Board Directors and Chief Executive Officers

Beyond the Corner Office: Leadership in a Multi-Company Ecosystem

 



Introducing ecosystems

Strategic partnerships between companies are nothing new. Most often, they are straightforward formal agreements involving executives and legal departments. But the world is changing. Mass disruption is driving the agenda of most CEOs. They are being bombarded with expectations from all sides, including investors seeking sustainable, long-term growth; customers expecting bespoke products and solutions on demand; and employees worrying about job security in an age of artificial intelligence (AI) and robotics. CEOs navigating this tension are being forced to take a new look at the way they do business, particularly their approach to collaboration. As a result, they are deliberately seeking complementary strategic partners with which to share expertise, resources and risk.

The nature of these new partnerships is so distinct that we have begun to call them "ecosystems." These ecosystems are an innovative way to bring many partners together. We find they are characterized by agility, a fail-fast mentality, and unassailable trust. They are created for a number of reasons, such as testing new ideas, innovating around products, delivering across new channels, and finding alternative ways to collaborate – all in order to develop a win-win situation for the partners, one that will allow them to meet – and stay ahead of – the demands of their stakeholders. (See our companion piece, Collaborating for Competitive Advantage: How CEOs Create and Manage Successful Ecosystems).

A shift in ecosystem leadership

As partnerships and alliances change, so too must leadership approaches. It is hard to imagine companies becoming more disruptive and agile without their leaders doing so as well. Originally, companies may have hired digital officers to bring about disruption. But we are now seeing a shift, as CEOs step in to drive the transformation personally.

Russell Reynolds Associates and Professor Andrew Shipilov from INSEAD recently held joint discussions with a dozen global CEOs from a cross-section of industries to find out more about this evolution. As we learn more and more about how these CEOs are operating, a new CEO profile is emerging. (See Methodology).

METHODOLOGY

Over the past six months, we performed a pilot study, interviewing 12 CEOs representing a wide range of industries, including companies working in the financial services, electronic design and manufacturing, systems integration, consumer products and data storage industries. The transcripts of those conversations were made anonymous and redacted to the CEO’s comments only. The transcripts were then analyzed using IBM Watson’s “Personality Insights” program, which derives insights about personality characteristics from transcripts and texts. The personality model infers 60 personality characteristics based on three models: Big Five, Needs and Values. Watson already contains data on thousands of anonymized individuals. For more information, click here.

Who is the ecosystem CEO?

In the course of our narratives with ecosystem CEOs, we noted some striking similarities around their objectives, approaches and mindsets. Each portrayed an excitement to try a new way of working. Their conversations focused on long-term strategies and future visions driving new opportunities. They talked about trust, shared value, innovation, incubators and next-generation talent. They discussed measurable impact and KPIs. And they emphasized that it was all about the bottom line.

To further understand who these CEOs are, Russell Reynolds took the transcripts of our discussions, anonymized the speakers, and input the conversations into IBM Watson’s personality insights service. IBM Watson’s personality insights service derives insights from written formats and digital communications, using linguistic analysis to infer intrinsic personality characteristics employing the Big Five, Needs and Values models. The application then generates a personality profile of the author of the input text.

Just as we had observed in our conversations, the results indicate strong similarities among ecosystem leaders. In aggregate, the results present a profile of the ecosystem CEO today. These leaders are not bound by tradition or concerned with stability. They are curious and goal- oriented. As much as these leaders are willing to challenge authority, however, they also apply caution where necessary and ensure they are achieving results – not just tilting at windmills.

The profiler identifies 60 traits of the executives and provides a ranking on how high they rate the executive against a broader population of like executives. Below is a chart of the top and bottom 10 traits.

 

We believe it is important to put these traits in context. Recently, Russell Reynolds Associates worked with Hogan Assessments to develop a framework, Leadership Span, to assess an executive's ability to adapt to changing circumstances. Leadership Span is comprised of four core competencies: Setting Strategy, Executing for results, Leading Teams, and Relationships and Influence; as well as four differentiator pairs. The pairs represent leadership paradoxes that differentiate C-Suite leaders from one another. The most effective leaders are able to actively span across the pairs as business conditions require, rather than just being strong on one end of the pair. While there are many nuances, we often describe Leadership Span as having a "loud" side (disruptive, risk taking, heroic, and galvanizing) and a "quiet" side (pragmatic, reluctant, vulnerable, and connecting). See more on our Leadership Span framework here.


 

When we correlated the traits from the Watson’s Personality Insights application to our Leadership Span framework, it became obvious that ecosystem CEOs lean heavily on their “loud” skills in order to innovate, test and achieve results. Three traits immediately scored highly: disruptive, risk-taking and reluctant. These results make sense, given that the CEOs with whom we spoke made it very clear that they are personally driving their businesses’ transformation and change strategies. This also correlates with the common sentiment that ecosystems are built to impact the bottom line.

Nonetheless, we that know leadership is a team sport. The ecosystem CEO must also rely on colleagues throughout the organization to ensure that parts of the ecosystem move in concert, that partners collaborate and trust one another, and that information is shared. When we asked them about their hiring practices, interestingly, they did not speak of searching for additional disruptors. Instead, they spoke in terms of hiring leaders who can execute against strategy – but also bring with them competencies that correlate to the “quiet” skills, recognizing the need to provide this balance if they are to be successful.

Based on our initial conversations and analysis, it is clear that ecosystem CEOs are driving change in their organizations. They lead with disruption, but also deftly span risk taking and reluctance to produce solid results. This allows ecosystem CEOs to quickly produce new ways of doing business and meeting customer demands.


The CEO as...


 

DISRUPTER

Ecosystem CEOs are disruptors. They see trends and patterns in ways that others do not and are willing to challenge tradition. Our initial research indicates that most such CEOs are employing ecosystems as a way to champion innovation and find new solutions to existing problems. This may lead to expanding existing businesses, creating new business models, or improving speed. They are not typical, steady-state leaders. In fact, even at well-established and traditional companies, most have adopted a scrappy, start-up mentality.

Key Characteristics of Disruptor CEOs:

  • Entrepreneurial 

  • Support creative thinking and champion innovation

  • Anticipate external change

  • Think strategically and long-term

  • Apply deep market and industry insight

  • Provide a global mindset

RISK TAKER

In challenging the traditional way of creating partnerships, the ecosystem CEO is a risk taker. A risk taking CEO is comfortable with ambiguity and complexity, while remaining optimistic. At the same time, these risks are calculated, and they are aligned with each business's long-term strategy.

Key Characteristics of Risk-Taking CEOs

  • Seize opportunity and take risk

  • Work hard and quickly achieve goals

  • Operate with bias to action

  • Flexible and thrive in ambiguity – comfortable with the unknown

  • Manage stress and respond flexibly to change and complexity

RELUCTANT

The third-highest quality of the ecosystem CEO is reluctance. Combined with risk-  taking, it means these CEOs are executing for results. They are willing to seize opportunities but they mitigate the risks and predict the consequences of their decisions. Reluctant CEOs will prioritize key objectives against strategy and ensure that internal resources are driving critical outcomes. They will bring a measured approach that insists on strong KPIs and positive impact.

Key Characteristics of Reluctant CEOs

  • Generate high-quality outcomes

  • Predict the consequences of decisions and manage risk 

  • Prioritize key objectives

  • Manage and allocate resources

  • Detail-focused and data-based in decision making



 

AUTHORS

MALLORY SAMSON is the firm’s Global Knowledge Leader for the Consumer Sector at Russell Reynolds Associates, where she specializes in understanding the confluence  of  consumer  trends and transformation and corresponding talent needs. She is based in Chicago.

DEREK LUSK is a business psychologist and member of the Leadership and Succession practice at Russell Reynolds Associates, where he specializes in executive selection and team development, identifying high potentials, and culture change. He is based in Chicago.

ANDREW SHIPILOV is a John H. Loudon Chaired Professor of International Management at INSEAD, a top global business school with campuses in France, Singapore and Abu Dhabi. He is an expert in the areas of strategy, innovation and digital transformation. Andrew is a coauthor of a book Network Advantage: How to Unlock Value From Your Alliances and Partnerships (Wiley, 2013).

 
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Beyond the Corner Office: Leadership in a Multi-Company Ecosystem