COVID-19 requires a New Era of Leadership

Introduction

The pandemic is a challenge for businesses—and their CEOs— unlike any they have ever faced, forcing an abrupt dislocation of how employees work, how customers behave, how supply chains function, and even what ultimately constitutes business performance.

Confronting this unique moment, CEOs have shifted how they lead in expedient and ingenious ways. The changes may have been birthed of necessity, but they have great potential beyond this crisis. In this article, we explore four shifts in how CEOs are leading that are also better ways to lead a company: unlocking bolder (“10x”) aspirations, elevating their “to be” list to the same level as “to do” in their operating models, fully embracing stakeholder capitalism, and harnessing the full power of their CEO peer networks. If they become permanent, these shifts hold the potential to thoroughly recalibrate the organisation and how it operates, the company’s performance potential, and its relationship to critical constituents.

Only CEOs can decide whether to continue leading in these new ways, and in so doing seize a once-in-a-generation opportunity to consciously evolve the very nature and impact of their role. As part of this, CEOs must have a thesis of transformation that works in their company context. A good CEO is always scanning for signals and helping the organisation deliver fine-tuned responses. A great CEO will see that this moment is a unique opportunity for self-calibration, with profound implications for the organisation.

It is clear to us that CEOs sense an opportunity to lead in a new, more positive and impactful way. If a critical mass of CEOs embraces and extends what they have learned during the pandemic, this CEO moment could become a CEO movement—one that is profoundly positive for the achievement of corporate, human, and societal potential.

Aspire 10x higher

The global health crisis and its resulting business dislocations have unlocked change at a pace and magnitude that has made even the boldest and most progressive of CEOs question their assumptions. From what we have observed, there are at least two related areas that are ripe for innovation: goal setting and the operating model.

Think bigger and faster

During the pandemic, many organisations have accomplished what had previously been thought impossible. Cincinnati Children’s Hospital Medical Center (CCHMC), for example, scheduled 2,000 tele-health visits in 2019. It is now handling 5,000 a week—a goal that, prior to the pandemic, it had estimated would be accomplished several years from now and only after a large-scale transformation. At Dubai-based Majid Al Futtaim (MAF), attendance at movie theatres fell (as a result of government-mandated closures) while demand for its online supermarket soared; in two days, the company retrained 1,000 ushers and ticket sellers to work for the online grocer. Without the crisis, that speed and magnitude of reskilling to leverage talent across MAF’s portfolio of companies would never have been contemplated. Best Buy, which had spent months testing curb-side pick-up at a handful of stores, rolled it out to every store in just two days. In four days, Unilever converted factory lines that were making deodorants into ones making hand sanitiser.

CEOs making bold moves is vital to achieving outstanding performance, which itself is elusive—only one in 12 companies goes from being an average performer to a top-quintile performer over a ten-year period. Making one or two bold moves more than doubles the likelihood of making such a shift; making three or more makes it six times more likely. Research has also shown that CEOs who are hired externally tend to move with more boldness and speed than those hired within an organisation, partly because of the social pressures that constrain internally promoted CEOs. As a result, we often advise CEOs who are promoted from within to ask themselves the question that famously prompted Andy Grove and Gordon Moore to focus Intel on microprocessors: “What would an outsider do?” Given the performance we have seen during the pandemic, we would now encourage CEOs to ask themselves and their teams a follow-on question: “What would your COVID-19 answer be?” The power that these frames of reference hold, to reimagine the possible and recalibrate what can be achieved, is profound.

Other questions for CEOs to reflect on to help calibrate their aspirations include:

• Where should we be aspiring 10x higher and/or 10x faster?

• What beliefs or long-held assumptions do I need to explicitly reset in the organisation and with stakeholders to achieve this?

• What do we say no to, or stop doing, to create the additional space to go bigger and faster?

Zero-base how work gets done

In addition to the mindset shifts mentioned earlier, there are any number of more tangible reasons why companies have been able to drive this kind of progress so quickly. Some CEOs, have noted that remote work and bans on travel have opened up banks of time that give them the opportunity to focus more on what really matters. Though downtime at the water cooler with colleagues and travel by oneself can be creative openings and outlets for new thinking. Therefore, many CEOs have since adapted by booking “flight time” into their schedule so as to avoid spending all day, every day, on videoconference meetings. In either case, the COVID-19 experience has made it clearer than ever that CEOs must be extremely intentional about how they use their time.

The magic of the moment is that both the CEO and the organisation’s operating models have been unfrozen, perhaps more than in any time in a generation. There is an opportunity to reset how work gets done in ways that make it multiple times more efficient and effective—free of the burden of historical norms. Breakthrough moments arise when leaders dramatically raise their sights, and then commit to the operating implications (particularly with difficult resource-allocation and portfolio choices) needed to achieve those aspirations.

As CEOs begin to seize the unique opportunity at hand to recalibrate their personal, team, and company operating models, they should reflect on the following questions:

• How have we worked differently to enable the impossible to happen during the pandemic (including our decision making, processes, resource allocation, communication, and location)?

• What learnings and new muscles should we bring forward into the organisation for the future?

• How will this change my day-to-day as I run the company as CEO?

Elevate ‘to be’ to the same level as ‘to do’

In a moment of crisis, everyone looks to their leader. CEOs have felt this acutely during the pandemic. In a normal environment, it’s about business leadership and setting up strategy, as well as culture and people decisions. In this environment, it’s about helping people maintain morale. It’s about people being prepared for whatever may come in the face of uncertainty. As a result, leaders have shown up differently and have starting using a different lens to take notice of how members of their senior team show up. We see both of these areas as candidates for permanent change in the future.

Deliberately choose ‘how I show up’

Perhaps the most notable feature of how CEOs are showing up differently is that they are showing more of their humanity. This has been a sustained period of uncertainty and fear, but also a great opportunity to forge a stronger, more cohesive and motivated workforce. If CEOs can step into a ministerial role—extending hands virtually, truly listening, relating to and connecting with people where they are—there is enormous potential to inspire people and strengthen bonds and loyalties within the company.

Showing up isn’t only about opening up more of oneself to others, however; it’s also about being the organisation’s rock during a time that’s fraught with anxiety and uncertainty. Employees need to see that their leadership is vulnerable, empathetic, and making decisions in accordance with the values.

By reflecting on the following questions, CEOs can use this moment as an opportunity to recalibrate how they show up every day:

• What qualities am I bringing to being and showing up today that I should continue to bring into the future?

• Going forward, is there an opportunity for me to manage a “to be” list with the same rigour as my “to do” list?

• How, practically, should I hold myself accountable? How will I ensure that others help hold me accountable?
  

Recalibrate how I expect leaders and employees to show up

CEOs are noticing aspects of their people that had always been there but perhaps had gone overlooked or weren’t considered important until the pandemic helped make those characteristics more pronounced. Most job descriptions list what is expected in terms of skills and experience, but during COVID-19, CEOs have seen the critical importance of other attributes and qualities of character. We’re moving from a world of specialists toward a world of generalists. Leaders need to adapt to all kinds of different circumstances, and generalists can succeed when life is so fast and volatile. We will need more generalists to lead in disruptive times, whether they’re caused by technological shifts or this unimagined pandemic.

A conscious, deliberate choice to adjust people expectations to include “to be” as well as “to do” considerations will change how CEOs and their organisations select, train, coach, recognise, and reward leaders. As CEOs decide how to make this shift permanent, they, together with their chief human-resources officer, should consider the following:

• What will I look for differently in leaders as a result of what I’ve learned during the pandemic?

• What actions should I take in the near term to reinforce what “being” attributes will be of elevated importance going forward?

• How can these attributes be hardwired into our people model to ensure they are institutionalised in how we develop, reward, and promote?
  

Fully embrace stakeholder capitalism

Over the past few years, many CEOs have begun to embrace the idea that their companies’ obligations to shareholders should not come at the expense of other stakeholders—that is, employees, customers, the community, suppliers, and society. The pandemic has brought this issue to the fore in powerful ways, prompting many CEOs to gut check what they really believe and take action accordingly— something we believe all CEOs would benefit from, given the moment at hand.

Decide what you really believe

The COVID-19 pandemic has emphatically affirmed the interconnection and interdependence of businesses with their full range of stakeholders. At the beginning of COVID-19, CEOs zipped right to thinking about shareholders above everything. It was almost a muscle memory. But then they realised that at every turn they were bumping up against different stakeholders: partners, governments, suppliers, employees. They were experiencing the interconnectedness of stakeholder capitalism in everything they did.

CEOs are being called upon to make decisions they have never been trained for. Few have any expertise on the general health of their employees, yet they are called upon to decide when it is safe to return to the office. Tough decisions with profound human consequences are confronting CEOs every day.

Research has made it clear that tending to multiple stakeholders and managing for

the long haul is good for not only stakeholders but also the company. Exposure to customer and stakeholder-related risks are minimised, and new opportunities present themselves. For example, 87 percent of customers say that they will purchase from companies that support what they care about. Ninety-four percent of millennials say that they want their skills to benefit a cause. Sustainable investing has grown 18-fold since 1995. These facts are not new to CEOs, but the COVID-19 pandemic has laid bare the profound interconnectedness between businesses and the broader world in which they operate. Furthermore, our early research indicates that consumers will be even more committed to social responsibility coming out of the pandemic.

In this context, we encourage CEOs to reflect on issues such as:

• On what stakeholders should I explicitly recalibrate my personal focus and our company’s overall focus?

• How would I convince my shareholders that the long-term benefits of shifting the company’s focus outweighs the short-terms costs?

• Do my answers to the questions above implicitly show that I’m not yet ready to embrace stakeholder capitalism, and, if so, what is holding me back from having true conviction?
  

Once you have made the decision, make it happen

Determining how to manage the short-term costs of stakeholder capitalism practically is one of the most daunting challenges for CEOs who have chosen to fully embrace the ideal. Consider, for example, the issue of job reductions in the face of declining revenues. It may be the right thing to do for shareholders in the near term, but it can also be catastrophic for employees who lose their jobs at a time of human-health and economic crisis.

Important stakeholder questions are also intrinsic to CEO decisions regarding returning to the workplace. On one hand, the economic downturn is having a catastrophic impact on many of the most vulnerable groups in our society. The sooner economic activity can resume, the sooner unemployment can be addressed and goods and services can be delivered to those who need them. At the same time, the more that people are brought together, the higher the risk that lives are put in jeopardy.

CEOs acknowledge that these and many other multi-stakeholder decisions become more difficult the worse your business gets. Employees, customers, and stakeholders expect a CEO to articulate where the company stands on critical issues—it’s increasingly becoming an expectation of the CEO role. Going forward, there is going to be a lot more focus on society, customers and clients, family, and employees. he moment of the pandemic offers CEOs the opportunity—and increases their obligation—to acknowledge this reality.

CEOs who believe in the opportunity of stakeholder capitalism should ask themselves the following questions to help turn beliefs into action:

• Based on the stakeholder interests that I need to recalibrate, what practically must look different in the next six, 12, and 18 months (including the frequency and nature of interactions, management processes, and resource allocation)?

• How and when will I reset expectations with my shareholders?

• How will we measure progress as we transition?

Harness the real power of peer networks

Here’s one of the most noteworthy changes we have seen during the pandemic: CEOs are talking to one another much more and are seeking to do so at a much greater rate. Two months ago, the business community was thinking, ‘If we don’t figure out a thoughtful path, we could wallow in this for a long, long time.’ So CEOs started thinking, ‘Let’s learn from each other. Let’s hold hands.’ There’s even a little bit of commiseration. I haven’t put enough value on the ability to be with a couple of other CEOs on one of these Zoom calls, or on the phone, and talk about any number of things that are unique that you can’t talk to anybody else about. We believe that having CEOs spend more time laterally will prove useful not only for responding to the current pandemic, but also for addressing emergent issues and unlocking higher levels of business performance, innovation, and multi-stakeholder impact in an ever more complex and uncertain world.

Invest further in building relationships with other CEOs

CEOs are communicating more, and expanding their networks, in part because only another CEO confronting the pandemic can fully identify with today’s leadership challenges. It’s no surprise that CEOs are seeing the benefits of connecting in new ways during this crisis. The urgency of the moment has given focus and urgency to the nature of the dialogue.

Leaders are less focused on showing up to large group meetings and putting on a corporate face that suggests “We’ve got it under control.” Instead, they are intent on accelerating problem solving together by building on one another’s ideas, iterating novel solutions to use in the workplace, trading notes, and moving forward having learned what works best. They are also encouraging one another to conduct bold experiments, taking advantage of the current environment to do A/B testing on a massive scale and trying new ways of operating virtually and digitally.

In order for CEOs to leverage such interactions in the future and accelerate impact on shared challenges, they will have to continue to approach such opportunities— both formal and informal—with humility, a learning mindset, and an open-minded commitment to ongoing development. The benefits of doing so are more significant than one might imagine: role modelling this has the potential to create more open learning organisations for companies, and to identify the cross-industry analogies that often provide the touchstone for innovation. Without the pressure of a crisis, however, leadership resolve will be required to maintain such an approach—research makes it clear that none of this is easy for people in powerful roles.

In light of the newfound connectivity among CEOs within and across industries happening in this moment, CEOs will benefit from reflecting on the following questions:

• What peer networks should I continue to create beyond the crisis (in particular, those in analogous but not identical situations)?

• What makes for a valuable peer interaction, and how can I ensure that these conditions are in place when I interact with other CEOs?

• Beyond role modelling, how can I encourage my senior team and other leaders to enrich their own networks and the velocity of learnings with their peers across industries?

Leverage networks to tackle a broad set of issues

CEO networks also have a unique potential to enable some of the other things we have talked about thus far in this article. CEOs in noncompetitive industries are well positioned to both challenge and support their peers in aiming higher; in sharing learnings, best practices, and encouragement regarding elevating “to be” to the same level as “to do”; and in working through how to fully embrace stakeholder capitalism.

The pharmaceutical industry’s “10x” rush to counter COVID-19 bears witness to this. As Christophe Weber, CEO of Takeda Pharmaceuticals, explains, “We started the development of a plasma-derived medicine for COVID-19 by ourselves. But our head of Plasma-Derived Therapies realised that if we formed an alliance with other plasma companies, we could go much faster and would have the potential to produce a product on a bigger scale. So now we have a pro bono, not-for-profit alliance. And we have a very good alliance with other major plasma companies, smaller ones, and also non-plasma companies, like Microsoft. When everybody saw that it was a true alliance to do good for society, we were able to get the convergence of many companies.”

As CEOs look forward to decide what issues to tackle with their peers, they can build on their pandemic experience by considering the following questions:

• On what issues has peer connectivity most benefited my business, now and in the future?

• On what societal issues (such as inequity and racism, climate change, porous social safety nets, weakened healthcare systems) should peer connectivity be directed, and how can I maintain the same level of intensity that I did during the pandemic?

• What issues will I take personal leadership on and convene others around?

Conclusion

COVID-19 has brought with it a pressurised operating environment the likes of which few of today’s CEOs have ever experienced. It has necessitated a reappraisal of how much is possible and in what time frames. It has forced personal disclosure at levels previously considered uncomfortable and, in doing so, has increased awareness of the importance of how leaders show up personally. It has shined a light on the interconnectivity of stakeholder concerns. It has prompted a level of substance-based, peer-to-peer CEO interaction that has elevated all involved. Ultimately, it has “unfrozen” many aspects of the CEO role, making possible a re-fusing of new and existing elements that could define the CEO role of the future.

When the pressure decreases, will CEOs go back to operating as they did before? Or will the role at the top be thoughtfully reconsidered and re-conceived by those who occupy it? Clearly, not every CEO will choose to make permanent the four shifts we’ve discussed. The more that CEOs do, however, the more the moment has the potential to become a movement—one that could create higher-achieving, more purposeful, more humane, and better-connected leaders. Judging by the evolution underway, many companies and societies stand to benefit.