Auhtor: Richard Oldfield, Global Markets and Services Leader
We’ve been speaking to more than our fair share of CEOs across the globe this month in the run-up to the 20th anniversary of our Annual Global CEO Survey. It’s got me thinking about how the role of the CEO and their team have changed in that time. Over the years, I’ve been lucky to work with the boards of many companies. And I’ve been struck by the fact that, as time has passed, the shape of the board has changed entirely.
Whereas once the board executive team was an elite group consisting of the CEO, the CFO and the COO. It’s now expanded to include a number of other senior leaders with a diverse range of skill-sets. A typical board could now include a chief commercial officer, chief risk officer, chief marketing officer, chief technology officer, chief compliance officer and a chief sustainability officer. And I wouldn’t be at all surprised if a chief robotics officer and a chief purpose officer join them before too long.
Of course, it’s not just me who has noticed that the C-suite has expanded. Research from Harvard Business Review found that the size of the executive team (defined as the number of positions reporting directly to the CEO) “has doubled, rising from about five in the mid-1980s to almost 10 in the mid-2000s”. My guess that this proliferation of executives is a response to the rapidly shifting business environment, particularly the march of globalisation and the widespread industry disruption unleashed by advances in technology. As agile and innovative start-ups seek to overturn existing business models, corporate survival increasingly depends on a CEO’s ability to draw on an arsenal of skills.
Customers also are having a profound impact and businesses increasingly look for ways to use big data to access valuable insight into customer behaviours. Given the challenges associated with unlocking the power of data, in particular, it is unsurprising that the CEO’s partner of choice is fast becoming the ‘digital C-suite’, consisting of the chief data officer, chief digital officer and chief information officer. By 2019, 90 percent of major organisations will have a chief data officer (CDO), yet only half will be hailed a success according to Gartner. Experian has found that 70 percent of chief data officers already report directly to CEOs.
The rise of the digital C-suite helps to explain why COOs are set to become a rare breed. Research by executive search firm Crist Kolder Associates in 2016 found that just 30% of S&P and Fortune 500 companies employ a COO, down from a high of 48% in 2000. In the past the COO was often regarded as the second-in-line – and natural successor – to the CEO. Today, the increased complexity and digitalisation of operations has led to other leaders with more relevant skills taking on some of what were the COO’s traditional responsibilities.
So, what does the expansion of the C-suite ultimately mean for the CEO? It certainly makes the role an even bigger management job than it already was – there are significant challenges associated with leading a large group of ambitious and highly capable direct reports. Perhaps tomorrow’s CEO will need to become the Chief ‘enablement’ officer for a whole new (more fluid) ecosystem of CXOs ready to harness the power of the crowd.
Richard Oldfield leads all market-facing activities, initiatives, and strategy. Prior to his current role, Richard was a member of the UK Executive Board for five years during which he was Head of Clients and Markets and latterly Head of Strategy and Communications. Richard also led the UK firm’s Banking and Capital Markets Assurance practice and sat on the Assurance Leadership team. Read more