Leadership in 2023 – is it time for change?

As businesses kick off the new year, important decisions must be made about the direction of travel, and the best leadership team for the journey. Leaders must combine strategic vision, agility, curiosity, and the right functional balance, to anticipate and capitalise on the risks and opportunities ahead.

We may have emerged from the rollercoaster that was 2022, but it’s clear that the economy isn’t out the woods yet. Nobody knows quite what lies ahead, but times are changing for businesses, which will be impacted in myriad ways in the next couple of years. Costs are rising, buying practices are changing, supply chains have shifted, and debt markets are tightening. Business as usual, it is not.

But, as any successful entrepreneur knows, with crisis comes opportunity, and for private equity backed leadership teams, now isn’t the time to sit back. What has worked during times of growth won’t necessarily work as markets shift. The right leadership is pivotal to developing and executing a strategic vision, not just for 2023 but for three or more years into the future. Firms should be undertaking full-scale reviews of their leadership teams, to ensure they have the mix of competencies that the new landscape demands.  

Strategic vision – a skill for seeing the future

Is the current leadership team able to anticipate the market and forecast which trends and issues could impact the business in the next 12, 24 or 36 months? Tactical teams may perform well when markets are on the up, but as growth starts to stall, a more strategic, forward-thinking approach is required. If this capability doesn’t exist in the current team, then is it time to bring in a CEO or Chair who has this skillset? 

Strategic leaders are skilled at picking up on industry trends and signals, in terms of customer behaviour, new market opportunities, and operational challenges, and then preparing the business for these eventualities. Will a company need to move into new markets as current customers tighten their belts? Should they digitise operations to overcome skills shortages? Or will supply chains need to be reorganized to cut costs? Big decisions are required to ensure businesses can maintain growth as headwinds mount.

Agility and curiosity – the flexibility to pivot 

Leadership agility is also critical, so that a business has the capacity to pivot and respond to changing times. According to our PACE behavioural assessment tool, highly agile individuals are well suited to times of uncertainty – they are likely to be flexible, open-minded, and take a generally experimental attitude to new situations and tasks. The same goes for curiosity, with highly curious individuals demonstrating comfort with ambiguity, while seeing problems as possibilities. This aligns with the need for a strategic outlook outlined above.

In contrast, where a leadership team scores highly for pragmatism and execution, this could mean that they are too heavily focused on delivery of an agreed plan, rather than having the flexibility to pivot as the market shifts. If this is the case, firms and their investors should consider supplementing their team with more agile, curious leaders, to support its ability to change tack and rethink the company vision if necessary.

Supporting new situational narratives

Finally, how can the functional balance of the team best support the business as it enters a new stage of its journey? As the strategic vision evolves, businesses and investors should be assessing the leadership team to ensure that it has the right mix of functional competencies to deliver new strategies, whether that’s M&A activity, securing new investment, a new marketing push, or a wholesale pivot of the business or delivery model.

Our Leadership Dynamics tool categorises these different strategies as Situational Narratives and connects each one to the functional roles required to carry it out – namely Revenue, Operations, Finance and Technology. By following this model, businesses can break down strategy proposals into their basic elements to work out the functional competencies they need to plan and execute them successfully.

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Leadership is the most reliable value creation lever in tough times

As the economic pressure mounts, there is nowhere to hide for business leaders, who will see their capabilities stretched to the full. It will take vision and bravery, and the right combination of skills and competencies, to come out on top. Only through drawing on data and insights can businesses and investors ensure they have the right breadth and balance in the leadership team to turn obstacles into opportunities.