In the long-run we are all dead - CEOs Focusing on Long-Term Value Creation, Not Just Stock Prices
Alex Pesjak
Future Backwards Strategy & Brand-Led Transformation VP Brand | Innovation | Change | Circularity | Platform | Ecosystem | Newsletter #EcosystemEspresso | ex-Coca-Cola | ex-Mondelez |
Un Espresso per favore!?
It is Friday and I am glad you take a sip of Ecosystem inspiration.
This is?#EcosystemEspresso?#18
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2| "Beyond Quarterly Reports: CEOs Unleashing the True Potential of Their Companies"
CEOs are humans too. The job is increasingly complex and hard. No doubt. Sorry, we must expect the best paid people to master the splits between short-and long-term.
We are here exploring the "the Good-the Bad and the Ugly" without dropping names and some factors behind it!
Quote of the week:
There will only be two types of companies: the ones that use AI and the ones that are dead. (unknown source to me)
This quote up here sets the stage and frame for this week's Newsletter.
3| MIT Platform Strategy Summit on #CircularityPlatforms
A quick preview on this top event. Changing the perspective on platform ecosystems beyond.
Alora, let's take a big sip!
"Beyond Quarterly Reports: CEOs Unleashing the True Potential of Their Companies"
Let me quickly start with two quotes to open this Espresso.
The world?isn't black?and?white.?All the magic is in the grey." -Gary?Vaynerchuk
At a time when humanity is facing some of its greatest challenges, every leader must know how to turn trade-offs into opportunities, tension into creativity, and discomfort into ambition. Paul Poleman, former CEO Unilever.
CEO Tasks are wide and long
Source: inspired by C. Dewar, S. Keller, V. Malhorta, K Strovink with AI support
2023 Trends and forces to act on
My personal company is branded #ANDfutureproof. To remain on the playing field = future proof it takes all about the AND.
Already in the top two items of the research above:
Alone these two top-rated items proof - every medal has two sides - a short and long-term one but also one that reveals the obvious and something deeper hidden beneath the surface...
Being CEO or President of Nations are one of the toughest jobs:
1.????Pressure for immediate results: CEOs and presidents often face intense pressure to deliver quick and tangible results within a limited timeframe. This pressure stems from various sources, including shareholders, stakeholders, and the public. The expectation for immediate success creates a sense of urgency, compelling leaders to prioritize short-term gains over long-term strategies. This focus on short-term outcomes can lead to a neglect of important but less immediately visible factors such as sustainability, ethical considerations, and long-term societal impact.
2.????Political and economic cycles: In the realm of politics, elected officials, including presidents, operate within fixed terms, typically spanning a few years. This limited timeframe creates a sense of urgency to accomplish policy goals and demonstrate progress before the next election cycle. Similarly, CEOs may face pressure from investors and board members to show quick returns on investments and meet short-term financial targets. The inherent cyclic nature of political and economic systems reinforces the temptation to prioritize short-term agendas over long-term sustainability and impact.
3.????Uncertainty and complexity: The modern world is characterized by rapid change, uncertainty, and complexity. CEOs and presidents must navigate a complex landscape of technological advancements, economic fluctuations, geopolitical tensions, and societal challenges. In such a dynamic environment, it becomes increasingly difficult to predict long-term outcomes and formulate comprehensive strategies. This uncertainty can lead leaders to adopt short-term approaches that offer immediate benefits and address immediate concerns, as they may perceive them to be more manageable and controllable in the face of uncertainty.
Here are 3 things we must demand of leaders!
Acknowledging the difficulty it is your job. Your are among the chosen few to lead. You get all the attention, support, and a big pay-cheque.
Certain actions are understandable, others not and here we can, no we have to expect more!
(1) Create a humble culture AND readiness mindset | operating model
Shoppenhower already stated there are three stages to truth:
All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.
Another version of this could be:
First They Ignore You, Then They Laugh at You, Then They Attack You, Then You Win. Source: Quoteresearch
We can observe the transition to TVs for almost two decades. And as often with disruptions the assessment of incumbents is wrong or incomplete because they view things from their sector perspective.
Where were the scenario teams and roadmap experts?
In this example one would expect that top companies from all now affected sectors would have had access to this information. Many of these informations are part of foresight think tanks and services. Some are even publicly available.
You saw EVs coming, you had access to disruption research, you understood energy efficiency being far better, you knew TCO for customers being lower...and on and on and on...
Shell scenarios have been in the making for 40 years now!
(2) Do not start as CEO, if you are just driven by headlines
Look at these examples of Tesla headlines across the last years. The public and media, but also stakeholder are creating noise. Filter noise from signals!
Above is is a summary from 2014. 500.000 cars by 2020 is absurd. The Board members are reading the same news and POV of "experts" and they become unsure. "Do we have to take so much risk, can we create more evidence first" etc. I am sure you have seen or heard this before. Do not get me wrong cautioning, not putting all eggs into one basket is wise, but not pondering.
Another beautiful one, "Demand may be slowing" - yes and leaders need to manage it. But not "On-Off-On" - this creates mistrust, lack of commitment and not giving the best as teams will wait for the next halt.
If a fundamental shift, like the one to #EVs, to #AI, to #Robotics, to #Circularity disruption will not come around the corner in linear fashion. They are always exponential as proven by #CleanTechnica and Tony Seba
Is everything we can observe in nature linear, always more harvest, better fruit? No!
Never forget, that bad news are good news for clicks and thus reach and thus ad Dollars.
领英推荐
What is real?!
Now let us check what really happened?!
Looks pretty exponential, doesn′t it?!
We live in the age of disruptive tech.
So, CEOs can, no have to spend more time on disruption patterns and understanding of patterns, as history, no laws will be repeating!
We live in the age of platform and ecosystem models.
When disruption happens, never only the core tech, but the whole ecosystem gets disrupted.
So, CEOs can, no have to think ecosystem first. This also means a longer horizon, a more outside in perspective. Partnering beyond the contract.
It also means CEOs need to mandate their Board members to be up to speed. An old boys club will not do it!
(3) Do not become CEO when you cannot drive a future backwards narrative and stick to it!
Just voicing over your finance report will not be enough to attract talent, get you trust and partners.
Looking at the poly-crises it is really hard and the swings from one reporting season to the other are huge. Consequently, trying to flatten profit impact is understandable, but never please at the expense of the overall match.
However, you will not leave a legacy behind growing the share of today's business bei 2-3% p.a. You will leave a legacy, if you are able to put the company, the partners onto the map for the next innings.
Economy is an infinite and not a finite game. See the famous video from Simon Sinek :
Source: Simon Sinek, Inspirational Leader
A strong leader understands that winning is not the path to the next bonus. It is ensuring a future backwards journey with relevant impact is coming to fruition.
And in doing so, I expect leaders to also manage the street, the media and most importantly boards accordingly. If you are never articulating where key building blocks are, how can you expect to be also receiving the € space, patience and resources to master transformations and transitions?
How many hours in board meetings, investor presentations did you devote to this balancing short- and long-term. I bet 80% less 1 hour in a year.
New models come in internal waves - modulate your story
We exchanged this week with a member of a large enterprise. He was outlining that they were "ecosystem wave 1" and it is now about "setting up ecosystem wave 2". This is ok as long as people do not just follow the "flavour of the week" and create a system to explore and experiment on specific search fields within the parameters of increasing uncertainties on tech and market | organisation. Stay on those search fields that will not go away: #Circularity and #AI!
As CEO and leader your narrative should evolve with the first learnings (good and less fun), with the evolution of tech and competition.
Insulate yourself from noise!
You are constantly exposed to messages. What you and we here becomes the organisations′ reality! This is dangerous for complacency. It takes out the focus and puts the sense of urgency at risk.
What is happening here in EVs will happen again many times in the years to come. As leaders you have seen the patterns, the journey, there is empiric evidence and you can avoid mistakes of the past.
Do not feel too safe - incumbent follower!
In Platform business models there is a SECONDMOVER DISADVANTAGE. Once the tipping point is reached, is is too late, even with the "best" rational arguments.
A great example in the last weeks was #Tesla again with more incumbents joining the NACS standard, one after the other:
Scaling Ecosystem with product-market-price fit and brand is winning - "Ecosystem Defense and Offense" come into play.
"Competition is coming"
A strong leader is not getting crazy about these messages and is rather focused on hitting the ambition of 20 Mio vehicles per year (or your equivalent ambition).
A weak follower should not trust their successes of the past, their financial strength, the power of the brand and luck. You need a robust framework and ignore the media noise.
Lessons for future disruptions outside EV - Platform Scale = Speed | Disruption is speed!
Too many variants - the wrong game!
The strategy of most OEMs is on one hand understandable. They have existing great brands and product brands. As responsible teams you want to make sure your products are available asap in the new and winning EV-format as well. As a consequence the OEMs are launching high numbers of new EV variants between 20-25 (see #GM).
This is a strategy approach of a mature market, not a market in transition:
You want to be focused on large lot sizes, minimum change over times, less complexity on new components (think battery variants) as you also have to take care of the supply chain, where already today we know there is not enough supply for the demand curves we can anticipate (only 5 iterations of approx 50% CAGRs which we have been seeing - see also the above exponential Tesla curve - and we are there - only EVs will be sold and after 10-20 years more the fleets are close to 100% EV....
Few variants - the potentially better strategy, if you are not too late
#Ford in contrast is focusing on few segments like pickups which are high margin and they have the number 1 seller.
Looking at profitability it might be too little too late too
Why is this so essential: #WrightsLaw = The new rule of thumb: "20 percent reduction in cost when production doubles"!
Now, if the battery is the key component and demand will soar while raw materials and refineries are scarce or take for ages, then #circularity is the only play left.
So, you want to make sure to be profitable in this transition to fund these new investments, which you did not have before!
In Summary:
Dear CEOs and Leaders, it is your responsibility and accountability that you are setting this up, follow through, be in there yourself - ex Power Points...get help from outside partners - cutting consulting, IT projects, partnering efforts, training and development, PhD programs is nice short-term and easy as you have done it over and over again. In times of exponential growth it is the sign of not leaving a great legacy behind...
AND Hope is not a method!
MIT Platform Strategy Summit on #CircularityPlatforms
A quick preview to next weeks Summit - our Chief Strategy Officer Peter C. Evans, PhD is co-chair with Marshall Van Alstyne and Geoff Parker and I am excited they are devoting so much time to #circularity platforms. The next disruption around the corner. It has to go fast, remembering that we had the warmest ever days on record and the next hottest will be for sure happening in the next 5 years!
See the link below with Peters post: We are super excited to host?Maryam AlMansoori?from?Rebound Plastic Exchange?coming from the UAE,?Julia Vendramin?from?LABELL-D?coming from London, and?Deborah Weinswig 韋葆蘭?from Coresight and?Kenny Arnold from?Ellen MacArthur Foundation?both coming from New York City.?
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Ciao and Happy Weekend!
Alex