Do we have the business leaders for the future?: Thomas Oosthuizen

Heidrick & Struggles, a leading global search firm, identifies shifting business needs influenced by digital disruption and AI. Traditional models struggle against digital natives like Uber and Amazon. Executives must think differently, embracing lateral thinking and adaptability to lead effectively. McKinsey’s 2024 recommendations emphasise innovation, agility, and customer value in future leadership.

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By Thomas Oosthuizen

Many executives will know the global search firm, Heidrick & Struggles. They are probably the leading search firm in the world, and many SA executives had contact with them over the years, including myself.

I take what they say seriously. 

As part of their business model, they have a consultancy arm. This arm collates the needs expressed by their clients, as to their human resource executive needs at given point-in-time. Hence, they are a good yardstick of the executive companies are looking for. 

Despite much tactical thinking in companies daily, logic says a company needs certain people to run a going business. This should not change fundamentally. Many factors determine this, not least how long before a CEO retires if he/ she has share options. 

This is one side of the equation. The more serious side is how the nature of business has changed since the digital natives became a global force of major magnitude. Many of these have forced incumbents to change, some did it well, but most did it badly, or did nothing. The reason is that it is hard to retrofit an existing business structure so fundamentally that it is equally able to compete with a digital native. This means, as we speak, we have Netflix, whilst many content companies do exactly what they always used to do. Or all they add, like in radio, is streaming. Or they flip-flop, like Virgin from content to digital and BT from broadband to broadband and digital. Eventually, these companies imply mop-up whatever business there is not mop-up.

Wal-Mart, largely driven by its immense critical mass, can compete with Amazon, albeit is different ways than the Amazon model. Yet is this viable long-term? In my view this is unlikely, unless they adapt their business model.

Staying with traditional businesses, Tesla, despite is small size, has forced an entire industry to change. Almost all automotive companies now offer either hybrids or electric cars. Similarly, energy companies are adapting to pressure and to renewables, even if we know it will take many years for renewables to supply sufficient energy to switch the old energy companies “off”. 

Then we have the complexity and jargon industry. This adds a layer of complexity of great value to management consultants and other suppliers, but of overwhelming confusion to companies and executives. The reason is not that executives do not grasp these changes, the reason is that terminology is so short-lived, that it undermines the importance of even the important ones. 

For about three years, digital disruption was the most important word in business lingo. Despite me hearing with my own ears, a tiny majority seeing that as the way to compete with the digital natives, to the vast majority even simplistic things like applications, was digital disruption. Now whilst an App may well be part of digital disruption, it is not. Digital disruption was how digital natives changed their way of working, their business model, their human-centred approach, to compete in new ways that made their service easier, more seamless, cheaper and vertically integrated. Uber meant you could order a car from anywhere, request the kind of car you wanted, request whether you wanted to talk to the driver or not, rate the professionalism of the river, know whether other customers rated the driver well. Then, at the back end, without you doing anything, your payment will be made. Then you could rate the driver, assisting other riders in future. This made the traditional cab outdated. Many cab companies then installed apps, yet they never realised Uber was far more than an App. In the same way that Amazon is far beyond an ecommerce system.

Then data became the name of the game, even though for many companies, since the inception of SAS and other systems, data was already core. It may not have been perfect data (no-one, even today, has that), but data was critical. 

Alongside this, the AI debate started, even if the concept is 60-70 years old. Yet, whilst the concept was there, and is here now, we are far away from what this concept means. To use AI well, it requires volumes of accurate data. To be lateral, it requires lateral data. If lateral data is not introduced, AI will simply supply us with many copies of the same thing. New questions are required to introduce those variables. 

To me, the important issue is to compete in the future, we need a different kind of leader to do so. We need different questions. We need executives that can live with duality. If bank traders start appointing geologists, why are most companies locked in the past? 

When I saw the graph below last week, I needed to look several times that I understood the graph. The graph told us, what senior executives, say they require in skills, to compete in future. Let us not even think about the fact that the first few listed requirements, will be of very first AI will be able to do faultless. 

The first three requirements, assuming the data is appropriate, AI can already do, even some old-fashioned modelling can. The only exception is where data is so incorrect or unavailable, that no executive or AI model can supply credible answers. Yet, that is true for all business thought. 

Exception management can supply the outliers and can include far more variables to project future success, even a range of scenarios given certain market, competitive or economic changes. Market landscape, where most of the digital native activities lie, have practically fallen of the chart. Hence. Most companies believe they can do what they please, it is irrelevant what the market does. 

For 2024, point four starts making sense to me, as this includes degrees of variability and soft skills, that at this point, AI cannot yet do as well as executives. 

Strategic planning did enter at point six. 

I find number ten perplexing, seeing that logistics is one of the most leveraged areas of AI. Optimising logistics, just-in-time manufacturing and given Amazon and others, fast and seamless delivery, place high demand upon these skills.

My take on this, is that we need to be very clear who we will compete with in future, what it will require to do so and win, not just be another or me-to player.

To be different, requires executives to think and do differently. If not, results will decline, and more digital natives, with low constraints, will erode margins and chip-away at market share. I am convinced banks were not scared when Charles Schwab entered the market, they will not laugh it off today. 

To win with AI, and to win against AI, requires lateral thinking. This needs to be a core executive trait. 

To conclude, in a January 2024 article, McKinsey states what ideas will shape business. Surely, these are the requirements we need to aim for in appointments.

1. Be builders,
2. Innovate to scale,
3. Leaders must master the digital law of compounding value,
4. Digital and AI leaders must forever transform,
5. Data is knowledge,
6. Gen AI needs a brilliant co-pilot,
7. Many small teams must be agile and connect,
8. All business is about building customer value,
9. Test-and-learn, cheaper, and faster.

If I compare this with the list of executive requirements, I find very little overlap. To lead needs a rethinking, fast. As business, we don’t really have the time to get ourselves ready, whilst we are doing that, other speed ahead. 

The right people, understanding the right technology, are needed.

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