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CEOs told to bet big on coming mega-trends

12 October, 2011

CEOs have been told to look beyond to the current gloomy economic news, and take intelligently aggressive steps to capitalise on the mega-trends transforming business.

An era of seismic changes — with new middle-class consumers and fast-globalising competitors from emerging markets as well as innovative business models arising from the development of the new technologies — presents CEOs with a golden opportunity to galvanise their companies, according to Hans-Paul Bürkner, president and CEO of The Boston Consulting Group (BCG).

But, if leaders are to capitalise on these trends and guide their companies through the economic gloom to a better future, they will need to take some "bold bets" and "intelligently aggressive" action, he added.

Bürkner said senior managers face an extraordinary test of their personal leadership.

"The challenges confronting CEOs are large, and getting larger," he said.

"There are many new middle-class consumers in the emerging markets who have continuously changing needs, there are new competitors from the emerging markets with different ways of doing business, and there are new business models created by disruptive technologies.

"Never before have corporate leaders faced such a convergence of major transformative events. This truly is an era of seismic change — and it presents today’s managers with a once-in-a-generation test of leadership.

"To pass this test, CEOs must take decisive action. They should not hunker down and try to preserve the status quo. Yes, there are risks — but the opportunities are greater. So they should be making some bold bets: entering new markets, acquiring struggling competitors, investing in marketing and new products and services, making the most of digital technology, creating new business models, and building adaptive organisations."

Addressing developed markets specifically, Bürkner said today’s senior managers couldn’t afford to stand still — otherwise, they risk leading their companies into terminal decline.

"Companies from China, India, and other emerging markets are rightly charging ahead. So to compete, you need to make more changes more frequently than the previous generation of corporate leaders has. If you don’t take these steps, your company could lose advantage, market position, and even its right to exist," Bürkner said.

Bürkner’s prescription for corporate success chimes with the recommendations of some senior business leaders featured in Leading Transformation, a major new BCG study on the challenge of orchestrating organisational change.

The study features exclusive interviews with 11 CEOs who have re-energised their organisations, reset strategies, and made fundamental and difficult changes.

These executives regarded the challenge of transformation as a mission rather than simply a job and found ways to: deliver ambitious goals in 1-3 years by building on a bedrock of bold moves; fund the organisation’s transformation by freeing up cash and resources and/or unleashing the necessary political capital; and build the right team with a shared mindset and commitment — since even the best-laid plans will fail if people are not on board.

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Ian Dolan | Friday, October 14, 2011, 9:07 PM
"You need to make more changes more frequently" = change for change sake in my book. Maintaining a competitive advantage requires a much more measured approach. History is full of "gung ho" CEOs who have plunged their companies into debt-fuelled expansion, only to have the mat whipped from beneath them when economic conditions falter.