This article originally appeared in the World Economic Forum on January 21, 2025.
The norms that have shaped business activity for decades are changing. Disinflation, low capital costs, free trade and geopolitical stability are out; politics, technology and shifting customer preferences are in. CEOs face a host of new challenges, from rising protectionism and misinformation to labour shortages and customer disloyalty.
Not all of these challenges are external. The median CEO tenure among large cap companies worldwide has declined 8% from 2013 to 2023 to 4.6 years. Confidence in leaders is low with only 12% of non-managerial employees expressing confidence in executives, according to surveys by the Oliver Wyman Forum, the global management consultancy’s think tank.
The gaps in many companies between CEOs and employees keep widening. Consider artificial intelligence: Business leaders expect it to drive growth by improving efficiency and increasing productivity, while workers fear it will eliminate their jobs and require significant reskilling.
To succeed today, executives need to radically rethink their approach to leadership, according to a new report by the Olive Wyman Forum. They must act quickly to reduce risks and meet shifting customer demands by focusing more on geopolitics, stepping up efforts to integrate AI, embracing agile talent models and building employee trust.
Adopt a geopolitics-first mindset
Geopolitical headwinds, including wars, sanctions, export controls, tariffs and industrial policies are at their highest levels in half a century. The number of industrial policy measures globally has increased twentyfold in the last two years, while tariffs and export controls increased by almost one-third during the last five years, according to the Global Trade Alert and the IMF. The number of new restrictions introduced between the United States and China grew by 13% annually between 2019 and 2023, according to Global Trade Alert (1), Global Trade Alert (2) and likely will increase with the new President Trump administration.
Globalization isn’t dead, however. Companies are preparing for the challenges of more ‘equal’ blocks of influence and more frequent unexpected disruptions. Many CEOs are making geopolitics a near-term priority, rather than an afterthought. Fully, 86% of leaders of large and midsized companies are planning to take actions in the next year or two to address geopolitical instability, protectionism and government industrial policies, while 60% of companies with revenues of less than $1 billion also plan to act, according to a report by the Oliver Wyman Forum and the New York Stock Exchange.
But many still don’t fully understand the structural changes occurring. They need more in-house geopolitical expertise with only about a quarter of large companies having hired in-house geopolitical experts, according to the report. Leaders need to ensure that they aren’t responding only to the short-term changes that they see, but also the longer more fundamental structural changes – especially if they can’t continue to remain neutral and play all sides.
Leverage AI for growth and innovation
Executives understand the potential value of AI, but implementation has been uneven. Fully 96% of CEOs of NYSE-listed companies said they consider AI an opportunity for their business, rather than a risk. Some 47% acknowledged fear of being left behind by competitors — yet only 21% are investing to be market leaders.
CEOs need to decide where and how to invest in AI and then double down quickly. Over 90% of CEOs are investing in AI for operational efficiency and support services to drive the productivity of existing operations. Successful examples include leveraging AI and large data to enable resilient planning — from advanced geospatial analytics and supply chain visibility tools, which can provide up to four months of early warning about disruptions, to AI monitoring of customer service calls and social media to understand unexpected issues before they become problems.
A smaller set of leaders are using AI to reimagine how they serve their customers and capture new demand. One large US computer manufacturer, for example, is using AI to pore over all of its customer-service calls to suggest the best next actions.
While some companies are seeing outsized impact, AI initiatives overall have generated only modest gains so far, despite 65% of employees now regularly using generative AI. CEOs shouldn’t be discouraged; historical data on other transformative technologies indicates that when adoption approaches 60%, a rapid acceleration in productivity gains occurs (according to the Oliver Wyman AI-Q Survey and Oliver Wyman Forum analysis). Industries, like healthcare and banking, are beginning to see those results.
Embrace agile models — for all stakeholders
Traditional competitive advantages are eroding so it is especially important for companies in a world of uncertainty to be clear about what they offer customers and why and how they are better than the competition. Once they do, the entire workforce — starting at the top — must be fully aligned on the strategy, grasping the main objectives and how they individually fit into the company’s success.
To get there, CEOs must align their organizations with the right transformation model to capture the next wave of value creation, supported by a culture in which human potential and technology can flourish. It requires a more agile workforce model in which employees understand their contributions and work in skills-based talent platforms, rather than traditional job architectures. It also requires investment in upskilling that moves from episodic training to continuous skill building, as technical skills become obsolete within two to three years.
Success requires boldness from even the most successful and visionary CEOs. Leaders need to have their top 200 lieutenants aligned and the whole enterprise below. Trust is paramount; only 12% of non-managerial employees express confidence in leadership, according to surveys by the Oliver Wyman Forum and generation Z seeks more emotional intelligence from leaders.
New opportunities for CEOs
The role of the CEOs is trickier than it has been in decades. But the changes around us also bring enormous opportunities that have injected business communities with a large dose of optimism. CEOs need a vision and strategy that includes a clear understanding of how best to serve customers in this new world and how to get workers behind them — and detailed short- and long-term plans to make it happen. Once they’ve convinced their shareholders, board and top lieutenants that the plans will succeed, they need to build the trust and confidence of the rest of their employees. During the last five years, this generation of leaders was trained and tested in resilience. It’s a tremendous muscle for CEOs to call on in an even more uncertain world of the future.