What Big Challenges Will Face Tomorrow’s CEO?

Harvard-IESE Committee identifies key competencies for 2025

10/06/2015

The Harvard-IESE Committee: (L to R) Professors Pankaj Ghemawat, Carl Kester, Richard Vietor, Pedro Nueno and Eric Weber / Photo: Quim Roser

Globalization, digital disruption, geopolitical uncertainty and the upkeep of skills and knowledge. These are just a few of the challenges facing CEOs today.

But what about tomorrow? What will business leaders be grappling with in 2025? And how to prepare for the future today?

These were the issues debated by the Harvard-IESE Committee this week. A distinguished panel that included Harvard Professors W. Carl Kester and Richard H. K. Vietor together with IESE’sPankaj Ghemawat,Pedro Nueno and Eric Weber, convened in Barcelona to discuss the profile of global business leaders 10 years from now.

The myriad challenges facing tomorrow’s CEO include concepts that are familiar to us today, according to the panel: The increasing internationalization of business, cross culture, governance, risk, among these.

But while globalization remains set to dominate the global business landscape, panelists identified a number of corollary "big developments" likely to affect the shape of things to come.


Global, Global and More Global

Leaders will increasingly have to compete abroad, said Professor Vietor, Paul Whiton Cherington Professor of Business Administration at Harvard Business School.

For this reason, areas such as outsourcing, foreign investment, delocalization and the management of multiple subsidiaries, tax variation and currency exposure will need to be front of mind, he said – citing the decline of the euro and rise of the dollar, which is currently impacting international trade.

Vietor also issued a call – one that was echoed by fellow panelists – for the CEOs of the future to bemore involved in domestic and global government policy-making.

"CEOs have a role to play in regulating labor, monetary policy and other issues. They not only need to understand these things, but participate in defining them. Any CEO worth his or her salt will be proactively involved in this," he said.


Risky Business

For HBS Professor Kester, George Fisher Baker Jr. Professor of Business Administration, key on the agenda of tomorrow’s C-suite should be a "heightened focus on global risk management."

At an enterprise level, he warned, CEOs will have to address risk directly and avoid "delegating it to unit heads."

Kester highlighted what he called a new "social contract" sought by the "Millennials," in the wake of the global financial crisis. The younger generation has been "repulsed," he said, by the "muck exposed on Wall Street."

Kester argued that it is increasingly incumbent on leaders, to become the "main proponent of their organization’s values – and articulate those values to their organizations and beyond."

His comments were echoed by IESE Professor Pankaj Ghemawat, Anselmo Rubiralta Chair of Strategy and Globalization. Ghemawat described business as being "tainted" by the crisis and called for executives and business schools to do more to repair the damage to reputation.


Keeping up With Digital

Ghemawat also talked about the impact of digital disruption; an issue that should not "crowd out" other aspects of strategy, but which remains "essentially important" in terms of competing globally both today and in the future.

Facebook and Twitter were unknown only 10 years ago, he said. The changes that will characterize the next decade, he believes, are likely to be "just as significant. The upkeep of knowledge and skills is imperative for business."

IESEBertrán Foundation Chair of Entrepreneurship, Professor Pedro Nueno agreed, and wondered how business will feel the impact of the impending "5G scenario." A challenge that may not affect the ‘digital natives’ of the Millennial generation so much, but which will likely have significant ramifications for an ageing workforce.

"We have an ageing population and no means to support the increasing costs of pensions and healthcare," said Nueno. "A new challenge for business leaders 10 years from now is how to manage their older employees. How will we help people of 85 find a job?"


Six Priorities for the CEO of 2025

Moderating the session was IESE’s Associate Dean, Eric Weber. He asked the critical question: what competencies and knowledge will tomorrow’s CEO need to develop today?

There were six key calls to action highlighted by our panelists:

  1. Prioritize Cultural Sensitivity

With increasing delocalization, your C-Suite needs to understand the cultures you operate within. This, says Nueno, means "being humble and having respect for others."

  1. Build Relationships With Regulators

CEOs need to participate in the policy-making process, says Vietor: "From monetary policy to labor policy to the budget to savings and investment incentives."

  1. Understand Digital

CEOs must keep abreast of advances in digitalization. And understand how younger generations of digital natives interact with the world, says Ghemawat.

  1. Invest in Knowledge and Skills

You have to ensure your workforce’s skills and knowledge do not become obsolete, says Kester. And encourage and reward innovation among employees, says Nueno.

  1. Articulate Your Values

Be clear about your corporate values – not just with customers, but also with employees – says Kester. Millennials have a keen sense of their "social contract" as business practitioners, and the C-Suite will need to embrace this.

  1. Get to Grips with Energy

Energy is "a big deal," says Vietor. In dealings with government and regulators, leaders will have to keep externalities like global warming and climate change front of mind.


Harvard Business School and IESE: 50 Years Writing the Future

Harvard Business School and IESE have enjoyed a close alliance and collaborative relationship for more than 50 years. The IESE MBA, the first two-year MBA in Europe and currently celebrating its 50th anniversary, is the fruit of the partnership between HBS and IESE.

HBS and IESE share many commonalities in academic approach and vision. Since 1963, the Harvard-IESE Committee, which meets annually, has served as a forum to exchange ideas, reflect on the big issues facing global business and business education, interchange experience and find new perspectives.

"Harvard Business School was there when IESE was born, so to speak, and since then we have seen the school develop into what it is today: One of the world’s finest business schools, with extraordinary global reach and international scope," said Professor Kester. "We have a great deal to learn from each other."