Masters of the Universe. Titans of Industry. Corporate Rock Stars. These were once common phrases used in conversation and media reports to capture the power and influence wielded by CEOs. Such terms aren’t that common anymore, though.
A confluence of factors—ranging from activist investors and more accountable boards to digital disruption and heightened growth expectations—is quickly diminishing the image of the invincible CEO. The issue has been raised recently during some key CEO changes, as well as in a recent headline in The Wall Street Journal, “The Angst of Endangered CEOs: ‘How Much Time Do I Have?’” While that may be a tad hyperbolic, Korn Ferry senior client partner Debra Nunes says the concept of the heroic CEO is in serious jeopardy.
“In the past, when things were relatively stable compared to today, the main job of a CEO was to execute,” Nunes says. “Now, transformation requires new digital business models and products, a strategic vision and quick alignment and implementation against that vision, and investors and CEOs themselves are recognizing their limitations in the new environment.”
Studies show that the average tenure for a CEO is shrinking, though they vary in precise length from less than six years to just more than eight. Those in the position give themselves even less time—one CEO Nunes met with during his first week on the job estimated he would have about three years to implement his vision.
According to data cited in The Wall Street Journal, activists have launched nine campaigns targeting top management at U.S. companies so far this year, the fastest pace since 2014. The $3.7 billion in transaction volume last year was the third-highest on record behind only 2015 and 2007, and through the first quarter of this year there have been 450 more deals in the U.S. than over the same period a year ago.
Increased activist campaigns and M&A activity stem from not only the need for growth, but also a future vision that aligns the company with today’s digital business realities. Jane Stevenson, Korn Ferry’s global leader for CEO Succession and vice chairman, Board & CEO Services, said that the average transformational innovation takes at least a decade to take hold commercially, and that boards and investors now evaluate a CEO on the company’s future rather than its current profile.
“The days when you could have an enormously skilled CEO from an operating perspective but not have the communication skills to deal with outside external forces and internal governance are gone,” Stevenson says. “Growth is an elusive commodity, particularly for large-scale iconic companies of our time. Having the salesmanship to sell the vision for growth while simultaneously managing the recurring revenue that funds the business has never been more mandatory.”
Companies that aren’t in the game when a commercial innovation takes hold often fail to catch up. That’s why boards and investors are being proactive—some might even say aggressive—about finding CEOs who are more action-oriented and can anticipate more and react less.
Both Nunes and Stevenson agree that no one person can handle the real-time change, demands and complexity of today’s digitally driven global economy. CEOs can’t just mandate anymore. They have to align constituencies, build consensus, prioritize initiatives and develop other leaders to execute the vision.
“Today’s CEO profile requires less ego and less of an ‘I am the greatest’ orientation, and more of a selfless, service-leadership orientation,” Stevenson says. “CEOs simply cannot do it alone. They need a strong team and pipeline of leaders to make change happen.”
And that may end up being the most heroic thing a CEO could do for their company.