There has never been a more difficult time to be a CEO. In 2013, corporate leaders are facing some of the most challenging times of their careers. Companies’ unprecedented exposure on the regulatory and reputational fronts requires that CEOs get in and manage a lot of this themselves, in addition to providing inspiring leadership in the face of so much uncertainty.
When you talk to global CEOs and ask them what has been the biggest surprise about their role, one of the top responses is “stakeholder overload.” Stakeholder groups have become very powerful; in recent years, governments, NGOs, regulators, and special interest groups have taken to the open microphone and people are listening.
Companies can no longer just send a representative to address these groups—stakeholders want to interact only with the CEO. Mass movements are overthrowing governments like dominos. Expect the heat to be turned up on global CEOs and their brands.
Activist investors historically targeted smaller companies, where they could take a position and then demand certain outcomes. Now they are going big game hunting. No matter how large the company is—from Yahoo to J.C. Penney to Procter & Gamble—if these activists believe there is an opportunity, they will enter aggressively.
License to Operate
A “social license to operate” was once a term referring specifically to the regulatory approval required for petroleum and mining companies to operate in developing countries. But the need for such a license now also exists in Western economies—and across a broad scope of industries. Governments and regulatory bodies are using regulations to impose themselves on companies, and consumers are using their own forms of pressure to dictate what companies can and cannot do in their markets.
New rules in the financial sector since the mortgage meltdown, for example, have changed the banking business model, upending everything from investing in options to the fees they can charge customers. Businesses in New York, as another example, are now facing Mayor Michael Bloomberg’s large-soda ban. The host of restrictions businesses face as they enter local communities will have massive implications for business models and returns.