Why boards must only consider CEOs who can connect the inside and outside of the organisation

Delivering profitable growth is clearly a key metric for measuring the ability and success of a CEO. But in today’s world, shareholders, employees and customers are demanding even more of leaders, with causes such as tackling inequality and climate change fast becoming essential business goals.

So the means - the way CEOs engage with the world - are equally important as the end itself. As a result, boards now have so much more to consider when appointing a CEO than they did 20 years ago.

In this mini-series, I’m setting out three vital characteristics boards need to look for - and demand - when making this key appointment. They are the ability to:

• connect with people
• connect the inside and outside of the organisation?
• connect with the future

In this second edition, I look at leadership through the prism of connecting the inside and outside of the organisation.

It’s easy to become myopic as a CEO.

There is a status quo that is all-consuming. Think of the schedules many leaders have: early starts, late finishes. Endless calls and meetings. It’s so easy to get caught up in the day-to-day tasks of running an organisation that they can become addicted to the machine which demands continual returns and continual effort.

Many leaders will be able to relate to this. But it’s also a danger because when your head is down, you can’t see what is happening elsewhere, or what is coming on the horizon. This is where having the ability - and awareness - to connect the inside and outside of an organisation comes in.

Back in 2016, I co-led research for the University of Oxford’s Sa?d Business School on the evolving role of the CEO . Part of that paper focused on “leading at the intersection”. It’s something which has become even more pertinent for organisations since it was published.

It noted: “Once business was impervious. You could operate and the world around you could be a vortex of activity, but you could just keep going. Now, with the combination of all the factors at play, business and what’s happening outside are actually one.”

By 2016, and even more so today as we approach the end of 2022, traditional approaches to strategy, control and communication are no longer relevant. Leaders are having to adjust quickly to changing attitudes (sustainability, inequality) and seemingly endless disruptive events (global pandemics, economic turmoil).

Put simply, it’s the end of business as usual where leaders can sit in their little box. One of the main reasons businesses fail is their fixation on the status quo - think Blackberry, Blockbuster - as opposed to changes they need to make. (This problem is also accentuated because many leaders are promoted as a result of being excellent at executing the status quo.)

The best leaders are now asking themselves: “Why do we exist?” To do that, they have to look at what is happening outside the organisation and connect that to what they are trying to do inside.

On my Leadership 2050 podcast, I’ve been fortunate to be able to speak to a series of leaders who are matching their organisation’s internal capabilities with external impact.

Plastic Bank CEO David Katz , for example, saw the crisis of plastic waste in the ocean and connected the problem to a business concept where people in under-privileged coastal communities are paid to collect and deposit the waste at Plastic Bank branches. As David told me: “What we've done is create a monetary standard that reveals the value in what was once considered waste.”

Unilever CEO Alan Jope told me how the company’s “inner game” - a desire to be purposeful - was matched with its “outer game” - spotting consumers’ desire for brands which take an environmental or social stance - which resulted in its sustainable brands growing at twice the rate as the rest of the portfolio. “We have realised that capabilities in the outer game are immaterial until you have mastered the inner game,” he said.

It shows there’s a backwards and forwards between the inside and outside. More than ever, the outside is constantly changing and therefore the inside has to evolve. And vice versa: when the inside changes, the impact on the outside can change. There’s a dynamic flow between the two.

The common theme and key skill leaders have to demonstrate is listening - which I outlined in the previous edition of this mini-series - and then figuring out how to link the inside and outside with new products, services, tech, innovation, changes and ideas.

What boards should be looking for is the CEOs who have already thought about this. Do they have an awareness of the inside and outside of their organisations, and ideas on how to connect the two? It’s essential for boards to consider because any leader who is not doing this is not fulfilling their responsibilities.

A message from the author

Thank you for reading the 40th edition of the Leadership 2050 newsletter. You may be interested to know why I am writing this newsletter. As a senior fellow of management practice at the University of Oxford’s Sa?d Business School, my research and teaching focuses on how leaders transcend 21st century challenges such as disruptive technology change, the climate crisis and creating diverse and inclusive environments… alongside the ongoing challenge of delivering profitable growth. At Sa?d, I direct the Oxford Advanced Management & Leadership Programme and, in this capacity, work with leaders from many geographies, industries and governments. All this has given me a deep understanding of how good leaders create value - and bad leaders destroy it. One could argue that never before has this topic been so important on a global stage, hence why I am undertaking this work.