financial data, does not reflect the real and long term value of the companies, which could be its people and their knowledge. Therefore, CEOs should explain the why not just the what to their shareholders.
  • Reports are not reflecting the real value of the companies.
  • CEOs have to have long-term visions and long-term plans. There is a reason it is in plural, because in this continuously changing business environment it is important to have different scenarios for both.
  • Investors extract values from the market while CEOs create values. Therefore, they have different expectations, expertise and they initiate different dialogues. CEOs need to educate investors but that requires courage, conviction and persistence. And it can be painful. It is also important for CEOs to cultivate relationship with their investors, and build trust as investors sometimes give more credit to those who they trust without short-term proof.
  • It is important for CEOs to connect their strategy to the global megatrends. When it is well connected, then you can challenge investors by telling them: question the megatrends not the strategy. They will obvious not be able to do it.
  • To restore lost trust in capitalism in the society CEOs need to engage all their stakeholders at the same level, not only their shareholders.
  • CEOs have to have opportunities to discuss their strategy thoroughly in the media without being cut off. Presenting short-term activists’ views only, do a lot of harm.
  • Both investors and CEOs need to face the fact that there is a new market force which is not financial but societal.
  • There is a demand for private and public partnerships and cooperation which provide platform for not only delivering business solutions but addressing the above challenges as well.
  • Finally there is also an important role for governance and regulation to play in this complex topic.

Questions to consider:

Where do you need to shift your focus as a CEO to better manage the above agenda?

What skills do you need to sharpen in order to be able to tackle all of the above challenges?

What dialogue would you start with your shareholders?

How can your BOARD to be more prepared for the societal demands?

 

Source: https://www.weforum.org/events/world-economic-forum-annual-meeting-2018/sessions/corporate-governance-for-the-long-haul?tab=LiveBlogs#stream-header

 




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