Top 10 Challenges for CEOs in 2011
1. Eking out growth in an uncertain economy.
After a few years of abysmal performance, CEOs are focused on growth in 2011, and the $64 billion question will be how to boost profits, talent, trust and loyalty in a low-growth to no-growth environment.
"Organizations need to build new muscles, and to do this, their leaders must focus on how they can alter their current business models to focus on unexpected future trends," says Jim Haudan, CEO of Root Learning.
The last thing a CEO wants is to leave his company vulnerable to another economic downturn. One solution, suggests James Pajakowski, executive vice president of risk solutions at Protiviti: "Invest in innovations that provide a foundation for the future, while protecting the business from exposure to financial crisis over the next few years."
Phil Lieberman, president and CEO of Lieberman Software sums up the dilemma: "There are dual possibilities -- a double dip recession and strong growth in 2011. Do I plan for growth or defensive economic planning?"
2. Preparing for -- and reducing -- employee flight.
"Get ready for musical chairs," warns management consultant Nancy Keene. As the economy improves, history suggests that turnover will increase. Dealing with disillusioned, overworked employees must be a priority.
"Unmotivated, unfocused or uncommitted workers are a liability. They jeopardize the corporate brand and threaten survival and profitability of a company," says Terry Hawkins, founder of business training firm People in Progress. To reduce those risks, showing real CEO appreciation can be a smart strategy. Hawkins recommends that CEOs try making unannounced visits to work sites or impromptu telephone calls to line employees. Face-to-face communication with staff, whether casual chats or more organized events, helps everyone feel like they're being heard.
Equally important, to retain top performers, create and communicate plans for their professional progression, and make sure your company is paying salaries at or above the market standard.
3. Acknowledging the customer is boss.
"Accept that the balance of power between buyer and seller has changed forever. Customers will call more shots and set more agendas in 2011 than ever," says Ernan Roman, author of Voice of the Customer Marketing. The economy and unprecedented customer empowerment due to the Web and social media have significantly increased customer's demands for relevance and value. "Identify how your company can provide clearly defined, competitively differentiating value and service, at two critical points: at the point of purchase and throughout the customer's life cycle," says Roman.
In a world of eroding customer loyalty, customer retention must be a top-down, high priority, companywide mission, explains Robert Bloom, author, The New Experts: Win Today's Newly Empowered Customer at Their 4 Decisive Moments.
4. Surrendering to social media.
The power of social media is enormous, and it effects every aspect of a company, says Jeff Platt, CEO of Sky Zone Indoor Trampoline Park. "Do not fear social media, embrace it. It cannot be ignored. Monitor it, be proactive," he adds.
Next year will start to open the door to a more generalized understanding of social media, says Stephen Harvill, a consultant with Creative Ventures. "Companies banned from playing in this field by fear and legal compliance issues will figure out ways to dip into this communication phenomenon. The key will be drafting responsible social media company and employee practices," he adds.
The big winners will be those who harness social media to drive sales, corporate alliances, partnerships and other business development initiatives. "Social media can become a strategic avenue to communicate to your key stakeholders," says Peter Boni, CEO of Safeguard Scientifics.
5. Keeping pace with regulation.
"No one is sure what will happen to health insurance rates and competition as the new health care law takes effect. The same holds true for the [financial regulation] bill, since many of the rules still need to be written," says Michael Bisceglia, president of jewelry retailer Stauer. Quick adaptation to the evolving regulatory environment will be essential to success next year.
Regulatory changes are also spurring corporate board members to get serious. "Now directors are speaking up and striving for results. But in many cases, the evolving relationship between the company's executives and the board has not found the right symmetry," points out Linda Henman, president of Henman Performance Group. Smart CEOs, she says, will find ways to work more effectively with their boards.
And global regulatory guidelines are even more daunting. "CEOs must pay attention to the regulatory environment because the process of staying in compliance and managing the increasing costs of compliance become more challenging as the complexity of the environment increases," says Pajakowski.
6. Protecting against increased risks.
The other "R" word rolling off executives' tongues is risk. Since 2010 was the first year of the SEC rule on proxy disclosure about the board's role in risk oversight, some CEOs will be challenged to reevaluate their companies' approach to risk oversight and management processes to ensure they are formalized and effective, says Maureen Errity, director of the Deloitte Center for Corporate Governance.
From a strategic standpoint, she says, CEOs will have to think about risk as integral to enterprise management. "Taking the time to work with [the] management team about strategic risks and thinking outside the box about risks is key. CEOs should weigh risks that could cause the business to fail, as well as risks that could create the most value and competitive edge for the organization," says Errity.
7. Going global.
International markets present clear opportunities -- if you can take advantage of them fast enough. "CEOs are dealing with a time crunch: There is a sense that the window may be closing. Develop a clear, global growth plan. Most importantly, don't assume the U.S. way of doing business always will transfer internationally," says Richard Davis, author of The Intangibles of Leadership.
Know too, that in a global environment, it's harder to keep a competitive cost structure, maintain customer loyalty or increase speed-to-market of innovation, among other issues.
"Companies may need to rethink offshore strategies due to political risk, positioning in the BRIC [Brazil, Russia, India and China] markets, costs increases in China, India and in other countries," adds Pajakowski.
Additionally, some point to the euro and instability in the eurozone as hurdles. "The eurozone is still a problem," says professor Herb Kaufman of the W.P. Carey School of Business at Arizona State University. "The current eurozone model is unsustainable."
Despite all that, these days companies have to think globally. "By not increasing your vision of the market you will be limiting your sales potential," says Harvill.
8. Watching your reputation.
What's the best defense? "Strong customer service, high product quality and now, engaged and proactive social media, can mitigate the impacts of a crisis," he adds. Another strategy, suggests Stephen Miles, head of search firm Heidrick & Struggles' Leadership Advisory Services, is a serious corporate policy of social responsibility, which can serve to mitigate negative press.
9. Keeping up with technology.
Clients are increasingly mobile and tech savvy: They want information on their terms.
"Communication technology continues to fragment. This year alone saw the mass and financial services adoption of tablet computers. CEOs who don't change their company to adopt to evolving technology will be left behind and disengaged from their clients," says Glen Manchester, CEO of Thunderhead, a communications management company.
10. Staying ahead of the competition.
Competition is everywhere. "If they are not direct competitors, they are indirect. They may be in the building next to you, or a click away. Always stand above the competition," says Platt.
Be innovative, says Steve Baker, president of Eyefinity/OfficeMate. "With so many emerging technologies, identify the ones that will make a positive and measurable impact for customers."
Innovation is also a solution for maintaining momentum in a slow-growth market, adds Charley Polachi, partner at Polachi, an executive search firm.
With all these items on CEOs' agendas, 2011 in the corporate world's executive offices will be anything but dull.