Trying to predict the top challenges for chief executives in 2015 is a question many might want to pass on until we’re well into the year – and who can blame them given the level of change and uncertainty in 2014.
We started last year with generally consistent and confident views on global growth, inflation and something approaching a journey back towards “normal”, that is normal in terms of historic trends for interest rates, growth, inflation and market behaviour.
What we got instead was an oil price down 30 per cent, any rise in rates pushed well back probably into 2016 (don’t quote me on that this time next year), and a general sense of “hmm, that wasn’t where I’d hoped we’d be by now”.
So, with this background, what is any chief executive supposed to think or do beyond hoping that 2015 will deliver “better” results for their business than 2014?
Actually, I think that we can do better than that. As president of the Management Consultancies Association (MCA) and, like my fellow board members, a leader in the consulting profession, I am constantly engaged in discussions with our clients on this question and those that flow from it.
What strategy looks and sounds like has to adapt, but it isn’t dead
And it is precisely the volatility, uncertainty and ambiguity that gives me the confidence that there are the following clear priorities for chief executives in the year ahead:
I hear many voices pleading with chief executives that “strategy is dead – life is now too uncertain – we just need to focus on delivery and results”. I say to those chief executives, don’t you let them get away with it. Having clarity about what you stand for, where, why and how you’ll get there will, even more than usual, separate the high achievers from the pack. What strategy looks and sounds like has to adapt, but it isn’t dead.
2. INNOVATION AND THE CUSTOMER
In the MCA’s Year of Digital we have already understood and shared great insights to how digital is driving real innovation across industries. For “innovation” though, it has not always been the case. In fact, it must count as the most over-used and under-realised wish for business leaders in the last five years. This year, chief executives must finally demonstrate they can deliver innovation with and for the customer. Who can they look to for inspiration? Why, Ryanair’s Michael O’Leary, of course, who famously conceded late last year: “If I had known that being nicer to our customers was going to result in higher load factors [higher seat sales per flight], I would have been nicer years ago.” More, please, this year.
3. OPERATIONAL EXCELLENCE
In the rush to cut costs during and immediately after the financial crisis, many chief executives have been grateful they have achieved even that. But, if you keep on just cutting cost, you may end up with something the customer doesn’t value anymore. Operational excellence, in all its forms, will therefore come to the fore as a challenge for chief executives.
4. AND FINALLY, REPUTATION
Whether in retail, banking or pharma, reputations have taken a knock in 2014. In 2015, leaders will need to view the management, protection and enhancement of their brand reputation as a top challenge.