Putting Davos in Context

Putting Davos in Context

Last week’s World Economic Forum gathering in Davos centered on technology-driven forces that are reshaping business and society and giving rise to new possibilities for growth and innovation. To call the meeting unambiguously hopeful, though, would be misleading, particularly if you were to go by the headlines written about it. Plenty of attention was paid to macroeconomic and geopolitical uncertainties, and it’s easy to see why.

China is under pressure to sustain “medium to high” growth while navigating a broad set of reform challenges. Slumping commodity and energy markets are taking a toll on many developing economies. Europe has yet to get itself on a firm growth path, despite massive and multiple stimuli. Geopolitically, we have a powder keg in the Middle East, a refugee crisis there and increasingly in Europe, and a wild election cycle in the US. On top of all this, activist investors continue their unrelenting focus on corporate performance, especially in the US.

But while these challenges put an understandable emphasis on short-term risks and returns, the need to generate value over the medium to long term has never been greater. At Davos, I heard this most clearly during two panel discussions I moderated on the digital transformation of industries and what it means for business leaders. Extraordinary change is happening now, and speed is of the essence. Yet there’s also a level of fundamental change—to business models, industry dynamics, and organization structures—that requires a long-term, strategic perspective. Leaders must earn trust with employees and customers and build the human capacity inside their organizations to really leverage disruptive technologies.

This need to transform and create new business models also came through in a great piece that several of my colleagues recently published called Tomorrow Never Dies: The Art of Staying on Top. Their findings are striking:

  • Companies die sooner than ever before: one in three public companies overall and one in six larger companies will not survive the next five years.
  • Yet companies increasingly fail to take the long view. This is often a result of a “success trap”: instead of exploring opportunities for the future, they’re overexploiting existing business models, relying far too much on past recipes for success.
  • Companies in this trap—exploiters—significantly underperform in the long term relative to explorers. Over a ten-year period, explorers grew faster than exploiters and delivered higher long-term total shareholder returns.
  • Executives can avoid this trap by, among other things, tailoring their strategies to different environments, becoming more adaptive, shaping their business ecosystems, and embracing the diversity of the leadership challenge in today’s world.

To me, this piece makes it absolutely clear how important it is for leaders to not just streamline or restructure but also rejuvenate their organizations. Doing this in the face of substantial short-term challenges tests our resolve, flexibility, creativity, and ambition. We must strive to break down organizational barriers, accelerate transformation, embrace an increasingly digital world, and encourage new models of leadership.

Financial and economic headlines can’t be ignored, but nor should they deter leaders from focusing on the need to build and rejuvenate. To that end, I wanted to share a few links to some of my favorite BCG publications and TED@BCG talks that speak to these themes.

I hope you find them valuable and wish you all the best for a successful 2016—and for building the foundation for a vibrant future. 

Rich Lesser

President and CEO, The Boston Consulting Group

 

On Leadership:

  • Turning Around a Successful Company: Don’t wait for a crisis to hit—take the initiative. Create a healthy sense of restlessness, motivate people to experiment and act differently, and get your company to move at a much faster speed.
     
  • What It Takes To Be a Great Leader: In this TED@BCG talk, Roselinde Torres outlines three questions that define leadership in a 21st century world—a world that is more global, more complex, and more digitally enabled. Her talk has been viewed nearly 3 million times.

On Winning in a Digital World:

  • The Digital Imperative: Leaders in the digital age attack their own businesses before disrupters do. To do this, CEOs must think broadly and holistically about how to innovate around the unmet needs and pain points of their customers.

 On Transformation:

On Simplicity and Cooperation:

  • How Too Many Rules at Work Keep You from Getting Things Done: Efforts to drive measurement and accountability are stifling cooperation and productivity. In this TED@BCG talk, Yves Morieux describes why companies should prioritize fuzziness over clarity.
  • As Work Gets More Complex, Six Rules to Simplify: Today’s businesses are increasingly and dizzyingly complex—and traditional pillars of management are obsolete. In his first TED@BCG talk, Yves offers six rules for “smart simplicity.” Together, his two talks have had more than 4 million views.
Dr. Kenneth Gustin, Ph.D.

Senior Advisor | Strategy | Risk | Capital Markets | Derivatives | CCAR | FRTB | LIBOR | Treasury | Liquidity | IT | Structured Finance | PE | VC | M&A | Digital Assets | Tokenization | Due Diligence | Litigation Support

7y

Great contribution!

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René Crone, MSc

Co-Creating trusted advisor, mentor, coach, therapist, speaker, moderator, inspirator, ideator & writer

8y

Great piece, great overview for extended insights. Thanks. It instantly makes me implement the CEO title w. a new meaning, as the Chief Explorer Officer,

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Mukhlesur Rahman, PMP, PgMP, PfMP

Stakeholders Relations I Transformation I Sales I Corporate Affairs I Communications I Sustainability I Project Management I

8y

Superb article to read. Companies must behave as a start up even if it becomes traditional established company. And very importantly leaders must be human and hero at the same time to set up open and collaborative culture.

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Yazid Allal

Experienced IT leader with a track record of successfully managing large teams

8y

Very interesting post. Big companies , organization need "startupification", a kind of cultural reboot..

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