Chief Executives Will Need Global View in the 1990s
America’s chief executive, President Bush, has gained considerable mileage from his vision of a “kinder, gentler nation.” CEOs of American business, however, should prepare for a tougher, more turbulent marketplace in the decade ahead.
The men and women who pilot American companies in the 1990s aren’t likely to be any smarter or more ambitious than their current counterparts. But tomorrow’s superior companies will be led by a new breed of chief executive--one who is knowledgeable on global issues and their application to marketing strategy, is adept at anticipating change, acts swiftly and communicates those insights and actions to employees and shareholders.
Five major challenges confront the CEO of the ‘90s:
Acting globally: In the ‘80s, only the brightest American corporate leaders considered the global market for their business. In the ‘90s, corporate leaders can’t just think globally, they must act globally, and in every aspect of their businesses. In fact, CEOs who have not yet addressed the impact and opportunities of global markets in corporate planning are already lagging behind their competition.
Many companies today pay lip service to being multinational when, in fact, they are actually a cluster of unrelated worldwide entities contributing to the same bottom line. To leverage off the global presence of their companies, CEOs must forge a unification of disparate company entities while recognizing the peculiarities of the individual markets.
The Pacific Rim emerged in the ‘80s as a source of competition and a trove of opportunities for U.S. business. The unification of the European Community in 1992 also presents comparable opportunities, to say nothing of a rapidly opening Eastern Europe. The smartest CEOs must thoroughly understand the cultural and business differences among--and in--each of these foreign markets.
The best CEOs will recognize the potential of millions of consumers and vast raw materials in these markets. Thoroughly assessing foreign markets and developing new ways of doing business in foreign operations will be prerequisites for success.
Using technology to gain competitive advantage: The implementation of information technology is changing the way companies operate today. However technology is used, it will play a critical role in a company’s success or failure. CEOs must consider advanced technology not as an added luxury but as a necessity.
Effectively competing in the global arena will require integrating technology into all aspects of a company’s operations, with a corporate commitment to maintaining sophistication.
Competing against non-traditional forces: Competition will emerge not only from foreign markets but also from the new companies formed by mergers and acquisitions. In addition, companies that were once customers may become competitors.
With few exceptions, industry leaders in the ‘90s will not be well served by competing on price alone. Quality--in both products and services--will become an essential way that companies will attempt to differentiate themselves. Many firms today have established mandates to improve quality at every level in the company. Motorola, Xerox and Westinghouse Electric, for example, have been nationally recognized for achieving progress through a top-down commitment to quality.
Approaching the new labor force: The CEO’s role as coach and manager will evolve in the next decade as he or she tries to direct, without dissuading, a new breed of manager that is more entrepreneurial in nature. As the corporate organizational structure of the ‘90s becomes increasingly flat, CEOs must be able to effectively direct fewer management levels with more multifunctional positions.
The changing profile of the American family and the average life style will also necessitate how the CEO views the work force. The way that the CEO addresses such issues as child care, parental leave, flex-time schedules and fitness facilities will affect the loyalty of all ranks within organizations.
Changing the profile of mergers and acquisitions: Mergers and acquisitions will continue, but progressive CEOs will increasingly look to those that enhance existing capabilities or provide access to new markets and services. As business leaders wisely move away from the “scorched earth” cost-cutting policies of the ‘80s, the measure of corporate financial performance will shift from short-term profit gains to the improvement of company and shareholder value created by strategically formed alliances.
The most effective CEOs will be those who recognize the priority of identifying value in their companies. They will concentrate on profitable activities while reducing marginal business. They will set ambitious yet obtainable goals and will communicate their progress and optimism to the financial community and employees.
To say that the role of the CEO in the ‘90s will be more difficult may be a gross understatement. What is certain is that corporate success will depend on the CEO’s ability to adapt effectively to a rapidly changing business environment.
