In this newsletter, I have shared an article featured on the cover of The Smart Manager, India’s leading Business Magazine.
“The New World Reality Requires A New Organizational Model, starting with the CEO”
In the past 150 years, management has been focusing primarily at running and optimizing the business. Over this period, organizations have been structured in a very similar way, Hierarchically. The best way and model to maximize efficiencies and volumes, while reducing costs to the minimum. Projects were considered an addition to the business, hardly ever a priority.
As you will discover in the article, this organizational model has become obsolete. Day to day running of a business will soon be carried out by automation and robots, if not done already. Projects bring the flexibility and the agility to react and adapt; Project are becoming the essential part of the organization of the future.
“My prediction is that by 2025, CEOs, senior leaders and managers will spend at least 60% of their time selecting, prioritizing and leading the execution of projects; as opposed to the 10% they spend today on average.”
I’d also like to take this opportunity to share a video that Marshall Goldsmith has recently published about my involvement in the MG100 group. I really hope that in the next cohort some of you can be part of this fantastic and rewarding experience.
Stay well and stay focused,
Project Management Champion to the World
Are CEOs becoming the ultimate Project Leaders in the Gig Economy?
I wrote this article for The Smart Manager, India’s leading Business Magazine
For over 150 years’ organizations’ main focus has been in excelling at running the business (day to day operations) as oppose to changing it (execution of projects). This has been reflected in the way organizations have been run and structured, all in a very similar way: hierarchical; in which power, budgets and resources are divided over departments, the so-called “silos”. Management and management theory was focused on how to run and optimize (efficiency, volumes, costs) the business best. Projects were an addition, but hardly ever a priority.
The New World Reality Requires A New Organizational Management Model
The role of a CEO was to provide a vision and strategic direction, whilst leaving execution to their management team. What made a CEO successful was their capability to deliver business results maximizing shareholders value through the day to day business activities.
Yet, since a few years we are in the VUCA1 world, which is being accelerated by the latest disruptions that are impacting our society and the business world: robotics, artificial intelligence, shared economy, blockchain, big data.
Today, due to the speed of change experienced in the past decade, this organizational model has become obsolete. The day to day running of a business will soon be carried out by automation and robots, if not already done. Projects are becoming the essential part of any organization.
My prediction is that by 2025, CEOs, senior leaders and managers will spend at least 60% of their time selecting, prioritizing and leading the execution of projects; as opposed to the 10% the spend today on average. In the past growth would come by increasing the efficiencies and scaling the business. In the new world, value will come mostly from executing successfully growth and innovation projects. This is a radical shift in the role of the CEO and the skills needed to lead their organizations.
CEOs will need to understand how they can leverage the latest technological advances while focusing on execution of their strategic initiatives. The new core competencies required by CEOs will be their ability to turn around a business and show a successful track record in leading transformational change.
Source of Future CEOs
CEOs traditionally come through very limited channels, either from within the company or from outside:
a. Finance, if the company requires cost containment and/or cost cutting
b. Sales/Marketing, if the company wants to increase their top line and focus on business development
c. R&D/IT, if the company is highly technologically driven
d. Chief Operating Officer, as is the one running the internal side of the business, so a natural move
However, there have been exceptions in which the CEO came from a project management background. A good example is Siemens AG, the German conglomerate headquartered in Berlin and Munich, the largest industrial manufacturing company in Europe. Siemens employs approximately 372,000 people worldwide and with global revenue of around €83 billion in 2017.
The ex-CEO, Klaus-Christian Kleinfeld, founded and led Siemens Management Consulting, an internal global partner for Siemens’ businesses that played a major role in the restructuring of many Siemens’ business units around the world before being appointed Siemens CEO in 2005. One of the main assets of Klaus Kleinfeld was that he had a very broad understanding of Siemens multiple divisions, and at the same time, he had proven that he could make things happen and create immense business value through good project management practices.
Another interesting case is the current President of Argentina, Manuel Macri, engineer by education, with a long and successful career in project management, who is turning around the country into a new world economic power.
In a VUCA world, Project Leaders are some of the best candidates to be CEOs. They are results driven and are the CEOs of their projects. They have to bring together all the disparate aspects of theory, reality, vision, multiple business strategies, operational challenges, decision making, finances, value, politics and human nature to create successful outcomes. Being popular and charismatic helps substantially as emotional intelligence facilitates leadership.
Project Leaders often manage transformation initiatives that go across the entire organization. They get to see and interact with the entire company as a whole entity rather than from the ‘siloed’ view of a particular unit, department or function. A prerequisite, nevertheless, is that at some point in their careers they need to assume P&L responsibility and lead the business successfully for a certain period of time. I strongly believe that if Project Managers progress towards assuming responsibilities beyond the typical project management field they will become a new source of future leaders.
What is clear by now is that if CEOs want to succeed in the new Project Economy, they will urgently need to acquire project leadership and execution competencies. I am afraid that if they don’t take action, they will probably find out themselves out of business very soon.
1. Acronym used to describe or reflect on the Volatility, Uncertainty, Complexity and Ambiguity of general conditions and situations. The notion of VUCA was introduced by the U.S. Army War College to describe the more volatile, uncertain, complex and ambiguous multilateral world which resulted from the end of the Cold War. It the late 2000, after the meltdown of the financial sector, it started to be used in businesses and strategic leadership.
Nice article, but why should, they not be and stay in a Position to delegate the project management and execution Tasks and outsource respective skills like most of them do today? Best regards Christian