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Issue 05 March 2015
Renew Your Board Before an Outside Activist Does
With the proxy season approaching, CEOs at large publicly-held companies need to develop strategies to defend their interests from attacks by activist shareholders, argues Chief Executive Magazine. According to Egon Zehnder, activists achieve full or partial victories in 72% of proxy fights. “The days in which management got the benefit of the doubt are long gone,” notes Kim Van Der Zon, head of the firm’s U.S. Board Practice. Instead of waiting for activists to take the reins and redirect strategy, board leaders should act pre-emptively, argues the Harvard Business Review. Chairmen need to revamp their boards by insisting that every director is deeply informed of the company’s strategy and risk management. All directors should be able to look at their company from the “outside-in” and raise the same questions that an activist investor would ask.
Full Story: Dale Buss, “6 Ways CEOs Can Be Prepared When Activist Investors Strike” in Chief Executive Magazine (20th February 2015)
Chinese companies: No Global Leadership Without Global Leaders
Chinese companies have indisputably been major challengers on the global stage over the last decade. But now that the era of easy, rapid growth driven by low labor costs is coming to a close, many Chinese conglomerates are struggling, according to BCG Perspectives. Their corporate boards often lack the international experience needed to embrace a global vision. Their globalization efforts to date have tended to fail as a result, with Chinese companies unable to manage cultural differences, bridge language barriers, or understand local markets. Many Chinese companies also lack the global risk-management abilities to help them identify and mitigate potential problems like macroeconomic or political shifts. Their ability to attract and manage global talent and catch up with international organizational standards will therefore be critical for Chinese challengers seeking to become global leaders.
> Full story: Carol Liao, Christoph Nettesheim, David Lee, “Will China’s Global Challengers Be the Next Global Leaders?”, in BCG Perspective (8th January 2015)
The Courage to Say No
The role of Chief Financial Officer is undergoing a historic transformation, reports Strategy & Business. Gone are the days in which a CFO solely had to allocate resources and preserve financial integrity. Today's finance chiefs are: “charged with being the company’s premier champion of strategic discipline as well”, claim the authors. Their new role is to protect the company from value destruction and their main tool is the word “no”. A contemporary CFO is the advocate of focused investment, asking the right questions to help the company turn down many activities, and focus on business with strategic value.
> Full story: Deniz Caglar, Matt Mani, Josh Peters, “The Redefined No of the CFO” in Strategy & Business (2nd February 2015)
Automotive Industry: The Importance of Potential
The race to deliver the connected car is creating massive disruption in the auto industry. Leaders with a new vision are urgently needed to provide guidance in this volatile and complex environment, writes Shauna Finnie McIntyre, a consultant at Egon Zehnder, Palo Alto, in WardsAuto. In her view, leadership potential is defined by “a set of behaviors that demonstrates the ability to adapt to new environments.” McIntyre identifies the four key dimensions of that potential as: curiosity, insight, engagement and determination. She predicts that: “Companies willing to invest in augmenting their assessment process to include potential will find that their chances of attracting and keeping the hard-to-find automotive connectivity leaders will improve dramatically.”
> Full story: Shauna Finnie McIntyre, “Four Steps for Hiring Right People” in WardsAuto (20th February 2015)
For further insight: “Delivering the connected car” – Egon Zehnder experts Shauna Finnie McIntyre, Gabriel Andrade, Pavan Vohra, Rainer Merz and Megan Shea explore how Automotive OEMs must objectively assess and develop leaders’ potential, driving the deep strategic change to deliver the Connected Car that consumers so clearly desire.