At the height of the global pandemic, Satya Nadella, CEO of Microsoft, remained optimistic, even as arch-rival Apple the crown as the most valuable company in the world. He mobilized the company to help enterprise customers “adapt and stay operational in a world where everything is remote,” and raved that “we’ve seen two years’ worth of digital transformation in two months.”
Not only focused on the here and now, Nadella also had an eye on the future. He quietly increased Microsoft’s investment in OpenAI, a then-little-known artificial intelligence company. This strategic investment was about pursuing a vision of hope. As he said in his first engagement with OpenAI: “Whether it’s our pursuit of quantum computing or artificial general intelligence, I think we need these ambitious North Stars.”
Nadella’s investment in the future is it pays off – and really. As the world recovered from COVID, OpenAI launched its blockbuster chatbot ChatGPT, giving Microsoft a technological edge over its competitors that it hadn’t had in decades. And earlier this year, Microsoft reclaimed its crown as the world’s most valuable publicly traded company.
So why have Satya Nadella and others like him been successful when we are currently going through what some observers call a polycrisis or even a permacrisis? We believe they share several important traits. They maintain a certain optimism, they develop a vision of what their company will look like in five or even ten years, and they create a roadmap for continuous and rapid change that guides them in achieving their vision for the future.
To explore this question further, we spoke with dozens of business leaders. As we’ll now explain, the best CEOs understand that the future is a state of mind: it hasn’t happened yet—it’s waiting for us to create it. And to create it, they exhibit five different core leadership traits that come to the fore in different situations, whether they’re reviewing their corporate portfolio, driving breakthrough innovation, rethinking their global supply chains, improving sustainability, embedding their AI systems and other technologies, meeting their company’s capital and liquidity needs, or building their teams and managing their talent.
The five key leadership qualities of future-proof CEOs
In the hectic day-to-day running of a company, short-term and urgent matters often take precedence over long-term and important matters. But the best CEOs manage to break free from the pressures of the present and focus on the future because they possess a few special leadership qualities that are crucial to building a successful, sustainable company. Here is a list of these qualities and examples where they prove particularly useful.
1. Determined and unsentimental
Best to manage: The corporate portfolio
The best CEOs, who focus on the future rather than the past, take a dispassionately analytical approach to evaluating their portfolio of companies, deciding which businesses create value, which don’t, and which may even destroy value. But many executives make the mistake of holding on to their companies for historical or sentimental reasons. “It all started here, we can’t give it up,” was one company’s response when we presented it with huge losses over many years in the consumer electronics sector and suggested it close the division. It took executives another three years to exit the business after they finally realized they couldn’t stop the bleeding.
2. Experimental and ambitious:
Best for managing: Innovation, supply chains, sustainability, technology
The best CEOs are experimental and ambitious when it comes to their R&D and innovation strategy, their purchasing and supply chain management, their pursuit of sustainability goals, and their efforts to create a technology-focused culture.
R&D or innovation
Accordingly BCG’s latest list of the world’s most innovative companiesfour of the top five are technology-oriented (Apple, Amazon, alphabet and Microsoft). But what really sets them apart is not so much their technology but their ambitious approach to innovation. They know that they need innovative products and services to have a viable future, so they think experimentally and broadly about the ways to create value for their customers. They know that innovation comes in all shapes and sizes: better, faster services; lower-cost products with less waste; higher-quality materials with longer durability; more personalized services; new business models, and so on. They also know that innovative ideas can come from many different sources—not just the magic of an AI algorithm or the people working in the central R&D department, but also from subsidiaries, customers, suppliers, and adjacent companies.
Supply chains
In a world that is becoming increasingly fragmented, the best CEOs are trying to secure their future by rapidly reorganizing their supply chains. They are experimenting with new suppliers that can help them fulfill their ambitions and achieve what BCG calls “the fractal advantage”: the growing opportunities that arise at the edge of a business. While they are not deglobalizing (as they maintain their presence around the world), they are becoming more multi-regional or even multi-local by focusing on local customers and reducing their dependence on supplies of raw materials, parts and components from other regions. For example, many US companies have reduced their dependence on China as a manufacturing base and have switched to suppliers at home or closer to home. As a result, Mexico overtook China last year for the first time in 20 years as the largest supplier of goods to the USA.
sustainability
The best CEOs know that their sustainability strategy is about securing a sustainable future for the company and the planet. Accordingly, they pursue ambitious sustainability goals in experimental ways. They increase bottom-line efficiency by reducing carbon emissions, limiting the use of all resources, and limiting waste and loss. In addition, they seek revenue growth by positioning their companies as regenerative businesses that replace the “take, make, throw away” approach of the linear economy with the “reuse, recycle, reduce” approach of the circular economy. If they get it right, the opportunities for future growth are enormous: the circular economy is expected to be worth nearly $700 billion by 2026 (up from $339 billion in 2022); while the green economy is expected to be worth $10.3 trillion by 2050 through the emergence of new industries.
technology
Technology – especially AI – is rightly seen as a potential panacea to solve many current and future business problems. But realizing its potential is difficult. Study by BCG and MIT Sloan Management Review found that only one in ten companies are reaping significant benefits from AI, as most fail to integrate the technology into the day-to-day operations of the company. To solve this problem, the best CEOs are taking an experimental approach, often following what BCG calls the 10–20–70 rule: They devote about 10% of their efforts to designing the algorithms, 20% to developing the underlying technology and data, and 70% to supporting employees and changing organizational processes and culture.
3. Careful
Best for managing: Capital and liquidity
Maintaining a solid capital base with sufficient liquidity is a prerequisite for survival in the distant future. But doing so requires a prudent approach—and judging by the recent spate of corporate bankruptcies, prudence is a rare leadership quality. When inflation began to rise, accelerating with the energy crisis that followed Russia’s invasion of Ukraine, central banks responded by raising interest rates and many CEOs found themselves—in Warren Buffet’s inimitable words—swimming “naked.” To avoid this, the best CEOs carefully review their capital and liquidity needs: they determine their company’s true financing needs and continuously run risk models (including those with extreme scenarios) so that they have a financial cushion for the worst times.
4. Patient
Best for Management: Talent
Amid the so-called great wave of resignations, with many people leaving the job market or nearing retirement, the best CEOs have shown great patience in executing their talent strategy. They know there can be no quick fix as they face fierce competition for the best talent. So they take the time to think deeply about what they want their company to look like in the future (and therefore what kind of people they need to hire and retain), and in some cases they run a kind of “people profit and loss” because they recognize that a steady flow of good people is just as important as a steady flow of cash and critical components.
5. Persistent
Best for administration: All business domains
The best CEOs have another leadership quality: persistence. They apply this to all areas of their business, because they know that they will have to overcome many obstacles on their path to continuous and rapid change. When faced with challenges, they instinctively look for solutions. But they don’t play the blame game – or give up. They believe in their vision of the future and in their ability to chart a course to get there.
Shape the future
In many ways, the future is a mindset, a state of mind. The world’s most successful CEOs have shown that if you are determined and unsentimental, experimental and ambitious, cautious, patient and persistent, you can navigate through choppy waters to follow your vision of the future – what Satya Nadella calls your North Stars. To a very large extent, you and the actions you take as a leader will determine what the future looks like. You truly are in control of your own destiny – and that of your company, too.
Hans-Paul Bürkner is Managing Director and Global Chair Emeritus at BCG and former CEO and Chairman of the Board of Directors of BCG.
Arindam Bhattacharya is a senior advisor at BCG and an alumni fellow of the BCG Henderson Institute.
François Candelon is Managing Director and Senior Partner at BCG and Global Director of the BCG Henderson Institute.
Some of the companies featured in this column are former or current BCG clients.