The role of a CEO or MD is undeniably challenging and continuously becoming more demanding. Over the past few years alone, they’ve navigated through a global pandemic, disrupted supply chains, conflicts, persistent inflation, and various other upheavals. Managing any one of these issues independently is substantial enough to divert a CEO’s plans. However, when considered collectively, it creates an incredibly daunting operating landscape, perhaps the most challenging we’ve witnessed.
McKinsey identified the eight priorities for CEOs in 2024:
I summarise and highlight each priority in a couple of sentences and raise some questions to consider. (See the 95-page detailed report below in the link.)
1) Generative AI is ready to go to scale to create something big
The development of generative AI in the past couple of years has been nothing short of astounding. With significant advancements, AI’s generative capabilities have witnessed a remarkable surge. Generative AI refers to a subset of artificial intelligence that specialises in generating entire new, original content, such as images, text, audio, or even video, typically in a way that mimics human creativity or natural content creation.
- What is your company’s approach to generative AI?
- Where generative AI can help your company’s growth?
- What are the critical success factors that need to be in place in order to generate AI for the advantage of your organisation? (e.g. Infrastructure, Apps, Data, Models, Tools etc.)
- What skills do you need in place in order to incorporate generative AI into the daily operation?
- What are the risks of using generative AI?
2) How to outcompete with technology
Finding a path through the technology landscape to gain a lasting competitive edge stands as the paramount business hurdle today. While not new, this challenge grows more urgent, significantly impacting how companies operate in a landscape transformed by digital and AI technologies. Acknowledging the need to confront this challenge, companies are grappling with its complexity. McKinsey’s research reveals that despite about 90 per cent of companies initiating various forms of digital transformation, merely a third of the anticipated revenue advantages have been realised, on average.
- What capabilities do you need for successful digital transformation?
- What are the key and potential saboteurs?
- How is your leadership team equipped to lead successful digital transformation across the organisation?
- How much are your organisation and your people able to renew themselves?
- What do they find most challenging to let go and unlearn?
3) The biggest capital reallocation in our lifetime – Energy transition
The energy transition stands as a top priority for CEOs worldwide. There’s an evident urgency as time is running short to address environmental challenges. While commitments to transition towards cleaner and sustainable energy sources are abundant, the pace of actual implementation or concrete actions lags behind. The gap between pledges and tangible actions raises concerns about meeting critical deadlines and fulfilling promises to combat climate change. It highlights the need for accelerated and decisive steps to translate commitments into impactful, on-the-ground changes in energy policies and practices.
- What specific goals or commitments has your company set regarding renewable energy adoption or carbon neutrality?
- How does your leadership envision aligning business growth with sustainable energy practices?
- Are there any partnerships or collaborations your company has engaged in or could perhaps engage in to facilitate the energy transition?
- How do you address concerns about the cost-effectiveness of transitioning to renewable energy sources?
- What challenges and potential roadblocks do you foresee as impediments to your energy transition objectives, and what strategic initiatives or measures does your company plan to implement to overcome these obstacles and accelerate progress towards achieving these objectives?
4) Navigating the road to courageous growth
Achieving sustained revenue growth in the post-financial crisis era has been a significant challenge for corporations. Over the last 15 years, growth rates slowed drastically, even among the largest companies, with expansion at just half the pre-2008 pace. This sluggish growth coincided with a surge in capital investments, squeezing returns. Amidst a slowing global economy, rising inflation, and geopolitical uncertainties, pursuing profitable growth faces mounting obstacles. Business leaders must adopt a holistic growth strategy centred on vision, organisational enablers, and clear growth initiatives.
- What key initiatives your company has undertaken to achieve and maintain robust revenue growth?
- How does your company approach customer acquisition and retention to drive continuous revenue growth?
- What role does innovation play in sustaining revenue growth and improving corporate performance?
- How does your company respond to industry disruptions and market shifts to sustain revenue growth?
- How does your leadership team foster a growth-centric culture within the organisation?
5) What’s your superpower? (How can companies build an institutional capability to achieve competitive advantage?)
Amidst the whirlwind of countless promising business plans, CEOs and MDs face tough choices. Standing out in this chaos means finding one standout strength—an institutional “superpower.” It’s like a secret weapon that sets a company apart, making it different and better than the rest. This superpower isn’t just about making money; it’s about having something special that keeps a company strong and successful, even when things get tricky in the business world. More and more top leaders are realising that having this unique strength is what helps them win in their industries. (Institutional capabilities: an integrated set of people, processes, and technology that creates value by helping the company consistently do something better than competitors. An institutional capability should derive from the corporate strategy, of course.)
- How do you define and identify an institutional capability within our company that truly sets us apart from competitors?
- What steps have you taken to prioritise the development and investment in cultivating this distinctive capability?
- How does our leadership team foster an environment that encourages the cultivation and enhancement of your identified institutional capability?
- How do you foresee your institutional superpower evolving to remain relevant and adaptable in an ever-changing market landscape?
- What opportunities does your institutional superpower present in terms of attracting talent, gaining market share, or fostering customer loyalty?
6) Learn to love your middle managers
Why? Because your middle managers are the heart of your company, I love this! Without the ability of middle managers to connect and integrate people and tasks, an organisation can cease to function effectively. Rethink the role of middle management, challenging common assumptions that career advancement necessitates moving out of the current position. This approach addresses misconceptions about job importance based on organisational charts and emphasises the need to prioritise job satisfaction and capabilities rather than hierarchical promotions. Reward and retain exceptional middle managers by acknowledging their impact, offering tailored incentives, and avoiding promotion as a default recognition.
- How do you currently assess the effectiveness and value of middle management in your organisation?
- How does your organisation define career progression, and does it allow for growth within existing roles?
- How do you assess and support managers who excel in their current positions without pursuing higher titles or positions?
- Have you explored alternative pathways for career progression that value deep expertise and capabilities within a specific role?
- How do you balance the need for leadership succession planning with retaining high-performing middle managers in their roles?
7) Geopolitics: Beating the odds
The need for board-level strategic conversations on geopolitical risk is urgent. The evolving turbulent geopolitical landscape encompassing Europe, Asia, and other regions demands a vigilant approach. It’s crucial to broaden one’s perspective and anticipate future shifts, now integral to strategy and performance. Scenario planning is vital in this regard, serving as a cornerstone. Leaders should establish early-warning systems and contingency plans spanning various risk categories to bolster strategic foresight. Anticipating and planning for geopolitical changes have reemerged as essential pillars for organisational success.
- How well do we understand the geopolitical landscape and its potential impact on our organisation? How frequently does your leadership team discuss this topic?
- How well-equipped is your leadership to swiftly develop scenarios responding to sudden shifts and unforeseen geopolitical events?
- How often do you engage in scenario planning exercises to simulate various geopolitical scenarios?
- How can leaders be trained to identify opportunities within crises, considering that most challenges present an equal number of potential opportunities?
- How do you balance preparing for external influences that shape your organisation with actively defining your role in shaping the environment around you?
8) A new lens on the macroeconomy
Recent turbulence globally has prompted speculation about a potential shift in the long-term economic regime. According to new research from the McKinsey Global Institute (MGI) and a recent executive survey, signs indicate this possibility, although the exact nature of this future remains uncertain. Business leaders are advised to stay vigilant about potential scenarios, allowing them to adapt and strategise effectively. MGI developed four scenarios: Return to the past era, Higher for longer, Balance sheet reset, and Productivity acceleration.
- How are you preparing our organisation for potential shifts in the long-term economic regime?
- What insights can you gain from MGI’s four developed scenarios, and how might each impact your business? (see detailed report below)
- Are you equipped to adapt quickly to different economic scenarios? How agile is your strategic planning process?
- What indicators should you monitor to stay ahead of the economic shifts outlined in these scenarios?
- What are the critical strategic priorities that remain consistent across all four scenarios, and how can you ensure we’re addressing them effectively?
In navigating the complexities of today’s business landscape, CEOs and top leaders face a convergence of challenges that demand exceptional resilience, strategic acumen, and foresight. As we venture into 2024, the demands on leadership have never been more rigorous. The eight priorities outlined by McKinsey underscore the multifaceted nature of leadership in these times. By engaging with these priorities thoughtfully and addressing the related questions I raised, leaders can pave the way for adaptable and forward-thinking organisations that not only navigate uncertainties but also thrive in the face of change.
I WISH YOU A PROSPEROUS AND SUCCESSFUL NEW YEAR!