New research suggests that having a single leader, the CEO, will no longer work in this era of globalization.
The rapid evolution of executive roles in today’s hyper-dynamic business climate is like the game of ‘musical chairs’, where roles in the executive suit are constantly evolving with the ever-changing globalization of the business environment.
The fundamental concept of executive leadership is changing. CxOs must have a radically new type of creative, innovative mindset. According to Andrew Stein, the roles and responsibilities of just a few years ago of the CEO, CFO, CLO… is much different today, and it’s still changing. Sometraditional tasks have even shifted from one title to another. Today, every executive in the C-suite must communicate effectively, confidently, and convincingly to all stakeholders, partners, and especially customers and employees.
The business priority has changed, it was compliance but now technology innovation is the most profound driver of role change. As a baseline, corporations were historically measured by revenue and profit, whereas today companies are measured on creative ability to innovate in all aspects; functions and service levels across the business.
The economic drivers of the last few years forced global businesses to innovate to a higher level and at a faster rate, than ever before. It forced the executive team to make innovative decisions that forced seismic-level change. Shifts from efficiency measures to innovation initiatives produced profound results.
Customers are seeking out the innovative companies over those just holding on and riding out the economic storm. Leaders that want to stay on top must reinvent their role; they must be visible and build trust with their organization and extended stakeholders…
In the article “CEO or CFO: Who’s in Driver Seat?” by Lisa Yoon writes: In a study by Deloitte titled ‘Chemistry of CEO/CFO Relationships’, they identified four personality types that CEOs and CFOs fall into:
- Drivers: Analytical, logical, experimental, determined, decisive, direct, tough, competitive, pragmatic.
- Guardians: Concrete, process-detail-oriented, traditional, socially connected, loyal, conscientious.
- Pioneers: Adventurous, creative, interested in new experiences, high-energy, spontaneous, optimistic, adaptable.
- Integrators: Web-thinking, intuitive, imaginative, empathic, expressive, diplomatic.
In this study, researchers at Deloitte asked 91 large-company CFOs which personality type they themselves identified with, as well as the type that described their CEO. Just over half the finance chiefs self-identified as ‘drivers’, while 29% said they were ‘guardians’. The other 20% split evenly between ‘integrators’ (11%) and ‘pioneers’ (10%). While, 34% said their CEO was a ‘driver’, another 33% called the CEO a ‘pioneer’; even though that was the category were the fewest CFOs saw themselves.
Also, CFOs saw CEOs as ‘guardians’ 22%, and ‘integrators’ 11% of the time. In terms of CFO-CEO pairings, it appears ‘drivers’ are the key component in amicable and lasting partnerships. More than three-quarters of the pairs (77%) had at least one ‘driver’. According to Deloitte, this suggests the versatility of ‘driver’ type; it’s harmonious in pairings with any personality type. It may also be that the decisive and practical styles of ‘drivers’ are simply an essential part of an effective CFO-CEO partnership.
In this Deloitte view ‘driver’ CFOs, presumably, being able to pair well with different CEO types, enjoy important benefits among other CFO types. The ‘drivers’ versatility affords them more career options, better partnerships with their CEOs, and the ability to adapt to CEO changes. That same flexibility, meanwhile, might even help ambitious CFOs ‘drive’ toward the CEO role in the future.
In the article “Chief Legal Officers Have More Power Than Ever Before” by ‘The Economist’ writes: The Chief Legal Officer (CLO) is now one of the mightiest figures in the C-suite. The main reason is that the legal thicket has grown thicker. In the U.S., the 2002 Sarbanes-Oxley act inserted federal law deep into corporate governance. The Dodd-Frank act of 2010 made running a financial business much more complicated.
In the book ‘Indispensable Counsel’ by Norman Veasey, Christine Di Guglielmo, they argue that a CLO must be a ‘courageous renaissance person’. He must be a business partner and a guardian of corporate integrity. He (or she; 20% of big-company CLOs are women) represents the entire corporate entity, not just its managers. He answers directly to the CEO and the Board of Directors, as well.
Professional ethics often require the CLO to say ‘no’, to the other suits in the C-suite. Sarbanes-Oxley, in particular, has increased the lawyer’s responsibility to keep his company straight, or face punishment. The CLO must protect the company’s reputation with customers, suppliers, journalists and non-governmental organizations. Perhaps the hardest balancing act for a CLO is that he/she must be both a cautious lawyer and a member of the strategy team. Only the best CLOs excel in both roles.
A visionary thinks about the future, but a lawyer’s stock-in-trade is precedent. If he gets too involved in business, he may forget to be a lawyer. (The U.S. courts have ruled that a CLO’s purely business advice is not covered under attorney-client privilege.) Good lawyering can be good for business. For example; sharp legal departments can enforce a sound anti-bribery policy, while rival firms run into swamps.
It can knock down competitors’ patents; handy when so many technology firms are warring over intellectual property. It can smooth takeovers; tricky in any industry under scrutiny by trustbusters…
In the article “Two Leaders in the Corporation of the Future” by Marianne Lepa writes: New research suggests that having a single leader no longer works for the corporation of the future, and that the roles of CEO, CFO, CTO… should be given equal say. The Chief Executive Officer (CEO) as visionary leader is a thing of the past, says Dr. Philip Tulimieri. Dr. Tulimieri believes that the Chief Financial Officer (CFO) should also have equal billing and responsibility for corporate leadership.
Tulimieri says his research suggests that the distinction between the two roles is blurring and that changes in corporate structure and in society at large indicate that the two roles are merging in many ways. Tulimieri says the forces of globalization have created a confusing and complex set of responsibilities for corporate leaders. The two positions of CEO and CFO while very distinct in duties tend to be recognized now as ‘necessary counterforce’ in the business structure…
The CEO is the ‘eternal optimist’ leading the way and the CFO is ‘the realist’ being cautious and warning of risk. The two roles, both address the need for growth and responsibility must function as a team rather than adversaries. The CEO-CFO partnership provide the engine for the new-millennium corporation, and serve as a starting point for the new corporate model of ethical behavior, sustainability and true stakeholder value.
In the article “The New Path To the C-Suite” by Boris Groysberg, L. Kevin Kelly, and Bryan MacDonald write: We know that different times and different circumstances call for different leadership skills. Prior to the early 2000s the typical CFO was a bean counter, responsible mainly for reporting the numbers, measuring performance with integrity and accuracy, and managing the company’s checks-and-balances processes.
CFOs had accounting and financial acumen, as well, as strong quantitative skills but their purview was relatively narrow and confined mostly to their department. The typical CFO was also country-centric, even at firms with an international presence, operating on the theory that regulatory differences made global finance too complicated.
Today, however, regional differences loom larger than ever, and multinationals no longer have the luxury of keeping finance issues within geographical boundaries. As the retired head of finance of one U.S. manufacturer pointed out to us; ‘CFOs now need experience with capital markets, mergers, and information technologies’. The CFOs of the future will operate around the globe, in multiple time zones, and will regularly partner with nonfinancial areas of the business on growth initiatives and international expansion. Thus they will need both a commercial sensibility and a global mind-set.
Whereas, today CFOs are required to develop and implement systems and processes for budgeting and performance metrics, tomorrow they’ll also be required to provide the management team with real-time, operational, and financial data and analyses. They’ll continue to perform the traditional functions of managing the finances, reducing costs, and putting in place the appropriate controls, but strategic thinking will become more important…
Corporate executive leadership can be divided: The positions of CEO, CFO, CLO… while very distinct in duties tend to be recognized now as ‘necessary counter-forces’ in the business structure. The top job has simply become too large, too complex and too demanding for one person. A CEO-CFO-CLO partnership will provide the engine for this new-millennium corporation, and serve as a starting point for the new corporate model of ethical behavior, sustainability and true stakeholder value.
For the Chief Executive Officer (CEO), a few trends are emerging that are influencing the direction of the role, such as; strong communication, empathy, collaboration, and trust building. As the face of the company, one skill of foremost importance is the ability to elicit public trust. As one executive put it, ‘The C-level person today needs to be more team-oriented, capable of multitasking continuously, leading without rank, and having an open office plan. In other words, a whole new breed of top executive’.
For the Chief Financial Officer (CFO), trends show an active role in talent management, contributing to areas beyond finance, and assuming the role of CEO designate. No longer is the CFO only preoccupied in building credibility for the finance function, he must instill a sense of confidence among employees, customers, partners… It goes without saying that the CFO’s level of understanding of the business has evolved tremendously from what it was a few years ago.
For Chief Legal Officer (CLO), trends show heightened attention to risk management, which includes; safety, security, and reputational risks, which are all central to the senior team’s agenda. The CLO reports directly to CEO, but also functions as high-level advisers to the Board of Directors in matters affecting corporation. Whereas, corporate lawyers were once expected to understand just the rules in ones own country; today the CLO needs to operate across geographic boundaries, and deal with a range of new and evolving challenges in the era of globalization...
The CEO is the moral and ethical leader that bring a sense of optimism and purpose. The CFO is naturally prudent and cautious having developed in an environment of statutory financial information. The CLO is the risk manager and provider of corporate stability. These roles working together, in partnership, is the ‘platform’ for building a successful