Many executives are under huge pressure as they fight fires, manage significant change, and are expected to hit ambitious targets. When operating at such a fast pace, it’s easy to succumb to a short-term outlook, where tactics are the order of the day and strategy falls by the wayside.
It may be perfectly understandable, but a Chief Executive – and Chairman – need to be wary of such behaviours becoming the norm. At Criticaleye’s recent CFO Retreat, a poll showed that 60 percent of respondents thought that management teams become too focused on short-term goals because they are overly tactical, rather than strategic.
So, what can be done to compel executives to start looking outwards? Tom Beedham, Director of Programme Management at Criticaleye, comments: “The business landscape is extremely competitive at present, with huge cost pressures and technology-driven disruption.
“It’s easy to see why executives are defaulting to short-term, tactical thinking given the current trading environment, and yet it’s more important than ever that senior leaders take a more strategic view if they’re to be successful.”
We asked a range of Criticaleye’s Board Mentors to draw on their own experiences – as NEDs, Chairs, senior executives and CEOs – and share their views on how to address the problem of myopia in the senior leadership team.
Step Outside of the Business
John Harrison, NED, AIA Group & BW Group
Executives can become inward-looking when there is a problem within the company and, in the short-term, this may be an appropriate course of action to take. A business in crisis often needs to restructure to make it more ship-shape. It requires a degree of insular thinking, albeit with the benefit of the relevant external factors.
This can, on occasion, lead to long-term solutions such as restructuring, disposals – or acquisitions – and cost-cutting, to get the company back on an even keel. Executives then need to consider medium to long-term strategy and constantly reassess if the business model is attuned to the new competitive environment, digitisation and customer demands.
A CEO should hold regular full-day sessions with the executive team devoted entirely to discussing future strategy and plans for the business. This should involve considering what is happening in the marketplace, how competitors are developing, how data is being used and managed, what disruptors there may be, as well as customer and supplier expectations.
Executives should ensure they are appropriately prepared for such sessions and come equipped with the necessary data. These meetings may also include external consultants with relevant expertise who are able to offer insight and challenge.
Keep the Conversation Constant
Vanda Murray, SID, Bunzl
A CEO has to deal with a certain degree of ambiguity. They should never stop sweeping the horizon for what might be coming to disrupt the business.
Naturally, it is impossible to know which scenario will end up playing out, but a CEO needs to hold all the different models in their mind and then be ready to move into an action phase, bringing the executive team with them when it becomes clear what needs to be done.
To achieve this, the long-term strategy should be an embedded part of a CEO’s daily discussions with the executive team. It cannot be considered briefly and then put to one side, as it is necessary to get your senior team to visualise what the future could look like and how it will affect the business.
There are many ways to do this: one option is to use longer-term incentives that are linked to the performance of the business, ensuring that decisions are made for the long-term benefit of the company.
Build a Strong Team
Ian Stone, NED, Tencent
I sit on the board of an internet service company and being aware of, and even paranoid about, new competitors is a big priority for them.
They know how quickly another business can take advantage of an undiscovered gap in their market. That’s why the CEO and board of any business needs to spend time looking for newcomers that may have a different approach to existing solutions, or could have identified gaps in the market.
For CEOs it is natural to focus on short-term results and, if you’re a public company, some may become dangerously distracted by the state of the share price. It takes a conscious effort for CEOs to take a step back and think about gaps in the market, so it is important for them to have a strong team in place to do this.
If the business can afford to have a strategic director, or a specialised team that is forward-looking and engages executives in discussions about [the future], then this will be of great help to any over-stretched CEO.
Personalise the Discussion
David Comeau, Venture Partner, KEEN Growth Capital
A CEO needs to present themselves to the senior leadership team as a visionary and purposely cultivate their image as a leader for the long-term.
I would never walk into an executive meeting and jump into rational, short-term metrics straight away; I always open instead by discussing where we are on our journey. It is essential to continue to inspire people and help them see what it is they are collectively working towards, before diving into hard numbers.
It is important for the CEO to be a catalyst. They should walk into a senior team meeting and be open to new ideas, or approaches to win. They should elicit ideas to improve or change, perhaps a new taskforce for example, or a new research project; plans that pave the way for long-term action.
Stay close to your team from an emotional perspective. Take time to listen to individual feedback and then use that to develop a broader framework for team building, collaboration and trust.
This will help a CEO to have a much more meaningful, long-term strategic discussion with the executive team. A more personal approach can often pay greater dividends than simply ‘walking the talk’ of corporate strategy.