The COVID-19 crisis has put CEOs and the organizations they lead under great pressure. At the same time, it has provided a once-in-a-generation opportunity for chief executives to evolve the nature and impact of their role. The authors of a McKinsey Quarterly article, “The CEO moment: Leadership for a new era,” describe the shifts that top-performing CEOs have taken in how they lead—changes that have the potential to permanently transform the CEO role. Carolyn Dewar co-leads our CEO Excellence work, and Monica Murarka is a senior expert and leader also of the Firm’s CEO Excellence work. Kurt Strovink is the leader of McKinsey’s global insurance sector and has led Firm initiatives for CEOs across industries. This is an edited transcript of a two-part episode of the Inside the Strategy Room podcast. You can listen to the episode on Apple Podcasts, Spotify, or Google Podcasts.
Sean Brown: Kurt, can you tell us what spurred your research into this topic?
Kurt Strovink: We saw that the pandemic presented CEOs with a number of unique challenges. On the one hand, they have to care for employees and make decisions in record time. At the same time, they have to think about the evolution of their businesses after the crisis—phases we call “return” and “reimagine” as opposed to just “respond.” CEOs are being called upon to act differently with their people and society as a whole, which entails a broader emotional and human dimension.
These challenges also bring opportunities. There are many enduring aspects of CEO leadership, but we see the role changing in four particular ways. While these changes have been brought on by the crisis, they may become lasting shifts that govern a different way of leading.
Sean Brown: Carolyn, in your work with CEOs, how do you see them adapting their mindsets and practices to the current environment?
Carolyn Dewar: One of the things we have noticed in talking with CEOs is that their organizations’ productivity level is tenfold what it was before the crisis, if not more. CEOs are not only thinking ten times faster and bigger and bolder but moving their organizations to achieve extraordinary things that would have been considered impossible in that timeframe before. I think of a conversation I had with a hospital CEO. Last year, the hospital did 38 telehealth visits a week. During the pandemic that number jumped to 5,000. Or think about companies that almost overnight converted their factory lines to making hand sanitizer. In normal times, such shifts would take months, if not years, and involve a lot of planning, capability building, strategic questions, and resource allocations. So, the question we ask ourselves is, what can we learn from that? Recognizing that this time has come with corresponding strain on organizations in some cases, what bold moves or practices have CEOs been able to implement that they could carry forward sustainably?
Our research shows that CEOs who make bold moves achieve significantly higher performance, both as CEOs and the performance of the companies they lead. What would it look like for CEOs to maintain that level of boldness in their thinking and ability to bring their organizations along? The barriers to that boldness and speed were thought to be technical. We see now that much has to do with the mindset of what is possible. That’s the first shift we see, and it’s quite exciting.
Sean Brown: What are some practical ways in which CEOs can not only push themselves but their organizations to achieve these higher aspirations without burning themselves or their employees out?
Carolyn Dewar: Of course, during crises people run on adrenaline, and that is not sustainable. But recent months have challenged some of the assumptions about how fast we can move. Maybe we can do things without all the preceding conversations we thought were necessary. Maybe we can use trial and error and experiments as we go. Maybe we can collaborate with others in dynamic ways to accelerate progress. Some of those new muscles are not about working harder or faster but in different ways that may be surprisingly valuable.
Kurt Strovink: I would add that we see a number of opportunities to institutionalize these productivity bumps, primarily by creating a set of sustainable, enduring models for how top teams operate, and for the speed of decision making and resource allocation. CEOs are also locking in the time savings from less commuting that remote work or hybrid work models present, and directing these towards higher return activities in their companies. The central idea here is that CEOs should think about the markers of what it means to really commit and choose—to zero base how work gets done. Such measures can be durable and create dividends of time. Thinking through sustainability will require more attention by CEOs—renewed focus on their employee value propositions, their long term recruiting, the onboarding of new people, and how people can continuously learn.
Sean Brown: Given that so much of work today is remote, how do CEOs ensure there is enough internal collaboration and consultation around decisions?
Kurt Strovink: That’s an important point. CEOs are finding that collaboration and having brainstorming sessions around the water cooler, as one CEO described it, has been difficult to replicate in remote work. Those leaning in are using technology to create real interactions and engagement as opposed to one-way broadcasts. They are launching strategic discussion about how their businesses will change and tasking senior people to think about that in addition to delivering the here and now. They are also experimenting with agile ways of working. A lot of agile forms are moving to technology-based models and achieving very strong gains (even relative to in-person formats, which was unexpected).
Formal CEO networks are meeting much more frequently, engaging on important topics and being incredibly vulnerable with one another in ways we have not seen before.
Sean Brown: This higher pace of productivity and change creates challenges and added stress for workers, particularly parents of young children. How are CEOs and their executive teams addressing that?
Carolyn Dewar: As a parent of young kids myself, I understand this well. I have some clients who are asking, “What if we move to a remote workforce indefinitely? What if that becomes our new model, not because of the pandemic but because it is something we choose?” And they are being very careful to not assume that the productivity of today will continue. There are people living under extraordinary strain, without childcare, managing health issues, and looking after elderly relatives. Are there lessons from this period that could serve us well in a more stable time?
The separate and equally important question is, how can CEOs and leadership teams best support all their employees? Because everyone’s circumstances are different. The overriding message I am hearing from CEOs is the importance of showing their own humanity. CEOs need to understand their employees’ challenges and care for them. They need to think of their people both as an extraordinary asset and as part of their community.
Kurt Strovink: You are exactly right. CEOs are being called on to play almost ministerial roles, to be emotionally relevant and available for their employees. We sometimes see a trifecta of difficulties where you have dual working parents, kids under the age of 12, and an apartment in an urban setting. CEOs need to role-model balance and a new equilibrium of work and life. When they don’t, we do see challenges with the organizations’ ability to sustain new ways of working. One CEO described this time as being “boundaryless.” It’s as if you are swimming in an ocean without land in sight: you feel like you are working so hard to get your bearings, but it’s still difficult. It is important to put some markers between work and life outside work.
Sean Brown: That’s a great transition to the second shift that CEOs are making. Monica, do you want to take us through it?
Monica Murarka: The third shift is the idea of elevating “to be” to the same level as “to do.” What that means practically is that CEOs are making a conscious, deliberate choice to bring more of themselves into the workplace. They are choosing how they show up and recalibrating how they expect their leaders and employees to act. In a normal environment, the types of skills often valued in CEOs are business leadership, developing strategy, building a culture. In this environment, a key aspect of the role is maintaining morale and helping people handle uncertainty.
So how are CEOs doing this? They are showing up with more of their humanity, as Carolyn said. Employees now see CEOs in their homes on videoconferences or walking their dogs. They are dressing more casually in some instances. Interestingly, the benefits are showing up in things like employee engagement scores. We have seen CEOs start to move toward meeting with their top teams daily and holding more video town halls. They are connecting more, both internally and externally. They are also forging stronger, more cohesive, motivated workforces. In the age now of videoconferencing, a lot more CEOs are available and focused. One CEO told us that he used to multitask quite frequently on video calls, but he realized that he wasn’t bringing his best self to the conversation and he owed it to the others to be fully present.
We also see CEOs moving from being captains to stewards. That means showing more vulnerability and empathy, making decisions in accordance with both their own and the company’s values, and stepping out in front to be the living embodiments of those values. People expect CEOs to be transparent, to have a grip on the situation but be reasonable about what they know and don’t know, and we see a lot of CEOs stepping up to that. Being is different from doing, and right now you need both. A lot of that comes down to authenticity, and tapping into and bringing forward who you are as a person: being centered; managing triggers; and exhibiting calm, bounded optimism.
Sean Brown: Can you elaborate on this notion of cultivating a sense of being? You talked about CEOs’ sharing more about their personal situations. How can the CEO help keep people connected to one another, and how do they stay connected to the organization?
Monica Murarka: We have worked with a number of CEOs who are transitioning into their roles during this time. If you are an externally hired CEO, that is incredibly challenging. Typically, you do road shows, you meet people on the front line but all that is now difficult. We see a lot of creative adaptations, such as around-the-world tours by videoconference that let them get to know different parts of the operation. One CEO we interviewed said it beautifully: “In my daily top team meetings, I ask, ‘Who is having challenges? Who are the people I should personally reach out to at any level in the organization?’” There is a call to action to have a finger on the pulse of the organization. How do employees feel? Where do connections need to happen? It requires a concerted effort and many CEOs are fortifying their communication teams to help.
The second part is team connectivity, whether it’s peer-to-peer, or managers and employees. It’s important to have both scheduled and informal times, such as virtual happy hours. And many employees say they feel quite embraced. They have more access to leadership through more frequent video conversations with CEOs and top team leaders.
CEOs are moving from being captains to stewards: showing more vulnerability, empathy, making decisions in accordance with both their own and the company’s values, and stepping out in front to be the living embodiments of those values.
Carolyn Dewar: Something else we are starting to hear about is the development culture. If virtual work continues, how do we make sure that leaders are carving out time to give coaching and feedback? We are through the initial sprint of the crisis. How do we make sure people’s development continues and they feel supported?
Kurt Strovink: It is also critical to recast the employee value proposition in this environment, and that often links to the customer experience. Several companies are trying to influence customer experience through their interactions with employees. The focus on corporate purpose is on the rise in a substantial way, as well as on talent diversity. That requires CEOs to connect with their emotional side, not just the intellectual side.
Sean Brown: This, again, provides a good segue to the next shift you see CEOs making. Kurt?
Kurt Strovink: The third shift is embracing stakeholder capitalism, which means moving beyond the shareholder as the sole consideration for CEOs and their boards. While shareholders are of course important, and a reliance and focus on them needs to be maintained, there is an increasing focus on employees, suppliers, customers, and society at large. We see some evidence in our CEO interviews and CEO counseling that this has the potential to become a permanent shift. CEOs seem to be split on whether it will continue this way or snap back to being more shareholder capitalism driven, but many think that this is the best opportunity to make a more permanent change towards considering a broader base of constituencies.
Carolyn Dewar: Clearly, during COVID-19 there has been extraordinary pressure to balance the different stakeholder groups. The immediate business need, the need to protect employees, customers, consumers, society, the environment—all those things had to be juggled in real time. Many CEOs feel a sense of personal purpose around trying to advance these topics, and see it as a part of their role as CEO. I think measurement is a key piece. CEOs and others will respond to what they know they are being held accountable for. In some cases, the markets or society are holding the companies accountable. I’m thinking about some of the big investors that not only have environmentally-oriented funds, but ones focused on social purpose and broader stakeholder interests. That will apply pressure on CEOs and their organizations. Some are already very purpose-driven, and they are increasingly vocal about the broader set of measures of success they want to see. Positive peer pressure could be extraordinarily helpful here.
Monica Murarka: To add to that, I see two realities today. There are companies still struggling for survival and focused very operationally, but another set is facing a choice of how to react that may greatly affect their brands and consumers’ perceptions of them. Our research shows that millennials care about company purpose and having meaning in the company, so what companies choose to do and stand for at this time will be seen as evidence of their purpose, values, mission, and strategy.
Sean Brown: That brings us to the fourth and final shift. Carolyn, could you explain it?
Carolyn Dewar: The fourth shift is about CEOs harnessing the power of their peer networks. At certain CEO roundtables and forums, leaders have been markedly more present and engaged during this period. Formal networks of CEOs are meeting much more frequently, engaging on important topics, and being incredibly vulnerable with one another in ways we have not seen before. Those conversations between CEOs are no longer, “Let me show you how I have everything under control.” That humanity we talked about is showing up here as well. CEOs know that other chief executives can understand what it’s like to be in their shoes. They are sharing much more openly about questions they are struggling with that none of them faced before, and they are trying to navigate them together.
There are two particular elements we think will endure. One is learning from analogous companies and their CEOs. People have realized they have much to learn from organizations in other industries or at different stages of growth but facing similar challenges. The other piece is CEOs coming together to solve joint problems that can only be solved by acting together on behalf of society. That could be retraining workers in a sector that has fundamentally shifted or working together on broader vertical industry pivots.
Kurt Strovink: We have long believed that ideas from other industries can be powerful catalysts for innovation. And the uptake in CEOs’ desire to learn has been substantial during this period. They are saying, “I don’t want to learn from somebody who was a CEO in a different era. What I find more helpful is learning from people who are facing the same situation I am from different vantage points now.” A number of the CEO forums we host as a firm have seen requests for triple the frequency of meetings. These executive networks have a potential to endure and to create learning organizations whose perimeters are more porous.
We think about CEOs as calibrators-in-chief. They are the ones in the organization who have to assess the extent, speed, and materiality of their company’s response to the changing external world. This is indeed an essential part of the CEO role for the company as a whole.
Sean Brown: Many of the shifts you have described are substantial enough to merit the attention of the boards of directors. How much are CEOs collaborating with their boards on these issues?
Kurt Strovink: They are doing so frequently. The management teams are increasingly not just updating boards at arm’s length but involving them in core problems. We see that across industries. The cycle time of board interactions has doubled or even tripled in some cases. Secondly, we see a lot more focus on questions of succession, interestingly. The crisis has made companies more mindful of sustainability and boards are participating in that dynamic. We also see CEOs exposing next-generation talent to the boards through formal and informal processes. Overall, this period has more closely connected many boards and management teams.
Sean Brown: When you think about the four shifts together, what do they mean broadly for the future of the CEO role?
Kurt Strovink: We sometimes think about CEOs as calibrators-in-chief. They are the ones in the organization who have to assess the extent, speed, and materiality of their company’s response to the changing external world. This is indeed an essential part of the CEO role for the company as a whole. The CEO has to calibrate and decide, “Are we doing enough? Are we doing it fast enough? Are we doing it imaginatively enough?” Leaders who are thinking this way typically move faster than others and unlock additional value, and not just financial value. We talk about this as a CEO moment—a moment for individual CEOs to change their role, partly because this calibrator-in-chief role has never been more important. We are excited about the possibility that, if a number of CEOs make these shifts, it could add up to not just a moment but a movement to advance the role of CEO within society. The CEO role is a domain that should be studied in its own right, much like you would study talent management or digital and analytics.
Monica Murarka: A lot of this comes down to how a CEO individually chooses to spend their time and show up in ways that they potentially hadn’t thought about before. Where one CEO puts their effort, it impacts not only their organization but also society at large.
Carolyn Dewar: This is an unfreezing moment. So much is in flux, and the invitation for the generation of CEOs right now is to take advantage of this moment to reform our view of leadership and the CEO role.
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