Management gemsFind here some gems from our monitoring of the best publications on leadership and management

A study by the McKinsey Center for CEO Excellence estimates that 45% of a company’s performance can be attributed to the CEO’s influence. Hence the importance of evaluating the performance of those who hold this position.

The study drew on a self-assessment questionnaire, to establish the strengths and shortcomings perceived by the CEOs themselves. One area for improvement is clearly identified by the vast majority of them: interactions with their board of directors. Only 30% of the surveyed CEOs consider their board of directors to be effective! Relations with directors are good, but the CEOs struggle to take advantage of their individual skills. Their added value is often restricted to financial considerations and market relations. But directors can provide valuable assistance on strategic or operational questions. All that is required is knowing how to ask them.

An invitation to accompany CEOs, from the moment they take up their role, to broaden their perception of this governance body’s strategic value.

Source : CEO excellence: How do leaders assess their own performance?, Gautam Kumra, Joydeep Sengupta, Mukund Sridhar, McKinsey & Company, February 2024.

Among the challenges facing executives—the generalization of AI, the war for talent, climate change—, what place should be reserved for geopolitics? According to Nikolaus S. Lang, Global Leader of the BCG Henderson Institute, this is an issue that remains largely underestimated by companies. In an informative TED Talk, he exhorts executives to prepare for the advent of a multipolar world, with, among others, the following recommendations:

– Reinforcing the resilience of your supply chain. Global supply chains have become vulnerable in the face of the increased risk of tariff barriers, economic sanctions or war. It is best to work on the flexibility of this chain, by reducing your dependence on a particular site and identifying the potential alternatives.

– Reinforcing your “geopolitical intelligence”. To face up to geopolitical reversals, companies must enhance their internal aptitude, by getting their teams used to working according to different scenarios, and by recruiting talents capable of anticipating these challenges and adapting to them.

Source: 5 ways leaders can adapt to shifting geopolitics, Nikolaus S. Lang, TED@BCG, September 2024.

Crises follow one another and each is different. The ones we are currently undergoing are all the more complex for combining armed conflicts with economic, societal and sanitary disruptions. The time has come to take a closer look at McKinsey’s retrospective analysis of the crisis of 2007.

Approximately 10% of the 1,100 companies studied across 12 business sectors proved to be particularly resilient: they not only withstood the crisis, but also prospered in the process.

What did they do to achieve this feat? Most of them very quickly gave themselves the means to be flexible. At the first signs of the crisis, they strengthened their balance sheets by withdrawing from underperforming activities and reducing their debts. This gave them the means to ride out the crisis while maintaining a sustainable financial situation, then to seize the opportunities offered by the market rebound. They also focused on the reduction of their production costs, while maintaining their expenses relating to sales and administrative support. Operational flexibility played an important role, with the renegotiation of more flexible contracts and the expansion of supply sources.

In a context of crisis, investing in flexibility seems to always be a good first move to facilitate the resilience of one's organization.

Source: Bubbles pop, downturns stop, Martin Hirt, Kevin Laczkowski, Mihir Mysore, McKinsey Quarterly, May 2019.

Putting an end to projects or cutting loose from historical activities is always difficult. And yet it is a practice that distinguishes companies that are lastingly over-performing. The logic is rather intuitive: perpetuating dead-end projects only disperses resources and undermines the company's ability to invest in more solid avenues. Nonetheless, in practice, many biases make this process difficult. Consulting firm PwC has identified four practices that can help make the divestment exercise more natural and more effective:

- Implementing standardized and regular portfolio evaluations. The cadence is important to making this a habit.

- Carrying out an in-depth review of each project in the portfolio, including the analyses of historical financial data, but also of extra-financial information and of the current and future competitive environment. Many companies stop with the first of these analyses.

- Involving the board of directors in these assessments. The study shows a significant positive impact of this involvement on the likelihood of companies considering divestments. The involvement of the board also speeds up the implementation process.

- Working on reinvestment plans in parallel. Identifying other avenues to be pursued once existing projects are closed helps to counter the status quo bias, by making the opportunity cost visible.

Source:  The power of portfolio renewal and the value in divestitures, PwC US, March 2023.

Currently, most companies are pondering how they can best take advantage of AI at their own scale. Applications and experiments are thus flourishing, with varying degrees of success. Very often, the frustrations are commensurate with the hopes. And with good reason: AI, however "intelligent" it may be, can ultimately only do one thing—work from the data we provide it with. To capitalize on it, we therefore need centralized data of sufficient quality and quantity, and derived from a wide range of sources. In many organizations, however, this data is scattered among various business functions, each of which has its own systems.

So, before considering sophisticated generative AI set-ups, it is useful to carry out a quick diagnosis of your organization. Is tacit knowledge sufficiently formalized? Is it centralized? Are data collection and processing methods sufficiently standardized? Given the nature and quantity of the data collected, is there a risk of triggering biased responses from your AI system? Would you benefit from access to additional sources? This upstream work is essential to ensuring the quality of the AI's responses and maximizing its potential to help decision-making.

Source:  Harnessing AI to accelerate digital transformation, The Choice by ESCP, July 2023.