Drives Long-Term Value
Companies must transform to thrive, and if experimentation is the first step to unlocking bright ideas and discoveries, choosing not to take risks could be an “existential risk itself,” says Kanarick. “As an example, technology needs to be deployed at the speed customers demand. Unless you can figure out how to apply technology to take more risks, and orient a culture to accept and promote them, you’re unlikely to continue to prosper into the future, because no organization is going to look in five years’ time the way it looks today.”
How Experimentation Accelerates Transformation
Recently, the CEO of a media company faced what EY terms the “duality dilemma.” A common leadership challenge, it refers to the urgency to transform coupled with the pressure to maintain predictable earnings that satisfy shareholders, analysts and other interested stakeholders. One way CEOs can help navigate those conflicting forces is by crafting a compelling narrative around how their transformation ambition is balanced with a viable long-term position while managing the risk associated with that pursuit.
The pace of change and uncertainty about the future is all-consuming for business leaders. Forty-six percent of CEOs surveyed say the most effective leaders commit to experimentation and risk taking. While they grasp the urgency to transform, the exact path there isn’t always clear. Transformation in this environment requires continually testing ideas and customer propositions and revisiting assumptions. In this way, a portfolio of small changes and course corrections becomes the larger transformation.
How Innovation Drives Long-Term Value
Leaders that “build the muscle to innovate” and continually push past their original missions can increase their brand’s visibility, equity and revenue streams, explains Kanarick. One medical device company, for example, stretched to evolve its products, embedding sensors in its knee and hip implants to monitor users’ gaits and strides post-surgery. These sensors generated crucial data that enabled the company to improve its patient health outcomes and experiences, ultimately leading to new business models.
How Innovation Accelerates Transformation
For one energy company, innovation required rethinking its entire organizational structure and culture to cultivate a cross-functional, collaborative ecosystem in which agility and creativity could truly flourish. The firm traditionally operated in silos within a defined hierarchy, and leadership worked to eliminate this fragmentation in order to upskill, cultivate new capabilities, enhance teamwork and incentivize invention across the company. This culture overhaul resulted in a pilot subsidiary company that develops brand-new services outside of the core business.
Innovation involves translating successful experiments and ideas into cutting-edge products and services to bring to market at scale. And the majority of CEOs in all major sectors surveyed by EY report that accelerating technology and digital innovation are key drivers of their business transformations. To actually achieve innovation at scale, however, many CEOs ultimately find that they must reimagine the culture, structure and operations of their company.
How Trust Drives
Investing in trust building can translate to increased loyalty from both customers and employees, particularly when it comes to reaching top millennial talent. The pandemic highlighted the need for flexibility: Many employees embrace the flexibility that tech-enabled remote work made possible. In fact, according to EY’s Work Reimagined Employee Survey, 54% of employees say they would leave their company if flexibility in schedule and work location is not extended post-pandemic. “It’s critical from a trust-building perspective to acknowledge this desired flexibility and build a trusted hybrid working model that engages and retains employees in order to remain competitive and achieve your goals,” says Fealy.
How Trust Accelerates Transformation
Organizations can earn trust by putting humans at the center of their vision and planning. “This allows for a more intimate, selfless response, which creates greater trust,” explains Liz Fealy, EY Global People Advisory Services Deputy and Workforce Advisory Leader. When a major insurance organization partnered with EY to craft a purpose statement to deepen trust, the firm focused on instilling confidence in its customers, workforce, communities and stakeholders. As part of this self-reflection, the insurer envisioned how to drive sustainability and financial health in the post-pandemic era through a more inclusive workforce. “What we’ve seen during the pandemic is that organizations that focused on a compassionate human response to the crisis created trust with their employees, customers and stakeholders,” says Fealy. “How do you create a trusted and safe digital customer experience to enable a sustainable relationship? With your workforce, how do you create a trusted relationship to engage and retain them?”
Lead With Trust
The EY CEO Imperative Study found that 80% of leaders agree that establishing stakeholder trust is increasingly part of a CEO’s role. To establish trust, you have to participate in creating the intended outcome for the person involved. “It’s not what you sell to people, it’s what you do for them,” says Kanarick. Leaders can establish long-term trust with customers and employees by focusing on meaningful outcomes, whether purpose-oriented ones, like mitigating climate change, or specific ones, like supporting individual customer goals. Demonstrating commitment to improving customers’ lives requires shifting away from simply selling a product or service and toward being a valuable contributor to the desired outcome. A company that sells smart golf clubs, for instance, should focus not on the clubs’ attributes but on the customer experience and objective of becoming a better golfer, ideally boosting trust by delivering on that promise.
How Empathy Drives Long-Term Value
Actions that demonstrate empathy by putting the needs of customers and employees first can enhance both customer engagement and staff productivity. For leaders, this means embracing vulnerability and admitting that your vision isn’t necessarily the right one. Ultimately, empathetic leaders can make decisions that resonate with customers and staff, boosting sales growth, market performance and customer trust while satisfying internal teams and retaining top talent, explains Fealy. “When you start with what your customer needs and then make sure that your employees have what they need to serve the customer, you’re well on your way,” she says.
How Empathy Accelerates Transformation
Customers increasingly expect personalized journeys. “Know me once, know me everywhere,” says Kanarick of customers’ expectations for brands. Empathetic leaders aim to deploy new technologies at the speed required to meet these demands. When leaders thoughtfully listen to customer desires, they’ll design services and experiences that put the customer first. In the banking industry, for example, some firms are empowering customers with more streamlined customer interactions—organizing horizontally across customer journey lines. Empathy also enables leaders to consider and then create workforce experiences through the lens of their employees, providing the culture, incentives and skills needed to ultimately serve customers.
The EY CEO Imperative Study found that 75% of CEOs believe that empathy and soft skills will become key management capabilities in the next five years. Empathetic leaders—capable of recognizing and internalizing the feelings of others—position the needs and challenges of their employees, customers and stakeholders at the center of their business, enhancing satisfaction and accelerating transformation. “Despite the lack of physical connection, 48% of employees surveyed in EY’s Work Reimagined Employee Survey believe their company’s culture has improved during the pandemic,” says Fealy. “Leaders showed up for the crisis—they were visible, transparent and purpose-driven with a focus on employee wellbeing.” This empathy translated into a transformational model of hybrid working.
How Imagination Drives Long-term Value
Asking how your company will thrive in five, ten or 15 years can point imaginative leaders toward transformation strategies, collaborative partnerships and game-changing initiatives that support future growth and enhance the ability to adapt swiftly. An assessment of future scenarios can help leaders create a multi-horizon strategic map that bridges from the future back to today with a portfolio of initiatives that provide immediate impact.
How Imagination Accelerates Transformation
The EY “Future Back” approach helps CEOs use megatrends, macroeconomics and data to reimagine a company’s future, and today EY teams are supporting companies as they continue to reimagine their businesses post-pandemic. CEOs should ask themselves and their leaders empathy-based, people-centered questions when reimagining what’s next. What innovations will collect data that enable CEOs to spot trends, envision the future and transform their brands? What work must be done in-office? What digital tools will help your remote workforce stay engaged and collaborative?
Lead With Imagination
Nearly half of CEOs surveyed say that the ability to “think the unthinkable”—to mentally stretch beyond the confines of what’s possible for their business—is a key characteristic of an effective leader. CEOs are generally comfortable thinking about their business’ incremental progress, but successful business transformation involves reimagining the business five or ten years into the future and working back from that vision to create your strategy. “Unencumber your thinking from the constraints of the business as you understand it today,” advises Bill Kanarick, EY Global Chief Transformation Architect, Consulting.
Learn more about how CEOs can thrive by transforming their organizations today.
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A note from EY: This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Member firms of the global EY organization cannot accept responsibility for loss to any person relying on this article.