10 Challenges CEOs Will Face in 2013


Between navigating between a slow economy and the approaching fiscal cliff, CEOs have had a number of challenges to deal with in the past year. While those challenges may linger in the new year, executives will also face a new share of challenges in 2013.

"With 2013 around the corner, corporate leaders are facing some of the most challenging times of their careers," said Stephen Miles , founder and chief executive of advisory group The Miles Group. "Companies' unprecedented exposure on the regulatory and reputational fronts requires that CEOs get in and manage a lot of this themselves, in addition to providing inspiring leadership in the face of so much uncertainty."

To help companies be prepared for those new challenges, Miles offers his predictions on the top challenges of 2013. They include:

*Stakeholder overload —Stakeholder groups have become very powerful; in recent years, governments, NGOs, regulators and special interest groups (e.g., advocates in the environmental, climate change, sustainability, food safety, obesity fight, and occupational health & safety arenas; Occupy movements) have taken to the "open microphone" and people are listening. Companies can no longer send just a representative to address these groups – stakeholders want to interact only with the CEO.

*Board engagement —A primary message to CEOs is that "you get the board you deserve." Boards continue to be more involved and aggressive as they relate to transparency, company performance, and the interface with their CEO. Many boards are taking a much stronger leadership position and getting on the front-foot as it relates to the discharge of their fiduciary duties. CEOs who believe they can be "imperial" or somehow dismissive — behaving as if their board is a "necessary evil" — are going to have a shocking wake-up call.

*"License to operate" —A "social license to operate"' was once a term referring  to the regulatory approval required for petroleum and mining companies to operate in primarily developing countries, but the need for a license to operate is now true in Western economies as well — and across a broad scope of industries and retail operations. Governments and regulatory bodies are using regulations to impose themselves on companies, and consumers are using their own forms of pressure, dictating what companies can and cannot do in their markets.

*Who is controlling your brand? —Never before has company news become so instant and transparent. Every single citizen, employee, customer has a camera and a microphone, and they are speaking loudly on their virtual stage. How do we handle an employee – or ex-employee – who has built up a personal brand online and is vocal about topics that may not align with the agenda and values of the company? Today's CEOs are operating in a goldfish bowl — you can hide in an aquarium!

*Activist investors –Activist investors historically targeted smaller companies, where they could take a position and then demand certain outcomes. What has changed is they are now going "big game hunting." No matter how large the company is – from Yahoo to J.C. Penney to Procter & Gamble – if these activists believe there is an opportunity, they will enter aggressively.

*Where will growth come from? – A key item on every CEO's agenda going into 2013 is "where can we find growth around the world?"  The last few years have been about streamlining and finding productivity improvements as the world has been in an economic shock. Now investors are getting more vocal and asking where growth is going to come from.

*Real succession planning —Boards are more demanding of CEOs around succession planning processes. They are demanding greater visibility down into the organization and more exposure to developing candidates, and are expecting updates on a more frequent basis. This can no longer be a perfunctory activity where "we do a little" and everyone is happy — but we then don't actually have viable candidates if we are tested.

*Disruptive technology —Understanding the complete disruption that technology is causing across all dimensions of business is an absolute requirement for CEOs. Social media, big data, mobile device dominance, and the Cloud are only part of the story; innovations are really about a whole new way of thinking and operating and organizing companies in order to reach consumers and other stakeholders.

*Global talent development —The pursuit of global growth – through supply chains or consumer markets – demands a commitment to developing truly global talent that many companies are not yet making. There are a lot of expatriate programs, but not so many for repatriation; typically, another company ends up monetizing one's investment in global talent, hiring the best people away once you've trained them. Additionally, with the massive push to "localize" talent, there are fewer and fewer opportunities for this development to occur. Creating a real plan for retaining global talent and expanding the growth opportunities for executives is a directive that, frankly, must come from the top.

*Talent (im)mobility –One of the toughest challenges in developing talent anywhere is the reality that fewer and fewer executives are willing to move, limiting the talent pool. Companies are finding highly qualified candidates to apply for jobs but who then won't commit to a move. This reality — however well-intentioned the reasons may be (usually family) — makes it tough for CEOs to tap into a truly diverse and long-term talent pool.

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