Friday 13 December 2019 4:29 am

It takes two chief executives to shake up a business

Chris Locke is chief executive of corporate innovation at Rainmaking.

In the words of Marvin Gaye, sometimes it takes two. And as the world of business changes and evolves, the same rule could also apply — because one person at the helm is no longer enough.

The technological revolution of the past 20 years has had a huge impact on the economy, and disrupted nearly every sector. Evolving customer expectations, complex shifts in business dynamics, and continuous tech advancements are happening at an exponential rate. 

You can see the impact in the terms of business longevity. In a recent Fortune 500 review, almost 50 per cent of companies that once featured prominantly had disappeared a decade later. The average age of an S&P 500 company is under 20 years, down from 70 years in the 1950s, according to Credit Suisse.

Yet despite these huge changes and the multitude of market forces — such as rising costs, increased competition, and new business models — the c-suite structure has remained remarkably stagnant. 

There may have been some new entrants, such as chief data officer and chief technology officer, but the hierarchy is largely unchanged.

But why does that matter? Ultimately, business transformation is essential for survival. 

No business can stand still during a time of such significant change, but the bigger the company, the harder it becomes to move a tanker. Translating words into action becomes harder.

Currently, the notion of business transformation is aligned to “innovation programmes”. Such is their failure rate that even the term innovation can make a leadership team collectively wince. They rarely yield positive results, but if you look at the reasons why, it’s hardly a surprise.

Ultimately, they are usually poorly resourced projects that are focused on how to digitise parts of the existing business. 

Terms like artificial intelligence and machine learning are bandied about today, just as apps and chatbots were five years ago. Let’s be fair: this really doesn’t move the dial, and it certainly won’t transform the company. 

The poor practices are compounded by a lack of senior support. A managing director is not incentivised to spend budget on so-called “innovation” where they cannot see the outputs.

So why would having two people manage the company solve the problem? Well, if the biggest challenges to enabling business transformation are resource and culture, we need to look at the top of the tree for a solution. 

You need a  team with a completely different mindset — otherwise you risk falling into the same business-as-usual patterns that caused you problems in the first place.

This is why there is value in having two leaders: one who runs the existing departments, and another who manages a  business transformation, ensuring that the company is ahead of the game. This person would have the resource and mandate to lead the next evolution of change that enables the business to take advantage of new opportunities. 

As a whole, these responsibilities are a massive undertaking for one person,. But it’s entirely doable for two chief executives who work on a common goal. Together, they can steer the business in such a way that it increases shareholder value.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.