In conversation: The CEO moment

Here is an excerpt from the transcript of a podcast sponsored McKinsey & Company. The participants are Sean Brown, Kurt Strovink, and Carolyn Dewar. To read the complete article, check out others, learn more about the firm, and sign up for email alerts, please click here.

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Corporate leaders are changing how they do their jobs in ways that may permanently transform the CEO role.

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 PodcastsSpotify, 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).

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.

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