In recent years, the C-Suite landscape has experienced significant shifts, driven by macro trends, market dynamics, and technological advancements. As organizations navigate the post-COVID recovery phase, executives are reevaluating their strategies and priorities. In this article, we’ll explore key trends in marketing and digital leadership within the C-Suite.
1. Survival Mode
During the pandemic, organizations focused on survival. The primary concern was employee safety and maintaining business continuity. Executive searches slowed down, with a notable emphasis on CFO roles. Financial stability became paramount, and CFOs played a critical role in steering companies through uncertainty.
2. Stabilization and Profitability
As the market stabilized and supply chains realigned, companies regained profitability. However, this phase was just a stepping stone. Organizations needed to transition from survival mode to growth mode. As companies move to the next stage of growth, It is critical to have the right talent and leadership in place.
3. The Role of Marketing
Digital marketing, once put on hold, is now back in the spotlight. Organizations recognize the need to leverage data, technology, and consumer insights to drive growth. Marketing leaders are at the forefront especially during this age of generative AI, pulling together data-driven strategies and customer-centric approaches.
4. The Multi-Disciplinary Marketing Executive
Today’s CMOs must wear multiple hats. They combine full-funnel marketing expertise with performance marketing skills. Additionally, they are commercially oriented, focusing on the consumer experience and the brand of the organization and its products and services. Agility, innovation, and data literacy are essential traits.
5. Owning the P&L
Perhaps the most significant shift is the expectation for marketing leaders to own a profit and loss (P&L) statement. This change aligns marketing with overall business operations, elevating the CMO’s role within the C-Suite.
Conclusion
In the ever-evolving C-Suite landscape, marketing and digital trends play a pivotal role. As organizations seek growth, they rely on agile, consumer-centric executives who understand both data and business operations.
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Kimberly Melcer is Head of the Marketing practice at RSR Partners. She specializes in recruiting across all C-Suite level positions in the AdTech, MarTech, Digital, and Marketing industries at start-ups, privately held, and public organizations.
RSR Partners is a boutique professional services firm that specializes in helping Boards and CEOs with their most critical recruiting, selection, and succession needs. The firm was founded in 1993 by industry icon Russell S. Reynolds, Jr. The firm has conducted thousands of projects for Boards and CEOs across a range of functions and industries.
The RSR Partners Marketing team operates at the convergence of marketing, data, and technology. We understand the talent landscape and how to recruit top talent in this competitive market, and we successfully placed executives who exemplify the type of leader and culture carrier who can drive technological and digital transformation and growth.
Whether you call the role Chief Supply Chain Officer (CSCO), Chief Operations Officer (COO), or some variation, someone needs to be responsible for leading all extended supply chain processes for any enterprise producing physical goods. Moreover, this person must be a full strategic partner with the CEO, CFO, and other members of the C-suite. They are responsible for the lion’s share of enterprise cost and capital spending. Historically, many organizations failed to recognize the need for a “strategic-minded” CSCO.
For the last several decades, manufacturing businesses and their supply chain leaders focused relentlessly on driving cost out of the system. This led to a massive shift in manufacturing and sourcing to lower cost regions, particularly China, in pursuit of lower production cost. It also led to consolidating vendor bases, including increased sole sourcing, in return for lower prices from suppliers and just-in-time production which drove down inventory investment requirements.
This drive for lower cost worked well when conditions were relatively stable. Customers received lower prices, shareholders owned a more profitable business with higher returns for their investment, and employees worked in a growing business with more career opportunities. What was not well recognized was the added risk the enterprise assumed. Sourcing and manufacturing in Asia lengthened supply chains and made them more vulnerable to transportation disruptions. Consolidating vendors increased exposure to supplier outages. Reliance on China increased political risk. Just-in-time manufacturing eliminated inventory which could serve as a buffer to absorb mismatches between supply and demand. Occasional disruptions in one or another of these dimensions occurred and companies scrambled to address them. Few had risk mitigation plans in place ready to deploy, and most were treated as one-off events. Then the covid pandemic hit, which clearly exposed the inherent risks companies had assumed in adopting the low-cost supply chain strategies of the last 40 years. While the drive to low cost was a “strategy” many pursued, companies did not think strategically about the potential unintended consequences.
Companies should not think of the pandemic as a once-in-a-century event and revert to business as usual. Disruptions have been, and will continue to be, a fact of life for manufacturers. The McKinsey Global Institute has studied the history of supply chain disruptions and their effect on business results. They estimate companies lose 45% of one year’s EBITDA to supply chain disruptions over the course of a decade. Historically, corporate responses to supply chain disruptions have been reactive. Recent disruptions have clearly illuminated the imperative for creating and maintaining operational resilience. What does this mean for the next generation of CSCOs?
Apart from the leadership and strategic skills required of any C-suite executive, perhaps the most important skill required of today’s CSCO is that of an underwriter. Underwriters, be they insurance, investment banking, commercial banking, or other, evaluate the risk involved in a particular activity, asset, or person and set a “price” appropriate to the risk. As we saw during the pandemic and its aftermath, most CSCOs failed as underwriters. They did not appreciate the risks they were bearing and had not taken necessary steps to “insure” against those risks. As a result, supply chains broke for extended periods—inventory did not arrive when needed, factories closed, customers did not receive their orders, and consumers saw bare shelves and empty lots.
As we have seen over the last three or four years, most companies were unprepared for pandemic risk, geopolitical risk, weather risk, et cetera, much less having the compounding effects of these risk occurring simultaneously. Insurance underwriters tend to think of risk along two dimensions: frequency (how often a loss is likely to occur) and severity (how expensive a loss is likely to be). Low frequency, high severity risks are the most difficult to predict and insure. To protect against these catastrophic events, insurers often purchase catastrophe coverage to protect themselves from existential losses. Manufacturers had not understood the extent of their exposure to “catastrophes.” Consequently, they did not have risk mitigation measures (insurance) in place and suffered greatly for it as suppliers in global markets shut down and transportation infrastructure became clogged.
To mitigate these very real but previously poorly perceived risks, many are now rethinking their global supply chain strategies with an emphasis on creating supply chain resilience. This has included reshoring and near shoring critical manufacturing infrastructure; deploying digital supply chain solutions to speed information flow and decision making; diversifying sourcing partnerships; and investing in critical inventory. Manufacturers are now actively assessing the broad range of integrated supply chain risks they face, quantifying the exposure they have to disruption, and making the necessary investments and other actions to mitigate these risks. This requires new skills on the part of the CSCO and full partnership in strategic decision making with the rest of the C-suite.
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Don McMurchy is a senior member of the Industrial practice, driving execution across a broad range of senior leadership roles for clients ranging from start-ups to Fortune 50 enterprises. Based in Cleveland, his engagements are typically continental in scope with additional experience in Asia and Europe.
RSR Partners is a boutique professional services firm headquartered in Greenwich, CT, that specializes in helping Boards and CEOs with their most critical recruiting, selection, and succession needs. The firm was founded in 1994 by industry icon, Russell S. Reynolds, Jr. The firm has conducted thousands of projects for Boards and CEOs at public, private equity backed, and family-owned businesses across a range of industries including asset management, consumer goods and services, industrial, technology, and healthcare. To learn more about RSR Partners, click here.
Over the past few years, digital transformation has dramatically impacted the business landscape. This evolution is only intensifying in terms of need and speed – especially as we enter the age of AI. As organizations and leadership teams pivot to learn and adapt, the difference between success and failure may be determined by whether organizations are market leaders or market followers. It’s therefore critical to be ready for how digital transformation may impact your business, and even more crucial to be sure your team can embrace and leverage digitalization when the opportunities arise.
How can organizations and leaders determine that their teams are ready?
Human capital is critical. First, the right leadership team should be in place to gain the trust and buy in of the employees, stakeholders, and customers. Next, consider whether you have the right talent and resources to implement the transformation. Finally, consider the need to create and sustain the “new” culture through scaling the business.
1) Is your leadership team ready?
In speaking with organizations about their leadership needs, we often hear that they need to hire an executive to strategize and execute a digital transformation. Since digital transformation often requires coordination across functions, it can be a challenge for a new executive to gain the buy-in necessary to achieve their goals.
Additionally, what problems are you trying to solve? In today’s customer-centric environment, it is critical to listen to the needs of your customer. Be sure you can explain the transformation and why it benefits the customer, and how it will enhance the customer experience and brand loyalty.
2) Does your organization have the talent and the resources?
When answering this question, it is critical to consider two factors – financial capital and human capital. With financial capital, it’s vital to fully assess the current state of the business, devise a plan including a timeline, budget, and resources. Is this achievable? What needs to change or shift?
It may also be a good time to assess the talent that will be on the front lines of the transformation and whether they are open and excited about being a change agent. Do they have the skills required to understand whatever is required of your digital transformation- whether it’s an appreciation of data analytics, cloud computing, SaaS platforms, AI, software development, and cyber security skills.
3) Can your culture sustain the digital transformation?
There must be an environment of trust and transparency built into the culture as well a more agile and innovation mindset and if not, the digital transformation will not be sustainable. If this is an issue you face, identify what resources you need to help shift the culture and get buy-in both internally and externally.
Additionally, consider if your organization has the resources to scale and grow. Digital transformation will bring efficiencies, speed to market, cost savings, and growth. The key is to plan for the growth and appropriately resource for the growth both from a financial and human capital perspective.
Too often an organization is led through the transformation and the infrastructure of the organization cannot handle the change and rapid growth. The organization ultimately decides to go back to their legacy business model. Unfortunately, this is not fair to the executives, the employees, and certainly does not reflect well for the organization in the marketplace and with their customers.
As these digital times continue to evolve, your organization should, too.
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Kimberly Melcer leads the firm’s Marketing practice. She specializes in identifying leaders with digital transformation capabilities across the C-Suite, and especially within the marketing function. She works with start-ups, privately held, and public organizations. She has extensive experience within the AdTech, MarTech, and broader consumer and marketing services industries.
RSR Partners is a boutique professional services firm headquartered in Greenwich, CT, that specializes in helping Boards and CEOs with their most critical recruiting, selection, and succession needs. The firm was founded in 1994 by industry icon, Russell S. Reynolds, Jr. The firm has conducted thousands of projects for Boards and CEOs at public, private equity backed, and family-owned businesses across a range of industries including asset management, consumer goods and services, industrial, technology, and healthcare. To learn more about RSR Partners, click here.
Much has been written and debated about CEO succession. The pandemic has taught most companies that succession is a heavy-lifting exercise when it comes to business continuity. Boards are increasingly concluding that the full weight of succession planning rests squarely on their shoulders, which leads to the critical question that every board must answer: promote from within or search externally? Executive search and consulting firms, including ours, are often engaged to help boards resolve this complex situation, but the inclination to conduct a search may sometimes be premature. Having completed over 1000+ assignments for Boards and CEOs over the past two decades, we wanted to share a few observations when planning for the selection of your next CEO.
Internal or External?
There is no solution that applies to all situations. Given the extraordinary dynamics of today’s marketplace, one might argue that finding a CEO with the needed agility calls for assembling the broadest internal and external group of candidates possible. However, our conversations with many seasoned Nominating & Governance and board Chairs (“Chairs”), who are at the center of CEO succession, have shown that this is not necessarily the case.
The consensus seems to be that knowledge of the business, people, and its culture trump almost every other consideration, and thus an internal candidate is strongly preferred, especially when the business is on an upward trajectory. Many feel that deep knowledge and intimacy of the business can provide quicker impact with reduced risk of failure and that consideration of outside candidates for calibration should only be done as a very last resort, and when the CEO succession planning process has failed.
Many reasons exist to recruit or vet outsiders, such as the need for strategic or cultural changes, a requirement for specific expertise in dealing with unanticipated market challenges, activists, or a merger. These occurrences notwithstanding, most boards realize an outsider will take extensive time to assimilate and consolidate as needed. Even proven successful CEOs who have already demonstrated great learning skills still take time to settle in before they create an appreciably positive impact.
Therefore, while it may seem counterintuitive to our own business model, we encourage our clients to go through the process of deep self-reflection and succession planning regularly. This preparation may avoid the need to launch a rushed CEO search later. The process itself is very revealing for most organizations, and boards are recognizing that preparation is the key to optionality.
Engagement
CEO succession is a passionate and delicate topic. It involves changes and sometimes challenges that affect leaders who are considered to be the very best in commanding complex organizations. But for the boards who assume this monumental responsibility, it need not be a cause for angst. With a commitment to diligent planning, extensive engagement with candidates, a high level of candor in discussion, and an enlightened view of the opportunities and resources that present themselves to the company, succession planning can be a smooth journey, and even stimulating. When boards come to the point of treating succession as a non-episodic issue that deserves constant reflection and attention, the organization will find a more secure position for the exciting future ahead.
In the past, boards have overly relied on the perspective of management to develop, manage, and provide solutions for succession planning. With CEO tenure trending towards 5-year terms, boards need to own the responsibility and develop a perspective that is integrated but independent from management. One of the best ways to subdue unease around the topic is to make CEO succession planning a board priority and a regular topic of discussion. Most public company boards keep CEO succession as a standing agenda item but at private equity backed or family-owned companies, there is certainly room for improvement. By continual engagement on the topic on a formal level, and even under less formal conditions, boards can avoid being overwhelmed by the planning and enactment of succession plans. It is critical that Chairs start the conversation and be frank and open. Once they start the conversation, others on the board will engage.
It also helps to acknowledge and appreciate the sensitivities around CEO succession planning. Few changes in a company can affect such a breadth of internal and external constituents as a change in CEO. It is a critical event, shrouded often in unspeakable sensitivity. Framing the discussion as a neutral one can help directors open up. No CEO likes thinking about being replaced, but by setting expectations early that tenure is fixed, the topic is less likely to be taken personally.
A piece of the ongoing puzzle and dialog around CEO succession is building the competency agenda for the CEO, known as the “success profile.” For several years, we at RSR Partners have advanced the concept of “stretch versus fit.” For example, some boards aspire for greater growth trends and feel that goal can be achieved with some modest tweaking to strategy and culture which the incumbent CEO is unwilling or unable to embrace. Generally, while boards may have no regrets about the past, many have more expansive and aspirational visions for the future. As it relates to the “spec” capabilities required of the next CEO, they question whether to stay squarely on course or to drive change. Invariably, boards harbor some hopes and dreams that a CEO change will provide opportunity for added business propulsion, so they look for both steadiness and value-adding creativity in the next CEO.
My longtime friend and colleague, Alan Renne, who is a senior member of our Board & CEO Services practice and Head of our Industrial Technology team, has commented that “what the pandemic has taught most companies is that both culture and strategy are symbiotic in a sense, although neither can stand still under the pressure of unpredictability, which we’ve seen through the Covid period. Hence, we all hear the constant chatter about how companies require leaders with agility, nimbleness, resilience, etc. The point related to CEO succession is that the ‘stretch’ requirement can feel like a moving target since the marketplace is not static. So, boards must continually engage in the discussion about the CEO spec in the context of possible changes in strategy and culture, and therefore make in-flight course corrections on an ongoing basis.” Alan’s observations are spot on, and it is often during these continual discussions, that inspiring and innovative solutions to the CEO succession issue present themselves.
Bench Strength is Key
Finding an organization’s next CEO should be inextricably linked to understanding the capabilities and skills needed for success and filling those gaps at the C-Suite level. Succession planning goes hand in hand with talent reviews and leadership assessment, which help reveal opportunities to develop rising stars for succession consideration. The Nominating & Governance Chair’s mandate to ensure effective governance means that Chairs need to have a thorough understanding of the talent within the organization. They are expected to know when it makes sense to go to the market for the skills and experience that are needed, especially within the bench levels, so chairs are spending more and more time identifying and getting to know future leaders below the C-Suite.
Stars often rise from the “minor leagues” and good oversight on their development is key, especially as the CEO specification continues to evolve. Issues of executive development and retention go hand in hand, and boards should have their sleeves rolled up in these discussions.
“One of the most delicate topics today in leader development relates to promotion and rotation,” Alan states. “In many cases, companies are eager to keep great talent rising, challenged, and filling development gaps. Consequently, top players are often continuously pushed ahead to the next bigger job, but sometimes too quickly. High potential leaders need time to formulate strategies, build plans, execute, refine, and manage for a period that demonstrates sustainable success. Moving leaders too quickly can short-circuit that process and even disrupt business effectiveness. Boards should engage early in the leader development process because they have the seasoning of experience to spot these things and can offer valuable advice that will benefit their CEO succession plans.”
Retention and motivation of executives should also be high on the radar screen, especially considering the new phenomenon of “opting out,” discussed further below. Some Chairs have admitted that CEO succession can also be a challenge since it can be hard to retain A+ executives in the C-Suite if the company is unable to offer the compensation and flexibility of larger operating portfolios. If retaining and motivating talent within management is a priority, it should tie very closely into succession planning.
The “Siren Song” of Private Equity
Private equity firms are more actively and aggressively recruiting high potential talent from public companies. “There is a war for talent,” states Thames Fulton, a senior member of our Board & CEO services practice. “We often counsel boards so they understand and can deal with these incursions to their executive teams. We have been asked to educate the high-potential corporate executive who unknowingly thinks the grass is greener in private equity, thereby helping a board to buy some time in their succession planning.”
Conversely, there have been some great executives coming out of small and mid-cap companies because their leadership model is lean and therefore very hands-on and experienced. Large cap companies are starting to recruit those executives. “We spend significant time with our small and mid-cap clients, strategizing on how they can build their leadership bench in a way that earns loyalty and commitment from their teams,” adds Thames.
Competing for leadership talent in this environment can be especially challenging for organizations with limited bench spots. Boards must get creative about generating roles to provide opportunities for succession. There are ways to stimulate succession preparation with retention and development strategies. Dovetailing the creation of those roles with efforts to fill gaps in the competence between the bench and CEO can significantly impact an organization.
The Nexus of Board & Management and the “Opting Out” Phenomenon
The CEO role has always carried with it great cachet – authority, visibility, power, influence, prestige, impact, and wealth potential. In recent years, as terms like “servant leadership” and “shareholder capitalism” have occupied rightful places in the vernacular, the CEO role has become ever more complicated. More importantly, the pandemic circumstances over the past year have placed a glaring light on the CEO role. It is an extraordinarily intense and often grueling job, fraught with gut-wrenching decisions, overwhelming workload, tricky management and leadership challenges, and high pressure deadlines. Consequently, boards need to have intimate insight into the thinking of their future succession candidates. This can be incredibly important when gauging the bench’s proclivity to carry the CEO title.
In our discussions with the bench strength of today’s public companies, especially those seen as the best and brightest, we see an emerging phenomenon. Many are now seeing the CEO role as the great heavy-lifting job that it is, and they conclude that the associated sacrifices are too great for the potential rewards. In their minds, they are choosing to opt out in lieu of other career trajectories, including private equity backed opportunities. This is just one example of how boards need to know about personal decisions, especially as they consider high potential candidates for succession, which begs for deeper interactions between boards and the promising talent in the management ranks.
“When addressing clients’ CEO succession needs, we often overlay our board and executive search processes,” comments Gretchen Crist, Head of our firm’s Consumer Goods & Services practice. “This is an advantage during CEO succession projects because we can operate at the nexus of boards and management. We appreciate the board perspective and can integrate intelligence on proficiencies and personal motivations from the front lines of the business.”
Moreover, the succession planning process should be encountered as a moving target that never stands still – because markets, companies, and people are ever-changing. As such, the regularity of discussion between board directors and management should likewise increase. The Chair’s role is to help facilitate those conversations. Some Nom & Gov Chairs have occasional one-on-one conversations or visits with key members of management, while others have 8 – 10 executives attend each board meeting, and some attend dinners, on a rotation. Developing trusting relationships with members of management is good for both knowledge and retention.
Strike a Balance
“Succession planning has evolved into a rigorous process,” concludes Alan. “Our clients look down many levels into the management ranks to identify star talent. We are assessing their leadership abilities, putting their development plan in place, conducting a risk analysis around who might be poached, and benchmarking against external candidates and competitors. The goal is for the board to have transparency around who will be the next CEO if everything goes according to plan, and, as is often the case, if conditions change, to be sure to have a current CEO spec and a competency structure ready to go, should a search be unavoidable.”
“There also needs to be some flexibility and nimbleness,” adds Gretchen. “Clients do not need their succession plan to be perfectly buttoned up. It is fluid and dynamic. It’s important to get the dialog going and be open minded as the conversation evolves.”
There is so much to discuss during the CEO succession planning process, that it is natural and cyclical for the board to continually address the topic. Timing, the methods of evaluation of candidates, the development plans to help high potential executives build competencies, the regular review of the CEO spec, as well as a periodic revisiting of those stretch topics – like strategy and culture – are crucial to be sure that strong candidates of today have the skills to meet the expectations of tomorrow.
The clock is ticking… and boards need to be prepared when the time comes to make the best and most informed decision possible when selecting their next CEO. There is no more important responsibility for directors in this new world of stakeholder capitalism than CEO succession.
We are here to help you get it right.
About Our Board & CEO Services Practice
Our Board and CEO Services team partners with CEOs and boards to understand issues, assess opportunities, and strategically advise to ensure sustainable growth strategies are optimized. We are committed to executing an action plan that addresses sensitive and complex leadership needs and ensures clients are well positioned for the future. RSR offers trusted advisement rooted in years of experience and market knowledge. We excel at optimizing board and CEO effectiveness through transformative thinking about structure and operations. This helps us to engage closely with clients to drive greater accountability and enhanced performance. Our practice group leverages RSR Partners’ renowned experience in corporate governance with the firm’s industry and human capital consulting expertise to create an integrated and seamless approach. The range of services we provide to boards and CEOs include:
Board Services
CEO Services
RSR Partners is a boutique professional services firm headquartered in Greenwich, CT, that specializes in helping Boards and CEOs with their most critical recruiting, selection, and succession needs. The firm was founded in 1994 by industry icon, Russell S. Reynolds, Jr. The firm has conducted thousands of projects for Boards and CEOs at public, private equity backed, and family-owned businesses across a range of industries including asset management, consumer goods and services, industrial, technology, and healthcare. To learn more about RSR Partners, click here.
