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Issue 11 September 2014
Leadership: in Search of Sustainability and Stakeholder Trust
Developing sustainable business models and re-earning stakeholder trust are the key challenges facing today’s leaders, says Damien O’Brien, Chairman of Egon Zehnder, in an interview with Businessworld TV. His interview partner, Rajeev Vasudeva, Egon Zehnder’s CEO, agrees that engaging with stakeholders is a core leadership skill, along with motivation to pursue goals beyond self, curiosity, market insights, determination and resilience. In today’s swiftly changing business environment, Vasudeva also highlights the importance of potential. “Earlier we used to say ‘past performance is the best predictor of future success.' Today, when the future is unpredictable, a lot of our work [… ] is really about predicting potential […] Do you have the potential to deliver in an uncertain environment?” asks Vasudeva.
> Full story: Rajeev Dubey and Chitra Narayanan, “The Future of Hiring” in Businessworld TV (September 1st)
Bigger Is Not Always Better – Especially for Boards
Companies with fewer board members outperform their peers, according to data from governance research firm GMI Ratings, collected for The Wall Street Journal. If major corporations have fewer directors, the discussion in the boardroom becomes more meaningful, the quality of decision-making improves and poorly performing CEOs get dismissed faster, said directors and researchers when interviewed for the study. Analysis of nearly 400 companies with a market capitalization of at least 10 billion dollars showed that those with the smallest boards produced 8.5 percent more returns for their investors over a three-year period between the spring of 2011 and 2014, whereas companies with the biggest boards underperformed their peers by 10.85 percent. Ultimately, there is no safety in numbers when it comes to board members. Instead firms need to focus on hiring the right directors to build boards that are decisive, cohesive and hands-on.
> Full story: Joann S. Lublin, “Smaller Boards Get Bigger Returns”, in Wall Street Journal (August 26th)
More: Egon Zehnder's Board Consulting Practice
CFOs Turn into “Digital Ninjas”
In most minds the digital transformation primarily affects online marketing and thus the role of the Chief Marketing Officer. But it’s time for Chief Financial Officers to reconsider historic models of value creation too, since the digital age has massive implications for whole business models, writes ZD Net. CFOs should be “digital ninjas” driving digital transformation efforts. Instead, CFOs tend to lack prominence in this paradigm shift, partly because corporate value traditionally consisted of physical assets, which today do not even constitute 20% of a company’s value. Innovative CFOs therefore need to focus on creating value by allocating capital to business models that serve today’s digitally empowered customers. Data even shows an increasing number of CIOs report to the CFO. “When networks of people become a significant driver of value, accumulation gives way to co-creation and shared experience“, concludes the article.
> Full story: Michael Krigsman, “Digital Transformation and the Innovative CFO” in ZD Net (August 17th)
More: Egon Zehnder's Financial Officers Practice
Tech Gurus Take the Helm in Banks
Banks now want their highest-ranking executives to have a strong track record in technology and are looking for Chief Technology Officers who are not limited in their expertise to just compliance software or running data centers, reports American Banker. “It’s a new way of looking at a bank’s technology staff”, said Eric Anderson, head of the financial technology practice at Egon Zehnder. Some banks have already gone a step further, turning former CIOs into CEOs. Experts anticipate that more banks are going to be making such tech-savvy hires in the future as they search for CEOs who understand both the business and the often highly complex banking technology. “Nerds” are not only wanted in the C-suite: other financial services entities have recently added technology executives to their boards.
> Full story: Andy Peters, “Revenge of the Nerds: Tech Gurus Take Top Posts at Banks” in American Banker (August 13th)
More: Egon Zehnder's Fin Tech Practice