Five issues on the minds of CEOs in 2017
Today’s CEOs have much to contend with when navigating a company towards success. Along with maintaining profitability, the challenges are unique, and no matter the industry or business size, companies need to align projects with goals to be able to expand.
“It’s not just about sales growth, it’s about scale - meaning all sorts of resources need to be aligned to make the business stronger and safer,” said Ian Smith CA, Founder of The Portfolio Partnership, an operational consultancy that scales businesses organically and by acquisition.
CEOs resonate with the word scale, and they understand that it includes, alignment, predictability, control and surprisingly, safety.
Leadership is a complex balancing act requiring the ability to decide when to take a risk and when to maintain the status quo. These days, CEOs have plenty to keep themselves up at night. Here are five of those concerns.
Being able to foresee where a business is headed is a near impossible task, and sometimes CEOs have to make decisions based on incomplete data and predict the unpredictable.
“In a business sense, if you think about the accelerating speed of change, the technology shifts, the political climate, the talent shortages and the ever-changing demands of customers, predicting their own inevitable future is a challenging problem,” said Ian.
You don’t want to be overleveraged - if you have that solid capital base and it slows down, you will be strong enough to weather the storm.
“No matter what size you are, you’re just trying to see ahead, to ensure both your strategy and, therefore, your execution makes sense.”
Businesses need to be prepared for these sometimes irregular outside influences. Being capitalized appropriately will help a business get through slower periods, but sometimes those slow periods last longer than expected.
“You don’t want to be overleveraged - if you have that solid capital base and it slows down, you will be strong enough to weather the storm,” said Alan Norris CA, President and CEO of Brookfield Residential Properties Inc.
CEOs have to match people and money with a growth curve and a strategic plan. “There’s an umbilical cord between predictability and aligning those resources that are needed,” said Ian.
A business needs certain staffing levels to move forward, and a CEO has to figure out how to pay for that talent. How the CEO tells that story is key to attracting and retaining talent, as well as creating high staff engagement.
“I worry about the future from a labour point of view,” said Alan. “The skilled labour shortage is a real phenomenon across America. Even if the demand picked up on the housing side, I don’t know if our industry could respond quickly.”
Labour issues have caused delays and increased costs for construction, for example, which affects affordability.
Immigration filled voids in the past but has continually slowed, and North Americans aren’t entering the skilled trade industries like they did 25 to 30 years ago.
Labour issues have caused delays and increased costs for construction, for example, which affects affordability, said Alan. “We have to pay more for labour and if we can’t meet the demand by building houses because we don’t have enough people to build them, prices will go up.”
3. Policies and Regulations
Uncertainty seems to be the one certainty under the Trump administration, especially for policies relating to taxes, trade agreements, infrastructure, deregulation and immigration, which affect all industries.
“Any one of these could create a whole bunch of winners and losers,” said Alan. “They are such huge game changers at this point. You can’t manage through fear as to what’s going to happen. All you can do is position yourself as best you can.”
No matter the industry, once a company builds a product, the whole world sees it. While a business can catch up if something’s missed, “you want to anticipate where the world is going and be far ahead of the curve,” explained Alan.
We’ve got a lot of moving parts in our business, which makes it fun, but you have to figure out the best strategy.
Employment, housing prices, household formations, interest rates, mortgage availability, where people want to buy are all concerns for any business that develops communities. “We’ve got a lot of moving parts in our business, which makes it fun, but you have to figure out the best strategy,” said Alan.
Business plans often look ten years out, which makes getting it right all the time very difficult.
5. Innovation and Trends
CEOs walk a fine line between being innovative and responding to trends and developing a product that consumers will buy.
“You have to anticipate where the trend is, without going overboard by building something that people are too nervous to buy,” said Alan. “You want to be leading edge - not bleeding edge.”
Having shadow plans and optionality help companies respond to shifting markets. Consumer demand ultimately shapes product designs, along with technology innovations.
Technology changes at a fast clip, and “you want to have the flexibility to make sure you can respond to technology,” said Alan.
About the author
Andrea Murad is a New York–based writer. Having worked on both Wall Street and Main Street, she now pursues her passion for words. She covers business and finance, and her work can be found on BBC Capital, Consumers Digest, Entrepreneur.com, FOXBusiness.com, Global Finance and InstitutionalInvestor.com.