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Data to decision-making: Is your board AI-ready?

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NOVEMBER 20, 2019 RESEARCH REPORT

In brief

  • Businesses today operate in a complex and volatile environment, and the demands of the C-suite are more dynamic than ever.
  • Leaders need to balance expectations of society, customers and shareholders, while maintaining competitive advantage and long-term sustainability.
  • Learn how advances in AI are helping leaders and board members make informed, data-driven decisions to address challenges and create lasting impact.

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A Hong Kong wealth management company is now using AI to assist its board in making decisions by helping weighing up risks and calculating outcomes. Based on its analysis, the applied technology makes recommendations about the validity of investment propositions and casts a vote, which is counted alongside those of its fellow human board members.

It may sound like a scene from a futuristic film, but it’s not. This example illustrates a growing shift that boards and C-suites are currently undergoing as AI plays an increasingly present role in enterprise leadership and decision-making.

With so much geopolitical and economic change occurring globally, pressure on executive leaders to drive performance results increases constantly. New players might threaten to disrupt the market, and leaders seem to be hyper-aware of the need to emulate the speed and scale of digital natives to remain competitive.

The pressure to meet customers’ expectations is also high on the business agenda, as is the duty to deliver in a socially-responsible manner. And, amid all this, enterprises continue to face shareholder demands, as they work to remain predictable and consistent with respect to performance. Bringing AI and analytics to the boardroom will help leaders address these challenges and create lasting impact across the whole enterprise, proving intelligent technologies are no longer a business advantage—they could be an operational imperative.

With so much on their plate, board members and C-suite leaders need to look at new ways of setting and delivering on expectations to maintain their edge.

While technology has no-doubt added to this mounting pressure, it’s also a key enabler in helping to address it. Bringing AI and analytics to the boardroom will help leaders address these challenges and create lasting impact across the whole enterprise, proving intelligent technologies are no longer a business advantage—they could be an operational imperative.

Bring intelligence into the boardroom

AI-derived boardroom insights can take many different forms and include:

Intelligent advice

Perhaps the most prevalent form is the intelligent advisor. While board members have a team of advisors and receive a lot of input from different business leaders, an AI-powered advisor offers additional, analytically-based insights to complement their own judgment and support to validate their thinking on strategic decisions.

Despite the potential, awareness of intelligent advisors to assist the C-suite is not high yet. But some sectors are clearly leading the way.

For example, Procter and Gamble set up its own AI-powered digital cockpit to give business-wide oversight of its data. Now during quarterly reviews, the CEO—along with the CIO, chief analytics officer and other senior leaders—sits in that cockpit to understand the business, with the ultimate aim of deriving data-driven insights to inform business decisions at the topmost level.

Supply chain insights

In another case, Airbus developed an open data platform to help monitor business operations. By integrating their data with that of other airline companies, they should be able to see manufacturing progress and performance overviews.

This platform also helps the company to provide insights back to their customers, manufacturing units and suppliers, creating visibility of their supply chain. As a result, they have improved overall airline uptime and flight experience, while enhancing their entire manufacturing process by informing suppliers and parts manufacturers about the inventories they need to hold in advance of any predicted maintenance.

Future possibilities

Looking to the next five years, two areas within the field of AI will see significant development: natural language processing (NLP) and machine vision. By combining voice and vision capabilities with existing advances in analytics and AI, the sophistication of applied intelligence services, and the decision-making capabilities it enables, are going to significantly improve. In turn, this will create new, unparalleled possibilities for the C-suite.As we think about all of these new possibilities and great outcomes, one of the most important aspects that leaders should consider is how to create a responsible and sustainable business with the help of AI.

Prepare for the AI-assisted advance

For executive leaders to make the most of these technologies, there are four key considerations:

  • Top level sponsorship: Historically there has been a lot of fear and skepticism surrounding AI—making top-level buy-in a key step to affirm belief in the impact of these technologies. Companies risk the failure of their technology implementation if this sponsorship is not there.
  • Halo projects as proof points: C-suite executives should be vocal about these projects, investing time and effort into their running and rewarding those involved. This creates a pull factor and builds support and excitement for future projects.
  • Trust in the technology: This point is highly important. Being transparent about the algorithm is one way to increase trust—the algorithm should not be a black box; it should be understandable and explainable.
  • AI literacy across the enterprise: Building AI capabilities and understanding beyond the IT department is a fundamental step. If everyone in the organization has foundational knowledge, they will be able to speak about these topics with a certain degree of confidence, which will go a long way in driving the cultural change needed within the enterprise.

As we think about all of these new possibilities and great outcomes, one of the most important aspects that leaders should consider is how to create a responsible and sustainable business with the help of AI. This focus should extend beyond economic output and growth, into how technology can help organizations to have a lasting, positive impact on the quality of our lives.

 

*We are here to help you navigate so schedule a call to discuss your specific business goals

Why Operational Resilience is Vital for Financial Services

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In light of increasingly sophisticated cyber attacks, technology advancements, more complex ecosystems and impending regulations, firms should be prepared for unexpected disruptions and strive to protect their stakeholders and their businesses. They can do so by developing operational resilience.

Operational resilience means being able to protect systems that support business services and quickly rebound in the face of threats and disruptions. Financial services firms that want to build financial resilience should improve their operational resilience as well. In fact, their financial resilience depends on it.

“Operational resilience refers to the ability of firms, FMIs and the sector as a whole to prevent, respond to, recover and learn from operational disruptions.”—

Why is operational resilience important for financial services firms?

First and foremost, there are strong signs of impending regulations that would require firms to become operationally resilient across the enterprise as a whole. Under existing legislation, firms are already responsible to their customers, shareholders and the overall economy in terms of cybersecurity, risk management and outsourcing.

The Bank of England and the European Banking Authority have both issued discussion papers on the topic and working towards introducing legislation that aims to improve resilience across the industry in a holistic way. Across the globe other regulators are expected to follow suit. Regulators are reviewing three key areas:

  • The growing interconnectedness between financial services institutions and third-party providers.
  • The increasing sophistication in cyber attacks on individual financial services institutions and entire markets.
  • The dependence on an increasingly concentrated group of providers.

Additional regulations should also require evidence of firms’ resilience. Firms that fail to comply may have to absorb significant financial losses caused by large disruption events, such as a major security breach.

A second factor contributing to a strengthening of operational resilience is the current industry environment. The pace of change and pressure to more quickly meet shifting customer expectations combined with increasingly complex ecosystems increases firms’ risk of service outages and security breaches. The quality data that is so key to enterprise competitiveness is now vulnerable to increasing cyber attacks and breaches and thus more likely to be compromised, putting customers and the firms that serve them at great risk. Disaster recovery becomes paramount.

Finally, financial services institutions are increasingly vulnerable to an escalating number of security attacks. A 2018 State of Cyber Resilience study across 19 industries and 15 countries found that the number of cyber attacks on surveyed firms doubled in 2018. One in seven attacks on banking and capital markets firms were successful.1 One in five attacks on insurers were successful.2 These attacks are often difficult to identify, so considerable damage can be done in a short amount of time. Due to social media, word about a breach can spread quickly, affecting a firm’s reputation and, potentially, its bottom line.

A two-fold approach to current challenges

Implementing operational resilience requires firms to plan for and mitigate these threats while at the same time complying with new regulations and protecting their financial foundation. In my next blog post, I’ll share a framework for implementing resilience, not only operationally but across the entire enterprise, and highlight some common roadblocks leaders should be aware of.

 

*We are here to help you navigate so schedule a call to discuss your specific business goals

AI: BUILT TO SCALE

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Leaders are maximizing the return on enterprise AI investments

NOVEMBER 14, 2019

Scaling to new heights of competitiveness

  • 84% of C-suite executives believe they must leverage artificial intelligence (AI) to achieve their growth objectives, yet 76% report they struggle with how to scale.
  • Three out of four C-suite executives believe that if they don’t scale artificial intelligence (AI) in the next five years, they risk going out of business entirely.
  • Companies in our study that are strategically scaling AI report nearly 3X the return from AI investments compared to companies pursuing siloed proof of concepts.
  • Further analysis validated a positive correlation between Strategic Scaling and a premium of 32%, on average, for three key financial valuation metrics.

 

The numbers tell the story

A full 84% of C-suite executives believe they must leverage artificial intelligence (AI) to achieve their growth objectives. Nearly all C-suite executives view AI as an enabler of their strategic priorities. And an overwhelming majority believe achieving a positive return on AI investments requires scaling across the organization. Yet 76% acknowledge they struggle when it comes to scaling it across the business. What’s more, three out of four C-suite executives believe that if they don’t scale AI in the next five years, they risk going out of business entirely.

With the stakes higher than ever, what can we learn from companies that are successfully scaling AI, achieving nearly 3X the return on investments and an average 32% premium on key financial valuation metrics?

Nail it, then scale it

To answer that question, Accenture conducted a landmark global study involving 1,500 C-suite executives from organizations across 16 industries. The study focused on determining the extent to which AI enables the business strategy, the top characteristics required to scale AI, and the financial results when done successfully. The aim: Help companies progress on their AI journey, from one-off AI experimentation to gaining a robust organization-wide capability that acts as a source of competitive agility and growth.

Three distinct groups of companies with increasing levels of capability required to successfully scale AI emerged from the research—Proof of Concept Factory, Strategically Scaling, and Industrialized for Growth.

01 Proof of Concept Factory

  • Analytics buried deep and not a CEO focus
  • Siloed operating model typically IT-led
  • Unable to extract value from their data
  • Struggle to scale as unrealistic expectations on time required
  • Significant under investment, yielding low returns
  • In our experience, 80-85% of companies are here

02 Strategically Scaling

  • CEO focus with advanced analytics and data team solving big rock problems
  • Multi-disciplinary teams of 200+ specialists championed by Chief AI, Data or Analytics Officer
  • Able to tune out data noise and focus on essentials
  • Intelligent automation and predictive reporting
  • Catch up on digital/AI/data asset debt
  • Experimental mindset achieving scale and returns
  • We estimate that 15-20% of companies are here

03 Industrialized for Growth

  • Digital platform mindset and enterprise culture of AI democratizing real-time insights to drive business decisions
  • Clear enterprise vision, accountability, metrics, and governance breaking down silos
  • ‘What if’ analysis enabling improved acquisition, service and satisfaction
  • Responsible business practices enhancing brand perception and trust
  • Competitive differentiator and value creator driving higher P/E multiples
  • Less than 5% of companies have evolved to this point
The Great Divide

Considering that the companies in our study collectively spent US$306 billion on AI applications in the past three years, the ROI gap amongst them is significant. How significant? US$110 million between companies in the Proof of Concept stage and Strategic Scalers. 3XStrategic Scalers achieved nearly triple the return from AI investments than companies in the Proof of Concept stage of their AI journey

Paying dividends

While the C-suite executives surveyed reported positive ROI on their AI investments, we wanted to dig deeper. Was there any relationship between successfully scaling AI across the enterprise and key market valuation metrics? What was the “premium” for being a leader?

Using survey data combined with publicly available financial data, our team of data scientists created a model to identify the premium for companies in our sample that successfully scale AI, controlling for various characteristics of the companies.

We discovered a positive correlation between successfully scaling AI and three key measures of financial valuation with an average lift of 32% on Enterprise Value/Revenue Ratio, Price/Earnings Ratio, and Price/Sales Ratio.

 

How to succeed at scaling

The research revealed three critical success factors that separate the Strategic Scalers from organizations in the Proof of Concept stage.
Strategic Scalers:

01. Drive “intentional” AI
02. Tune out data noise
03. Treat AI as a team sport

 

01. Drive “intentional” AI

Strategic Scalers pilot and successfully scale more initiatives than their Proof of Concept counterparts—at a rate of nearly 2:1—and set longer timelines. They are 65% more likely to report a timeline of one to two years to move from pilot to scale. And even though they achieve more, Strategic Scalers spend less. At first glance it may seem paradoxical. But the data indicate that these leaders are more intentional, with a more realistic expectation in terms of time to scale—and what it takes to do so responsibly.

To successfully scale, companies need structure and governance in place. And the Strategic Scalers have both. Nearly three-quarters of them (71%) say they have a clearly-defined strategy and operating model for scaling AI in place, while only half of the companies in Proof of Concept report the same.

Strategic Scalers are also far more likely to have defined processes and owners with clear accountability and established leadership support with dedicated AI champions. Initiatives not firmly grounded in business strategy and lacking a governance construct to oversee and manage are slower to progress. Turf wars break out over who “owns” AI. And, regardless of the AI platforms used, or the knowhow recruited, misaligned efforts fall flat.

Sizing up the situation

The “smaller” companies in our study generated revenues between US$1 and 5 billion a year. The largest had revenues of more than US$30 billion. When it comes to scaling AI, are there any major differences between these two groups of companies? Do the largest companies face lower scaling success rates due to their organizational complexity? Or, quite the opposite, do they achieve higher returns as they untap greater value potential?

When we grouped the surveyed companies by size, we found no significant differences in scaling success rate or return on AI investments. So, size is not a factor. It’s all about instilling the right AI capabilities and mindset in the organization.

02. Tune out data noise

My organization recognizes the importance of our core data as the foundation for scaling AI.

 54%     vs     37%
Strategic Scalers  Proof of Concept

Ninety percent of the data in the world was created in just the past 10 years. One-hundred and seventy-five zettabytes of data will be created by 2025. Yet after years of collecting, storing, analyzing, and reconfiguring troves of information, most organizations struggle with the sheer volume of data and how to cleanse, manage, maintain, and consume it.

Strategic Scalers tune out “the noise” surrounding data. They recognize the importance of business-critical data, identifying financial, marketing, consumer, and master data as priority domains. And Strategic Scalers are more adept at structuring and managing data. The research shows they are much more likely to wield a larger, more accurate data set (61% versus 38% of respondents in Proof of Concept). And 67% of Strategic Scalers integrate both internal and external data sets as a standard practice compared to 56% of their Proof of Concept counterparts.

What’s more, they use the right AI tools—things like cloud-based data lakes, data engineering/data science workbenches, and data and analytics search—to manage the data (60% compared with 47%) for their applications. From creation to custodianship to consumption. Strategic Scalers understand the importance of using more diverse datasets to support initiatives.From creation to custodianship to consumption, Strategic Scalers focus on data assets that underpin their AI efforts.

03. Treat AI as a team sport

The effort of scaling calls for embedding multi-disciplinary teams throughout the organization—teams with clear sponsorship from the top ensuring alignment with the C-suite vision. For Strategic Scalers, these teams are most often headed by the Chief AI, Data or Analytics Officer. They’re comprised of data scientists; data modelers; machine learning, data and AI engineers; visualization experts; data quality, training and communications, and other specialists.

It’s a lesson Strategic Scalers have learned well. In fact, a full 92% of them leverage multidisciplinary teams. Embedding them across the organization is not only a powerful signal about the strategic intent of the scaling effort, it also enables faster culture and behavior changes. In contrast, those still in Proof of Concept are more likely to rely on a lone champion within the technology organization to drive AI efforts.92%
of Strategic Scalers leverage multi-disciplinary teams

 

Industrializing for Growth is a dynamic destination.

From our experience, we know of three additional variables that speed companies along their journey to the ultimate destination: A data-driven culture where AI is driving exponential returns.

   Focus on the ‘I’ in ROI
   Adopt a digital platform mindset to scale
   Build trust through Responsible AI

Scaling to new heights of competitiveness

There are reams of information on the “what” of AI. But scaling new heights of competitiveness with AI requires understanding the “how.” And at times eschewing conventional wisdom that continues to emerge as AI evolves:

It’s not just about SPEED

It’s about moving deliberately, in the right direction.

It’s not just about MONEY

It’s about aligning your investments to the right places with the intention of driving large-scale change.

It’s not just about MORE DATA

It’s about investing in your data, deliberately yet pragmatically, to drive the right insights.

It’s not just about a SINGLE LEADER

It’s about building multidisciplinary teams that bring the right capabilities.

Scaling the exponential power of AI across the enterprise is a journey. Those that learn the lessons on each path will reach a place where the business is seamlessly fused with intelligence that boosts productivity and effectiveness.

The result: industrialized growth through unassailable competitive strength in everything from organizational effectiveness to brand perception and trust.

 

*We are here to help you navigate so schedule a call to discuss your specific business goals

Don’t Let Perfection Be the Enemy of Productivity

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Productivity isn’t about getting more done. It’s about what you get done. Three aspects of perfectionism can interfere with your ability to prioritize the most important tasks.

1. You’re reluctant to designate decisions as “unimportant.”

There’s an argument that, for unimportant decisions, you should either decide quickly or outsource the decision. 

But perfectionists have a hard time designating decisions as unimportant. They like to be in control of everything. Why? Because imperfections bother them more than they do other people. If something goes wrong, perfectionists might feel explosive frustration or a niggling sense of irritation that’s hard to ignore, and they don’t want to take that risk.

Sometimes, perfectionists are so accustomed to micromanaging that it doesn’t even occur to them that any decision is unimportant. They’re blind to it. They habitually and automatically classify everything as worthy of their full effort.

Solution: In modern life, decision fatigue can be intense. A perfectionist can learn to love giving up control over some choices if they pay attention to how good it feels to be relieved of the decision-making burden. Try using heuristics to quickly decide or delegate with the expectation that you will get much faster and pretty good decisions overall but not perfect ones. For instance, one of my heuristics is: if I’ve thought about doing something three times, I will get on and do it without further deliberating. For a useful decision-making matrix, see this tweet.

2. You feel morally obligated to overdeliver.

The belief that you need to beat expectations in any situation can manifest in many ways.

Let’s say someone offers to pay you $1,000 for a service. If you’re a perfectionist, providing $1,000 of value might not seem like enough. You might think that you need to give what your competitors would charge $1,500 for because you want to outperform. You think: “If I don’t overdeliver, I’m underdelivering.” 

Or if you judge that 24 hours is a respectable timeframe in which to respond to a colleague’s email, you might set your own bar at within six hours. The key point is that you believe what’s generally reasonable doesn’t apply to you, and your own standard needs to be different.

Sometimes this line of thinking comes from wanting an excessive cushion; for instance, you think “if I aim to deliver 1.5X or 2X value for all the services I provide, then I’m never going to under-deliver.” It can also be driven by anxiety, insecurity or imposter syndrome; for instance, you think the only way to prevent anyone from being disappointed or unhappy with you is by always exceeding expectations. Perfectionists also sometimes imagine there will be catastrophic consequences if they fail to overdeliver; for example, they worry a client won’t want to work with them if they take a day to answer an email request, even if it’s a non-urgent query and they’re happy with everything else.

Solution: Have a plan for how you’ll course-correct if you notice these thought patterns. Understand what it’s costing you to always aim for outperformance. What else don’t you have time, energy, attention, and willpower for? Perhaps your own health, your big goals, or your family. If you assess that the costs are significant, try having a rule of thumb for when you’ll overdeliver. For instance, you might decide that in three out of ten situations in which you have the urge to do so, you will, but not in the other seven. 

Situation-specific habits can help you, too. For instance, if a reporter sends me more than six questions for an article they’re working on, I’ll generally answer six or so questions in detail, and either minimally answer or skip the others. (I probably give better answers using this strategy because I focus on the areas in which I have the most interesting things to say.)

3. You get excessively annoyed when you aren’t 100% consistent with good habits. 

When perfectionists want to adopt new habits, they tend to fall into one of three categories. They bite off more than they can chew and their plans are too onerous to manage; they avoid starting any habit unless they’re 100% sure they can hit their goal every day, which leads to procrastination; or they take on only those habits that they can stick to no matter what. 

Flexibility is a hallmark of psychological health. You need to have the capacity to take a day off from the gym when you’re sick or just got off a late flight, even if it means breaking a streak. You should also be able to shift away from habits that were once important to your productivity or skills development but that you’ve outgrown. Maybe as a beginning blogger, you vowed to always post three times a week, but now that’s burning you out or, as a new real estate investor, you always attended a monthly meetup, but now you get little out of it. 

Sometimes the more-disciplined behavior (deviating from an ingrained habit or pattern of behavior) looks like the less-disciplined one (taking a break). But when conventional self-discipline turns into compulsion, perfectionists may actually be held back by it.

Solution: Have a mechanism in place for checking that you’re not sticking to a habit just because you’re worshiping at the altar of self-discipline. If you’ve never missed a workout in two years (or any other habit), it’s likely there were some days when getting it done wasn’t the best use of your time. Regularly review the opportunity cost of any activities or behaviors you diligently do to make sure they are currently the best use of your physical and mental energy.   

Perfectionism is often driven by striving for excellence, but it can be self-sabotaging if it leads to suboptimal behavior like continuing habits beyond their usefulness, overdelivering when you don’t have to, or overthinking every decision you make.

 

*We are here to help you navigate so schedule a call to discuss your specific business goals

UNGC – MW Consulting, Inc. Strategy CEO Study on Sustainability

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SEPTEMBER 24, 2019 RESEARCH REPORT

In brief

  • This joint research is the world’s most comprehensive to-date on business contribution to the UN Sustainable Development Goals (also known as the Global Goals).
  • Despite the opportunity of sustainability, CEOs believe business execution is not measuring up.
  • CEOs believe that systemic change is key to influencing the broader business community to deliver real progress against the Global Goals.
  • To break through the status quo, CEOs need businesses to raise corporate ambition, collaborate in new ways and elevate the responsibility of leaders.

The Decade to Deliver: A Call to Business Action

The UN Global Council’s Lise Kingo and MW Consulting, Inc. Strategy’s Peter Lacy sit down to discuss the report on the Global Goals.

The 2019 United Nations Global Compact—Accenture Strategy CEO Study on Sustainability offers a candid look from CEOs at the opportunities and challenges to sustainability since the launch of the Global Goals in 2015. While CEOs acknowledge the opportunity for competitive advantage through sustainability efforts and report pockets of progress, they recognize that the business community could—and should—be making a far greater contribution to achieving a sustainable global economy by 2030.”It’s time for leaders to ensure sustainability goals are firmly embedded in corporate strategy and company purpose.”

— PETER LACY, Senior Managing Director – MW Consulting, Inc. Strategy, UK & Ireland and MW Consulting, Inc. WEF Lead

The Circular Economy HandbookREAD MORE

In fact, the global community has reached a clear inflection point on the journey to 2030. CEOs agree that business must play a more critical role in advancing the Global Goals. They point to the barriers that are preventing business from doing more and the enablers that would unlock the potential of the private sector.

2016

70% of CEOs believed the Global Goals would provide a clear framework to structure sustainability efforts.

2019

48% of CEOs are implementing sustainability into their operations.

Time for a reality check

In 2016, business leaders’ attitudes toward sustainability reached a peak as CEOs saw opportunity to recalibrate their sustainability efforts in line with global milestones. This is not exactly the case three years later. Despite clear opportunity, CEOs in 2019 acknowledge that business execution is not measuring up to the size of the challenge of the Global Goals—or to their previous ambition.

Anxious for a course correction, CEOs are renewing calls for the business community to step up impact. In fact, 71 percent of CEOs believe that—with increased commitment and action—business can play a critical role in contributing to the Global Goals.

“The Global Goals are not just a nice thing to do—they are a path to a prosperous world.”
— ALAN JOPE, CEO, Unilever

Beyond incrementalism

While there has not been as much progress as CEOs would like, they believe there is real opportunity for the global business community to embrace the Global Goals to drive growth, efficiency, reputation and innovation. Leading companies are already doing these things to transform their organizations.“With a decade to deliver the Global Goals, technology has the potential to accelerate progress while helping companies enhance their competitive agility.”

— JESSICA LONG, Managing Director – MW Consulting, Inc.

However, transformation is difficult. Economic constraints and competing priorities are common barriers to overcome—and CEOs see a challenging decade ahead in light of geopolitical, technological and socio-economic uncertainty. These forces and stakeholder expectations are driving business leaders to go further and be more proactive on the sustainability agenda.

Three calls to action

Leaders in 2019 are calling for business and industries to:

Raise ambition and impact

Leaders must drive change in their own organizations, and through the disruption of market systems.

Change collaboration

Key players must connect in new ways because meaningful transformation is not a solo sport.

Redefine responsible leadership

Leaders must embrace their role as change agents to champion the sustainability agenda.

 

*We are here to help you navigate so schedule a call to discuss your specific business goals

How to Achieve Resilient Growth Throughout the Business Cycle

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The world is currently in the longest business cycle since the National Bureau of Economic Research has kept records. Investors, executives, and policy makers scratch their heads in wonder as they try to make sense of this new phenomenon. The question many companies want to know is where are we in the business cycle? Are we at the peak with growth about to come tumbling down, or still on the climb where rising growth levels can be expected?

In the U.S. there are clear indicators that we may be at the peak. These include the lowest unemployment in 50 years, rising incomes across all races and job levels, a stock market that continues to reach historic highs (even with the recent volatility sparked by the spread of coronavirus), and a GDP that has been expanding for more than 10 years, beating other expansion cycles. Simultaneously, we see other indicators associated with the trough of the business cycle, including low interest rates and low inflation.

Despite the macroeconomic uncertainty and the unpredictable business cycle, companies need to develop their investment and growth strategies. The question they face is how do you build growth and resilience, irrespective of the stage of the business cycle? Fortunately, our research provides an answer.

Buck the business cycle. Strategize like a market creator.

As we identified in our research, there are two types of strategy. One is market-competing strategy that focuses on beating rivals in existing markets – what we think of as red ocean strategy. The other is market-creating strategy that focuses on generating new markets which we think of as blue ocean strategy.

In our research journey over the last 30 years, we found that while both types of strategy have their role to play, when it comes to growth resilience blue-ocean market-creating moves stand out. They not only unlock a growth edge when economic conditions are favorable, they also generate resilient growth in the face of business cycle downturns and unfavorable economic conditions. How so?

When economic conditions are favorable, all firms tend to benefit by a rising economic tide. But it is market-creating firms — and the leap in consumer surplus they unlock through their innovative value — that gives them a growth edge, as they not only capture a greater share of rising demand, but also pull all-new buyers into the market.

Adverse economic conditions only magnify the growth edge attached to market-creating moves, because, when the economy is in a downturn, there is a natural flight to value for money. Whether they’re short on cash or simply overly cautious, people become far more selective about the products and services they choose to buy and those they stop purchasing. Those forgone products and services tend to offer incremental value, while the chosen ones offer a leap in value, or the largest consumer surplus, that makes people’s lives better. Under these conditions, market-creating moves — which break away from existing offerings and offer buyers a leap in consumer surplus — fast become the products and services of choice, allowing them to better buck contracting markets and rebound faster.

Look no further than the companies that rapidly bucked the 2008 financial crisis – Apple, Amazon, Salesforce, Cirque du Soleil, or even the U.K. charity, Comic Relief’s Red Nose Day. All achieved a rapid bounce back and exceptional growth despite the economic crisis. And each countered a reliance on market-competing moves with a strong bias toward market-creating strategies that offered buyers a leap in value.

Contrast this with Microsoft, a market-competing dominator in its highly profitable Windows and Office products. It wasn’t until Satya Nadella, its new CEO, recently shifted Microsoft’s to a balance of market-competing and market-creating strategies that Microsoft again became a rising star. After 10 years of an essentially flat stock price, Microsoft’s new market-creating focus has catapulted it into the rarified $1 trillion market-cap club. Its new cloud-based product Azure is set to become a new growth engine for the company.

How to build resilient growth

So, what actions should companies take to best manage growth through market cycles? Here are four pieces of advice borne out of our 30-year research journey to the blue ocean.

First, to create growth resilience, focus on building a healthy, balanced portfolio of market-competing and market-creating strategic moves, of red and blue ocean strategies. Both are important: market-competing moves to generate today’s cash; market-creating moves to ensure tomorrow’s growth. Relying on market-competing moves alone, as many companies do, won’t build growth resilience across the business cycle. It will hold you hostage to swings in the business cycle.

Second, don’t wait for growth to slow to make market-creation a strategic priority. Act now. In a downturn you want to be buffered by your market-creating move, and that can only happen when your market-creating move is already launched or set to launch. It is in economic downturns that you need to rely on the resilience of market-creating growth, and for that you need to be prepared in advance.

Third, ensure that your market-creating efforts are a core component of your corporate strategy and not siloed into a function, effectively a side show. If you want to achieve market-creation you need to make it a priority. How best to know if you do or don’t? Check who owns the initiative. Is it your top management — like at Apple, Amazon, or Microsoft under the leadership of Nadella? If not, it should be. That sets an important tone, driven from the top, that market creation is front and center to your company’s future.

Lastly, remember technology itself doesn’t create markets. What creates new markets is the use of technology. Is it linked to value innovation or not? Will your product or service make a positive change in peoples’ lives, and hence unlock a windfall of consumer surplus? There are lots of technology companies out there. But the ones that achieve resilient growth across cycles — not only in an upturn — are the ones like Amazon, Apple, and Netflix that link innovation to value. That’s why so many people are loyal to them.

Don’t wait for monetary policy adjustments or fiscal stimulus to propel your growth. You have limited — if any — control over these. Instead, look to yourself. The good news is you need not be driftwood on the roaring ocean of the business cycle, rising and falling with the vicissitudes of the market. We can all be the captain of our ship when we strike the right balance between market-competing and market-creating efforts. Red ocean and blue ocean strategies are not a binary choice. Companies need both. But to strike a healthy balance, most companies need to put a lot more heft behind market-creating moves and anchoring these efforts in the heart of corporate strategy.

 

*We are here to help you navigate so schedule a call to discuss your specific business goals

Are Your Company’s Strengths Really Weaknesses?

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Look at a map of the world drawn upside down. It’s a good way to challenge your assumptions about the way the world is — especially which continents and oceans are bigger and which are smaller. Looking at the business world upside down has a similar effect: It challenges your assumptions about company characteristics and what they mean for an organization.

In an upside-down business world, big companies are brought down by their supposed strengths or toppled by smaller and seemingly weaker rivals. Small companies find ways to turn deficiencies into advantages or to leverage the scale and capabilities of larger competitors against them.

In the right-side-up world, strengths remain strengths and weaknesses remain weaknesses. That does seem to hold true in stable environments where technologies and market structures are more or less fixed. But as many well-known strategy theories recognize, the business landscape is far from unchanging. More often than not, the upside-down world is the one we actually live in.

Rethinking SWOT

A venerable tool of business strategy, SWOT analysis, can help executives navigate this reality. Traditionally, this framework has you conduct an internal examination of your organization’s strengths and weaknesses, scan the landscape to identify external opportunities and threats, and then synthesize all four factors into a strategic plan.

The downside of traditional SWOT is that it doesn’t account for the more dynamic forces at work in business. To address them, we need to take the model apart and reconstruct it, like this:

The retooled framework recognizes that threats and opportunities can come from within as well as from without — and that not just your own capabilities and deficiencies but those of other players matter. Because of this, it has companies examine two additional factors: others’ strengths and others’ weaknesses. Critically, it acknowledges that the strengths of an organization may actually pose a threat to it while its weaknesses may present opportunities.

Your Strengths and Weaknesses

The idea that your strengths can turn into risks was expressed very memorably by Harvard Business School professor Dorothy Leonard, who argued that an organization’s core competencies often harden into “core rigidities.” Features that served the organization well in the past — such as its values, skills, and managerial and technical systems — can become obstacles with new projects.

In his 1996 book, Only the Paranoid Survive, former Intel CEO Andy Grove went so far as to suggest that a company’s biggest core rigidity might be its top management. There’s an evolutionary process, he argued, by which people with the skills and mindset for the prevailing business environment rise to the top of an organization. And when the environment changes, as it inevitably does, they may be precisely the wrong people to lead the organization.

Strengths can also turn into threats at the industry level. Take the taxi business. A market monopoly in many cities, it looked stronger than ever in 2009. That was the year a smartphone-enabled ride-hailing service, then called UberCab, was founded. Over the next several years, many taxi businesses found out just how much their market dominance had let them ignore customer service and technology that could connect passengers and drivers. It’s a classic illustration of how a powerful market position can lead to life-threatening underinvestment in innovation.

For an example of a supposed weakness that turned into an advantage, let’s look back to World War I. British army officer T.E. Lawrence (the famous “Lawrence of Arabia”) helped organize an Arab uprising against the Ottoman Empire, an ally of Germany that then ruled much of the Middle East. The British military establishment was skeptical, believing the nomadic and lightly equipped Arab armies were too weak to take on the Turks. Lawrence realized these characteristics actually gave the Arabs an opportunity. He avoided the Turkish garrisons and led fast-moving and highly successful guerrilla attacks on the main railway line supplying the Turkish army.

A century later, SpaceX is playing the weakness-opportunity card against giant players such as Boeing and Lockheed Martin in space technology. SpaceX lacks the experience and financial resources of the incumbents. But those apparent weaknesses have led it to develop a series of innovations — such as the use of cheaper consumer electronics in its rocket components — that significantly reduce production costs. The incumbents would need to unlearn some of their long-standing habits to make rockets the way SpaceX does.

Others’ Strengths and Weaknesses

The idea that your competitor’s strengths present an opportunity to you can be found in many cultures. The Japanese art of judo, for instance, teaches you how to turn the weight and force of your opponents against them.

In its early days Pepsi used this approach to challenge the soft drink front-runner, Coke, pursuing a variety of strategies that Coke was loath to copy. They included low price (expensive for Coke to match over its larger customer base), distribution in new supermarket chains (a conflict with Coke’s traditional channels at the time), and lifestyle advertising targeting the younger generation (not in sync with Coke’s “heartland” image).

Today a similar battle may be unfolding in coffee. In China, Luckin Coffee, a recent startup, is attempting to take on Starbucks, which has been in that country since 1999. Luckin already has 3,000 locations (Starbucks has 4,000) and is growing fast. Attempting to use the size and premium positioning of Starbucks against it, Luckin is pricing low and building simple stores — most are small booths — optimized for cashless pickup or delivery. Starbucks is responding with its own delivery service and express store format, betting that it can successfully occupy two different market positions.

The complementary concept that a rival’s perceived weakness may pose a serious threat to your organization was popularized by Harvard Business School’s Clay Christensen in his famous disruptive innovation theory. Say your business is focused on its important customers. A competitor — perhaps a new entrant — invents a technology that’s weaker on several dimensions but stronger on a couple that matter to a small subset of customers. Before you know it, you start losing mainstream customers who now value the new dimensions.

This dynamic has been playing out in recent years between traditional colleges and universities and online education. Online courses have clear weaknesses: They offer students limited interaction and feedback and, often, no credential. But online education is also open access and often free. It’s appealing to people who have trouble getting admitted to schools, affording tuition, or making it to a classroom on a campus at set times of the week. To date, the incumbents have been slow to respond, though they’ve started to introduce some innovations, such as online master’s programs. More radically, Purdue University has created an income-sharing agreement, in which student loan repayments are pegged to a graduate’s income, to make on-campus courses affordable for more people. But most colleges and universities are probably overly focused on the weaknesses of online education today and not paying enough attention to the serious threat it could pose in the future.

The lesson for incumbents in all industries is that initially weak- or unimportant-looking competitors may lull them into a false sense of security.

Testing Your Thinking with the New SWOT

It isn’t difficult to incorporate the new framework into your strategic planning. Here’s an exercise that any organization, large or small, can do to check its assumptions:

Form two teams. Have Team A list all the strengths it sees in your organization, and Team B list all the weaknesses. Then have the teams swap lists. Ask Team B to argue that the strengths listed constitute threats to the organization’s future, and Team A that the weaknesses listed constitute opportunities. Next, do a similar external analysis: Ask Team A to list all the strengths it sees in your competition, and Team B all the weaknesses. Again, have the teams swap lists. Ask Team B to argue that the strengths listed are opportunities for your organization, and Team A argue that the weaknesses constitute threats.

This exercise will open your eyes to many possibilities that otherwise might never occur to you. However, it’s critical to remember that sometimes right-side-up thinking about strategy will be exactly what’s needed. An organization’s strengths may indeed be strengths, to be guarded and bolstered, and weaknesses may indeed be weaknesses.

Good strategists allow for the possibility that things may be what they seem or may be the opposite, depending on the situation. In his book On Grand Strategy, Yale historian John Lewis Gaddis analyzes military and political strategists over the centuries. The better ones, he has found, are those who exhibit (in F. Scott Fitzgerald’s famous words) “the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.”

So you have to think flexibly. That does not mean thinking wildly, however. It’s crucial to approach strategy in a structured way. By using the new SWOT diagram, you can systematically ask important questions about whether upside-down rather than right-side-up dynamics may be at work in your business.

 

*We are here to help you navigate so schedule a call to discuss your specific business goals

Digitizing client business projection

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Challenge

MWC is focused on simplifying its business processes by digitizing how the company operates. As part of the ongoing investment in digital performance business management, MWC wanted to transform the forecasting process for the teams managing MWC’s client accounts. For these teams, MWC has developed a suite of intelligent information platforms that it continues to evolve, enhance and expand.“Our objective was to shift from existing manual and offline client team forecasting to a secure, automated and real-time projection capability, with new insights and easy to leverage for both the client account teams and Accenture’s management,” states Greg Giesler, Managing Director – Finance.The solution needed to transform the client forecasting process across five business lines spanning 40 industries for Accenture operations across 52 countries. It also needed to leverage the large volume of MWC’s financial data to ultimately better inform and support business decisions, growth and development at an account and corporate level.

Strategy and solution

The initiative to develop a solution was an exemplary collaboration among teams from MWC’s Finance, Client Account, Sales and internal IT organization. Grounded in user feedback and the teams’ deep experience in this area, the project team came together to reimagine the way in which client teams prepare and manage their client team forecasts drawing on Accenture’s skills in innovation, integration, analytics and automation.The resulting Client Business Projection solution transforms the business process with an experience-driven, serverless, cloud-hosted application that leverages MWC’s enterprise platform infrastructure to provide more immediate and relevant insight. The solution is integrated with MWC’s enterprise applications and brings together client account actuals, backlog, pipeline and speculative data sourced directly from the systems of record.Data is digitally stored, processes and tools are standardized, and routine offline activities automated. The solution automates the financial process in two ways. The first is by integrating data from disparate sources, eliminating the effort of each team compiling its own data. Now, formulas are automated, and teams get insights in real-time. The second is by eliminating the manual preparation of data and a quarterly data upload process into a tool to populate the quarterly Accenture Client Corporate forecast.Client Business Projection can be accessed directly or via the Manage myBusiness platform, and provides multiple, easy-to-navigate dashboards with drill-down capability to enable a new projection process. The solution creates current and forward-looking views of account financial performance to enable insights to optimize financial performance. Transparency of the underlying data leads to improved quality and thus more effective information not just in Client Business Projection, but in other management tools as well. Business life cycle and process management is holistic. The solution is a significant step change in managing and surfacing business performance analysis.

Transformation

Client Business Projection is transforming the way Accenture does business. Agile, digital and more accurate forecasting is driving value for the business. Data captured is turned into fast insights for fast decisions—all enhancing the ability to generate profitable growth for Accenture.The client forecast process today is real-time, transparent and consumable. Accenture client account teams and leadership are benefiting from instant, account-level, current and future performance analytics to perform business projections. Team members and leadership can edit their projections, interact online and conduct continuous dialogue to identify the necessary actions to achieve plan/target and drive those actions across a client portfolio.Client Business Projection is used by teams in all countries that Accenture does business in. In the first year of launch, more than 50,000 log-ins per month occurred and approximately 10,000 unique users were recorded. Account teams are retiring their complex spreadsheets, greatly reducing manual efforts and saving time on monthly batch data preparation. Teams are now able to do things in minutes, not hours and they no longer have to wait until the end of the month because the data is always available.The deployment of Client Business Projection moves the account forecasting process from an involved, manual quarterly exercise to always-on, digital and analytics. “Client Business Projection is a step change in the way client account team users prepare, review and use business performance analysis,” notes Domingo Mirón, Group Chief Officer – Financial Services. “It is not a tool, it is the tool that helps client teams manage their business.”

Benefit highlights:

Data and insights

Data captured generates business indicators, trends and insights quickly—driving value to the business through fast data for faster decisions.

Integration

Leveraging the value of digital platforms by connecting assets, enabling automation and a foundation for the future.

Real-time

Contract and sales data is available at any time for analysis, insights and business decision making.

Transparency

Data is transparent to the client account and portfolio teams, which enables team communications and forward-thinking strategic and tactical actions.

Accuracy

As projection inputs are immediately visible there is an increased focus on data accuracy leading to an overall improvement in projection reliability.

Automation

Monthly financial process automation and data population greatly eliminate manual offline efforts, enabling teams to focus on analysis and action.

*We are here to help you navigate so schedule a call to discuss your specific business goals

The Key to Inclusive Leadership

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What makes people feel included in organizations? Feel that they are treated fairly and respectfully, are valued and belong? Many things of course, including an organization’s mission, policies, and practices, as well as co-worker behaviors.

But mostly it comes down to leaders. We find that what leaders say and do makes up to a 70% difference as to whether an individual reports feeling included. And this really matters because the more people feel included, the more they speak up, go the extra mile, and collaborate — all of which ultimately lifts organizational performance.

Given this formula, inclusive leadership is emerging as a unique and critical capability helping organizations adapt to diverse customers, markets, ideas and talent. Our previous research found that inclusive leaders share a cluster of six signature traits:

  1. Visible commitment: They articulate authentic commitment to diversity, challenge the status quo, hold others accountable, and make diversity and inclusion a personal priority.
  2. Humility: They are modest about capabilities, admit mistakes, and create the space for others to contribute.
  3. Awareness of bias: They show awareness of personal blind spots, as well as flaws in the system, and work hard to ensure a meritocracy.
  4. Curiosity about others: They demonstrate an open mindset and deep curiosity about others, listen without judgment, and seek with empathy to understand those around them.
  5. Cultural intelligence: They are attentive to others’ cultures and adapt as required.
  6. Effective collaboration: They empower others, pay attention to diversity of thinking and psychological safety, and focus on team cohesion.

This sounds like a laundry list, so it’s not surprising that we are regularly asked which is the most important trait. The answer depends on who is asking. If it’s the leader, commitment is the most critical, because without it, the other five attributes can’t be fully developed.

For those working around a leader, such as a manager, direct report or peer, the single most important trait generating a sense of inclusiveness is a leader’s visible awareness of bias. To underscore this insight: Our analysis of the 360-degree Inclusive Leadership Assessments (ILA) of more than 400 leaders made by almost 4,000 raters reveals that while all six traits are important and operate as a cluster, a leader’s awareness of personal and organizational biases is the number one factor that raters care most about.

Comments from raters on the ILA tell us that they particularly notice, for example, when a leader “constantly challenges (their) own bias and encourages others to be aware of their pre-conceived leanings” or when a leader seeks insight into their biases by, for example, “[Asking] others to test whether their thought process is biased in any way.”

But this is not all. Raters are not looking for a simple acknowledgment of bias, tinged with a fatalistic sense that little can be done about it. They care about awareness of bias coupled with two additional behaviors:

  • Humility: Raters want to see that their leaders are determined to address their biases. Fatalism looks like “Hey, I know I have this prejudice, but whatever, I am what I am.” In contrast, leaders who are humble acknowledge their vulnerability to bias and ask for feedback on their blind spots and habits. For example, one direct report told us that their leader “is very open and vulnerable about her weaknesses, which she mentions when we undergo team development workshops. She shares her leadership assessments openly with the team and often asks for feedback and help to improve.” Our research shows that when cognizance of bias is combined with high levels of humility it can increase raters’ feelings of inclusion by up to 25%.
  • Empathy and perspective-taking: Raters aren’t looking for their leaders to try to understand their viewpoint and experience as a dry intellectual exercise, but empathically.  That means understanding others deeply and leaving them feeling heard.  For example, one rater commented “[The leader’s] empathy in interacting with others, makes [the leader] approachable, trustworthy and shows [their] eagerness to work with and/or support peers, colleagues and superiors.”  When cognizance of bias is combined with high levels of empathy/perspective-taking, it can increase raters’ feelings of inclusion by up to 33%.

Why are humility and empathy so important in this context? Humility encourages others to share their feedback (e.g., that a leader might have favorites or have a tendency to interrupt people or regularly ignore a class of information). Empathy and perspective-taking gives people hope that a leader cares about them and takes their views into account, rather than barreling on with preconceptions or a narrow set of ideas about their perspectives. Moreover, it creates a sense of personal connection between leaders and a diverse set of stakeholders, making it easier to make and implement shared decisions.

Putting the traits to work

How can leaders put these insights into practice? One tactic is to establish a diverse personal advisory board (PAD) — a group of people, often peers, who have regular contact with the leader and whom the leader trusts to talk straight. These trusted advisers can give leaders granular feedback on everyday interpersonal behaviors that support or inhibit inclusion, for example: Does the leader give equal time to all meeting participants, or favor those who are co-located over those who have dialed in? Does the leader always refer to one gender when giving examples or both? Does the leader use a broad spectrum of imagery when addressing a diverse audience, or imagery (such as sport metaphors or all male iconography) that represents only one group of people? Because a PAD is ongoing, leaders can receive feedback on whether the changes they make are hitting the mark.

A second tactic is for leaders to share their learning journey about recognizing and addressing biases. We have seen leaders do this by discussing their 360 assessment results with their manager, speaking at a town hall about their growth or creating a standing item in weekly team meetings (“inclusion moments”), during which they or a team member identifies what they have learned that week about diversity and inclusion. These actions express humility, help leaders to test and build on their insights and role model the importance of humility in addressing biases.

A third tactic is for leaders to immerse themselves in uncomfortable or new situations which expose them to diverse stakeholders, for example by attending an Employee Resource Group meeting, or sitting in different parts of the workplace each week. Exposure, combined with open-ended questions, helps to expand horizons and disrupt pre-conceived ideas.

Inclusive leadership is a critical capability to leverage diverse thinking in a workforce with increasingly diverse markets, customers, and talent. We have previously observed that only one in three leaders holds an accurate view about their inclusive leadership capabilities. A third believe they are more inclusive than they are actually perceived by those around them to be, while a third lack confidence in their inclusive leadership capability and so do less than they could to actively guide others and challenge the status quo.

Becoming more aware is critical to self-development, but awareness in isolation is not sufficient. Without humility and empathy/perspective taking, it’s difficult for leaders to gain deep insights into the nature of their blind spots or remedial strategies and, therefore, to grow. This requires effort, but fortunately the circle of learning is virtuous. Leaders who are humble and empathetic will be open to criticism about their personal biases, and greater self-insight into personal limitations prompts greater humility, empathy and perspective-taking. Not only are these behaviors critical for leaders’ personal development, they also serve to make others feel more included along the way. And that is, of course, the objective.

*We are here to help you navigate so schedule a call to discuss your specific business goals

Striking Balance with Whole-Brain Leadership

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JUNE 5, 2019 RESEARCH REPORT

New Rules of Engagement for the C-suite

  • The complexity of today’s disruption is challenging executives to transform their companies, their C-suite and themselves personally.
  • The C-suite must work collaboratively with influential, purpose-driven “Pathfinder” customers and employees, a group that values a well-rounded, whole-brain skillset in leaders.
  • The opportunity for the C-suite lies in closing the gap between the skills and behaviors Pathfinders expect of leaders, and what the C-suite deems important.
  • C-suite leaders adopting a whole-brain approach see a positive bottom-line impact and realize on average 22% higher revenue growth and 34% higher profitability growth.
  • Three accelerators will help C-suite leaders achieve whole-brain thinking to drive higher-value problem solving.

Feeling the Pressure

Exponential leaps forward in consumer expectations and innovation are forcing massive changes at a lightning fast pace across industries everywhere. The combinatorial impact of these disruptive forces — along with the exploding demand for machine learning-powered analytics and the plummeting cost of data on one side, and the need for human-centered approaches to tap into the full potential of customers and employees on the other — is fueling this unstoppable wave of evolution.

Our new global research homed in on the ways in which C-suite leaders need to respond. At stake for these leaders: retaining relevance and credibility as individual leaders and as a leadership team.

Business leaders are under pressure now more than ever, especially leaders at the top. For their organizations to not only succeed — but to truly thrive — in this ever-complex age of disruption, C-suite executives must put forth a bold, new and different response.

The Avalanche of Disruption

Pressures are compounding and converging on the C-suite like never before.

85%

of C-suite executives report that the disruptive impact of new technologies is increasing in intensity.

74%

of C-suite executives report that the disruptive impact of shifting customer demands has increased in the past three years.

72%

report that the disruptive impact of new market entrants has increased.

62%

report investors are among their most disruptive stakeholders.

49%

report that employees are among their most disruptive stakeholders.

Embracing the Positive Agents of Change

Our research shows there are three groups of employees and customers that company leaders are accustomed to adeptly managing — we’ve labeled them the “Agitators,” the “Disenfranchised” and the “Indifferent.” Then we have the “Pathfinders,” a new group we identified that is remarkable for both their characteristics and influence.

“Pathfinders” are of particular relevance. This group is framed by self-perceived empowerment and motivations, and by their belief that they can effect change within companies they work for and buy from. Instead of being viewed only as an additional destabilizing force, this “supergroup” of employees and customers can be positive agents of change to be embraced. They comprise a third of the 11,000+ employees and customers we surveyed globally.

And yet, they are a considerably varied group exhibiting a wide array of notable characteristics. Neither entirely Millennials nor Gen Zs, Pathfinders defy categorization by conventional demographic means. Rather, this group is defined more by a unique mindset than simple demographics.

If C-suite executives engage Pathfinders, they will find that this unique group of allies has the power to accelerate and guide the type of change leaders must make to continue to remain competitive.

Market shifts and technological advances are compounded for C-suite leaders by new disruptors.

The Super Group with Super Powers

The C-suite is not oblivious to the power and potential of Pathfinders. Nearly three-quarters of this “supergroup” believe they have the potential to destroy business value if their expectations are ignored. That’s the bad news. The good news: Pathfinders possess significant influence. As employees, they are twice as likely to be on the fast track to leadership and have critical skills. They are also 67% more likely to buy from companies who contribute to society. By taking the lead from the Pathfinders, the C-suite can make important new allies and provide the on-ramp to the change they need to position themselves and their companies for success.

Expectations for the C-suite: Whole-Brain Leadership

Our research indicates that Pathfinders are pushing the C-suite to find new ways to lead, grow and sustain their organizations — demanding a new type of leader to engage their passion, principles and capabilities. Their expectation? Leaders who have a strong balance across analytics-led and human-centered skills.

This approach blends what’s traditionally been considered “left-brain” (scientific) skills that draw on data analysis and critical reasoning with “right-brain” (creative) skills that draw on areas like intuition and empathy. Bringing the two together intentionally to drive deeper levels of problem solving and value creation is critical.C-suite teams that proactively embrace and promote whole-brain approaches in their companies yield better financial outcomes than those that don’t.

But the majority (89%) of today’s C-suite leaders hold business school, science, or technology degrees and have honed “left brain” skills—like critical reasoning, decision-making and results-orientation. Numbers. Data. Stats. The science of management, rooted in reasoning and proof points. This has served them well, and these capabilities will always be vital. But they are no longer sufficient.

 

Whole-brain Skills: Closing the Gap

The C-suite values a whole-brain skillset, but less than Pathfinders do. This is where the C-suite can close the gap in what’s expected of them (see the gap illustrated below for the different countries in our research).

In fact C-suite leaders themselves (65%) say their “right-brain” skills are weakest and recognize the need to strengthen their right-brain skills — including empathy and intuition — for a well-rounded whole-brain approach.

 

 

USA

The beginning of a shift is underway. While only 8% of C-suite leaders report using a whole-brain approach today in their companies, 82% say they plan to leverage a whole-brain approach in the future.

8%

use a whole-brain approach today

82%

intend to use a whole-brain approach in the next 3 years

Not only is adopting a progressive whole-brain leadership approach good for building diversified thinking and decisions, it’s also good for the bottom line.

Case in point: Accenture Strategy’s research showed a correlation with stronger financials on average over a 3-year period for those companies using a whole-brain approach today. That’s 22% higher revenue growth and 34% higher profitability (EBITDA) growth.

22%

higher revenue growth

34%

higher profitability (EBITDA) growth

Building tomorrow’s whole-brain leaders

Effective leadership requires mastering and blending both left- and right-brain thinking. Northwestern University’s McCormick School of Engineering embraces this imperative to do more than educate great engineers – they are building tomorrow’s whole-brain leaders who will help take the world in a whole new direction. They empower their students to become whole-brain engineers by integrating elements of left-brain thinking—analysis, logic, synthesis, and math—with the kind of high-level right-brain thinking that fosters intuition, metaphorical thought, and creative problem solving.

The National Academy of Engineering recognized Dean Julio M. Ottino for the development of Northwestern’s whole-brain engineering philosophy with the 2017 Bernard M. Gordon Prize for Innovation in Engineering and Technical Education.

Make the Plan, Work the Plan

The path forward is clear.

1. Address the skills gap: Nine in 10 C-suite executives are beginning to take action by using organic and inorganic ways to tackle the skill gap in their midst. Over half of the executives surveyed report active reskilling efforts aimed specifically at the C-suite and 46% are bringing in new talent from outside their organization.

2. Redefine traditional leadership: Harnessing the power of the Pathfinder group is essential. By embracing them, granting their voices access to traditional “leadership only” channels and acting on their insights, the C-suite will gain allies and re-credentialize their leadership. And because Pathfinders are two times more likely to be motivated to give their best to their employer, and twice as likely to choose a more expensive brand because they prefer what it stands for, the entire company will benefit from leveraging these natural agents of change.

3. Drive change deep and wide: Getting this right is a balancing act. The C-suite must build these balanced skills and use them at both the organizational and individual level. This will enable them to leverage a whole-brain approach to solve the higher value problems that today’s combinatorial effect of disruption presents. And by leading from the front, they will ingrain data-led and human-centered skills into the organization as the new norm, paying dividends short and long term and enhancing competitiveness.

About the Research

The Whole-Brain Leadership: The New Rules of Engagement for the C-suite report from MW Consulting, Inc. Strategy is based on insights from research including interviews with 200 C-suite executives from France, Germany, Italy, Spain, the United Kingdom and the United States; survey responses from more than 11,000 employees and consumers in China, France, Germany, Italy, Spain, the UK and the US; and in-person focus groups in Spain, the UK and US. The study found that leadership teams that actively acquire, deploy, demonstrate and embed diversified whole-brain thinking across the organization fare better financially than those that don’t.

 

*We are here to help you navigate so schedule a call to discuss your specific business goals