Knowledge Center: Article

World Economic Forum

The New Leadership Contract


As a new leadership contract evolves with conflicting demands, CEOs will need agility, authenticity and fortitude.

“Everybody has a strategy, until they get punched in the face.”

That line, once muttered by former heavyweight boxing champ Mike Tyson, was borrowed by Mark Weinberger, chairman and CEO of global consultancy EY, as he made the point that successful business leaders need to demonstrate courage and fortitude, in addition to authenticity and agility. “You can’t change your strategy every time there is a shock,” Weinberger added.

Weinberger was speaking in Davos in the midst of the World Economic Forum at a panel discussion organized by Heidrick & Struggles and Saïd Business School at the University of Oxford . These two global powerhouses in leadership—H&S specializing in executive search and recruitment, leadership assessment, coaching, succession planning and on-boarding; Saïd focusing on leadership development, research, life-long learning and reflection—together announced a global research initiative aimed at exploring how the world’s most successful companies identify and develop transformative leaders. The ultimate aim is to reimagine a talent development pipeline that can produce CEOs to succeed in a dynamically uncertain future.

Global corporate leaders increasingly will deal with a dizzying set of conflicting demands from myriad inter-connected stakeholders. Successful CEOs will adroitly draw from a skill set of leadership qualities including agility, decisiveness and an ability to navigate unchartered territory. They will have to decide when to change course and, just as importantly, when to stay the course.

The panel discussion at Davos kicked off the conversation at the center of this new research initiative, addressing the question: What leadership behaviors will be required of CEOs in tomorrow’s complex, interconnected world?

The paradox between the CEO’s need for agility versus vision and “stick-to-itiveness” drew plenty of discussion.

“This job can be painful. There are always shocks,” said panelist Ellen Kullman, chair and CEO of DuPont. “Leaders can’t always simply stick to the plan. You have to be able to make adjustments. You need people who can see around corners…. Shocks help you learn a lot about people’s flexibility and their ability to incorporate new thinking.”

An organization’s mission, guided by its leader’s vision, necessarily has permanence in a roiling sea of change. “Things change all the time, but your purpose transcends the changes (you make) in products and services,” Weinberger said.

Saïd, Oxford and Heidrick & Struggles have a thesis guiding their research initiative: The new CEO’s expanded role will be defined by “a new leadership contract,” an implicit agreement between CEO and stakeholders to ensure long-term, sustainable value creation and legitimacy. It will entail transparency, agility, courage and vision.

“Leadership has always been important,” said Saïd Business School Dean, Peter Tufano. “So why undertake this initiative now?  The rules of the game are changing. Opportunities are changing. The world is changing and so what we need from CEOs is changing.”

Activist investors increasingly are becoming a more vocal—and demanding—part of that dynamic contract between CEOs and stakeholders.

In addition to being chairman of the Flextronics Board, Ray Bingham is an advisory director of General Atlantic LLC, a global private equity firm. “One of the hottest companies we have in our portfolio right now is in Silicon Valley,” he said. “We almost never (push to) make a CEO change, but in this case we did. We needed to bring to this company a leader who could inject real passion into the organization. We landed a ‘business athlete’ who had never been a CEO, but displayed clear leadership potential…The results have been astonishing.” Revenues have skyrocketed, he said, directly attributable to the new CEO’s passionate leadership style. “This new CEO has made the team better. When you hear him talk to his people, he sounds like a minister trying to save the world.”

Panel moderator Maria Bartiromo pressed Bingham. “What did you see in him?”

“We needed a leader who could be like a point guard on a basketball team. Someone who could distribute the ball to the right talent. (Because of his lack of experience in a corner-office role), it was an odd choice and a risky move. But it matched our strategy and our investment thesis.”

Most importantly, the new CEO has delivered the desired results, more than satisfying the demands of a restless stakeholder. Success, for sure, at least until another important stakeholder grows restless, providing the CEO another opportunity to bob and weave, and, yes, when necessary to absorb a punch in the face.

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