‘Complexity’ is the 2015 challenge! – Are leaders ready for ‘glocal’?
What is the key challenge in the coming years and how to prepare future leaders.
IBM released its high-profile annual CEO study with interview results from 1,541 CEOs worldwide. The focus is on ‘complexity’ as newly identified challenge that CEOs face increasingly over the coming years.
(Note: the study results are no secret and available in the public domain: http://www-935.ibm.com/services/us/ceo/ceostudy2010/index.html)
Complexity is what develops when a company tries to make their product and services easier to use for their customers and clients. – Why? Look at what we customers expect of the products that we buy these days:
Example – let’s take cars: New cars these days are highly integrated products that go far beyond only ‘taking you from A to B’. As added features we find WiFi and DVD players installed for entertainment. The radio receives traffic reports feed into the car’s navigation system to guide you around heavy traffic. There are distance sensors that automatically sound alarms and engage the brakes should we get too close to an obstacle too fast. Collision detection systems adjust your seat belt and deploy airbags to keep you safe and then call help through the car’s mobile phone system automatically while directing emergency rescuers to the car’s crash scene.
Integration entails inter-dependencies
These technological marvels in a car are integrated to run smoothly ‘behind the scenes’. They also pose significant challenges for the manufacturer that needs to keep the features as easy to use as possible for the customer or run even completely invisible to the customer. Nonetheless, all these components must work together seamlessly in an integrated way that create complex inter-dependencies among them.
This requires the manufacturer to integrate services and products outside their typical ‘automotive’ spectrum and ability. They need to collaborate with other suppliers that may not even have established ties to the car industry.
Note that the traditional product ‘car’ has undergone change to become an integrated ‘mobility and lifestyle’ product.
This increasing technological complexity at an increasing speed translates into the manufacturer’s organization and challenges its leadership.
Is there a ‘magic bullet’?
“The vast majority of CEOs anticipate even greater complexity in the future, and more than half doubt their ability to manage it.” – This fundamental statement strikes me most IBM’s 2010 CEO Study though it does not hold true though for a minority of outstanding organizations, which found ways to deal with complexity and produce 20% profits over their competitors nonetheless!
The ‘magic bullet’ facing unpredictable uncertainties seems a mix of
- Creativity (it’s the highest ranked leadership quality by all CEOs!) that allow to react fast to a changing environment
- Integrating customers into their processes
- Simplifying what organizations do and produce.
Perspective of CEOs in Life-Sciences
Now, how does this translate into our daily work? Most of my professional life I spent in different areas of the Life-Sciences industry in Germany and the USA that I chose as an example. What caught my eye here are the responses by CEOs from Life-Science organizations in Germany and the USA in comparison. – How do they rate the upcoming complexity challenges, how prepared do they feel and what do they look for in future leaders over the next few years?
The 3 Needs
US CEOs (86%) more than German CEOs (81%) expect higher complexity in the years to come but only 45% (in both countries) feel that they are prepared to cope with this new challenge successfully. This opens a larger-than-ever ‘complexity gap’ reflecting the uncertainty on how to operate in the volatile and murky waters of the new business environment.
Interestingly, the German CEOs rely confidently on creative leadership making decisions quickly (over thorough decisions) in the future by 18% above all CEOs sampled. The US CEOs, in contrast, seem more pessimistic by relying on quick decisions slightly less that CEOs overall. Both, the German and US CEOs equally make integrating customers to better understand the customers’ needs their highest priority
The CEOs take different approaches to how and how much to simplify: While the Germans seem more radically simplifying products and operations more than CEOs overall, the US CEOs focus on reducing fixed costs willing to increase variable costs to allow for up-scaling ability as need arises.
3. Focus in Emerging Markets
The study including all CEOs proves that 76% aim at the rapidly developing markets. It is not surprising that market factors is their #1 external focus followed by technological and macro-economic factors.
Key Attributes of Future Leaders
What kind of leadership we need to manage complexity successfully over the next 5 years?
The CEOs agree on the following three attributes:
- Creativity (60%) ranks highest overall followed by
- Integrity (52%) and
- Global thinking (35%).
What CEOs are looking for are leaders that understand and collaborate closely with the customers, show strong people skills and have a deep business insight with intelligence data.
The future leaders are innovators able to think on their feet and open to experiments when speed needs to rule over correctness. The capacity to simplify for the customer is crucial. This entails reducing the resulting complexity by stripping what matters down to the core and focus on that. Sound planning may have to give way to situational yet strategic management to avoid information paralysis and gain competitive advantage. – The coined term ‘glocal’ means to integrate globally using all resources available worldwide while doing locally only what is necessary.
What do you think – are we ready for the complexity challenge? Any suggestions how to prepare?