Inside the Mind of the Chief Supply Chain Officer

Transcription

1 Inside the Mind of the Chief Supply Chain Officer Russell Reynolds Associates Inside the Mind of series addresses the leadership and behavioral attributes of various groups of executives.

2 2 Contents Introduction...3 Differentiators of CSCOs: strategic thinking, change-driven personality, confidence...4 Unique attributes which can help CSCOs flourish in a CEO role...5 What does the path from CSCO to CEO look like?...6 What s next for the CSCO?...7 The way forward...9

3 3 Introduction The role of the chief supply chain officer, or CSCO, seems to grow in complexity and strategic relevance with each passing year and the rich and robust capabilities of those filling the role reflect this expanding responsibility. CEOs and boards today want leaders who are fully accountable for the global end-to-end supply chain, from product innovation to product delivery. Having a CSCO who is responsible for the entire process ensures efficient, cost-effective, and reliable supply and delivery of products and services, whilst also impacting the top line promoting growth, innovation, and new product launches. The proliferation of digital technologies across industry sectors and regions is requiring a further expansion in the CSCO s role, as discussed in our study Digitization of the Supply Chain: How Ready Are You? 1 Indeed, CSCO capabilities and responsibilities are now so important that several prominent companies have even considered tapping leaders with specific global supply chain experience for the CEO role. These developments compel us to look more closely at the following issues: Psychologically, what makes CSCOs different from other executives? What are the traits that enable or hinder CSCOs looking to step into a CEO role? How is the CSCO role evolving, and what traits will be needed in the future? METHODOLOGY To find out more, we analyzed the results of three well-validated psychometric instruments (the Sixteen Personality Factor Questionnaire (16PF), the Occupational Personality Questionnaire (OPQ-32), and the Hogan Development Survey) and created detailed psychometric profiles of 27 CSCOs. We then compared these CSCOs to the executives in our proprietary database of 8,000 senior leaders including a large number of CEOs from the top ranks of corporations across industry sectors worldwide. KEY FINDINGS 1. According to our analysis of psychometric data, CSCOs tend to be significantly more strategic and innovative, inclined to act independently, and persistent and determined than other executives CSCOs aspiring to become CEO bring meaningful leadership attributes to the table but also should be aware of key developmental areas in which they may need to improve. CSCOs who have successfully progressed to CEO roles have extensive cross-functional and global experience, as well as a deep understanding of the company. Successful CSCOs of the future will be those who can better structure, coordinate, and manage relationships. They will play a lead role in innovation with the help of digitally enabled global supply chains. 5. Leadership development of the next generation of supply chain leaders is critical in ensuring the long-term success of companies. 1 Russell Reynolds Associates, Digitization of the Supply Chain: How Ready Are You? (2015).

4 4 Differentiators of CSCOs: strategic thinking, change-driven personality, confidence The chief supply chain officer in most large organizations is no longer just a hands-on, tactical operator. These executives are influencing margins, time to market, and customer retention, using strategic capabilities that matter to investors. Companies now look to their supply chain leaders for growth, agility, and strategic advantage. Costs are still important, but today s best-in-class global supply chain leaders are making strategic decisions that enable the business to expand in the most efficient way. Given the CSCO s responsibilities, it is not surprising that when we examine their leading attributes relative to other executives, we find leaders who tend to be significantly more: Strategic and innovative: they contemplate the future, anticipate change, and think innovatively about solutions Inclined to act independently: they lead change and cut through bureaucracy Persistent and determined: they are likely to take the lead, set clear directions, and do what it takes to reach their goals We also noted the ways in which CSCOs interact with those around them. More than other executives in the management team, CSCOs have to navigate a complex web of stakeholders, including suppliers, customers, internal colleagues, and external organizations and partners. CSCOs are very aware that they are part of a global, interconnected supply-and-demand network with profound interdependencies. They tend to have an objective and logical approach, remaining fairly formal and reserved in their interpersonal relationships. They must be calm and poised under pressure as they work to ensure the supply and delivery of goods and services, no matter the circumstances or the location around the globe. Statistically significant percentage differences in attribute scores for CSCOs vs. other executives Takes the lead 10% Objective and task focused Takes initiatives and test limits Has strong opinions 19% 28% Moves to action 23% Cuts through bureaucracy 25% Goes against the grain 36% Independently minded 22% Change-oriented and willing to challenge the status quo Abstract thinking style Prefers less traditional approaches Seeks variety and change Anticipates the future 16% 16% 23% 22% Think outside-the-box 28% Confident in driving forward progress Interpersonally formal Thinks objectively Conceals feelings from others 10% 18% 19% Interpersonally reserved 28%

5 5 Unique attributes which can help CSCOs flourish in a CEO role Leading companies understand that in today s world, how the organization handles its global supply chain is a critical source of competitive advantage. That knowledge has broadened the CSCO s brief. No longer focused solely on operations, the CSCO now is also concerned with strategy development, product and service innovation, and even sales. The CSCO must both think about long-term strategy and profitable growth while at the same time making these operationally possible. The CSCO s increased understanding of the organization s complex operations gives those in the role more common ground with the CEO. The CSCO is also increasingly active on the senior management team, whether leading a business unit or geography or stepping up to a senior executive position, and even to the role of CEO. One of the primary questions we hoped to answer, therefore, was, Which CSCO attributes equip these executives to flourish in a general management role, and which behavioral facets may hold them back? (See Exhibit 1.) In today s environment of rapid and continuous change, the CSCO s entrepreneurial spirit, strategic long-term focus, and ability to search for innovative solutions will help them thrive in a general-management role. Perhaps more than other potential candidates, CSCOs are also skilled at seeing the bigger picture. They are comfortable in cutting through bureaucracy to make things happen and will confidently lead change when needed. Attributes that may hold back the typical CSCO include their preference for a professional and logical approach, and for setting their own agenda. While these attributes are necessary as part of a supply-anddemand network with many different stakeholders and interdependencies, as CEO, a more open and informal approach toward others helps build better relationships. 5 CEOs are often not as technical as CSCOs. Additionally, CSCOs are not as equipped to deal with broader social groups (e.g., small talk and networking) as CEOs, and tend to be more introverted and comfortable in their own realm of operations. In essence, they are less comfortable broadening their network and capabilities, despite the scope of influence that is inherent to the role. chief supply chain officer, leading global food and beverage company Exhibit 1 Attributes that could help or hinder CSCOs aspiring to step up ATTRIBUTES THAT COULD POSITIVELY IMPACT CSCO PERFORMANCE IN A CEO ROLE In a volatile environment with continuous change, CSCOs are creative and innovative Have an entrepreneurial spirit Think outside the box Abstract thinking style They challenge and question the status quo, looking for better ways of doing things: Seek variety and change Prefer less traditional approaches Go against the grain Cut through bureaucracy They are also confident in driving change Take initiative and test limits Have strong opinions Move to action + - ATTRIBUTES THAT COULD HINDER CSCO PERFORMANCE IN A CEO ROLE As part of a network where relationship building is extremely important Being reserved Interpersonally formal Consider deadlines as flexible Deliberate, focus on own pace

6 6 What does the path from CSCO to CEO look like? Among the leading supply chain executives who have made it to the CEO position, we can count Tim Cook (Apple), Mary Barra (General Motors), John Hendrickson (Perrigo), and Sam Walsh (Rio Tinto), to name a few. What, we wondered, did these global supply chain CEOs do differently from their peers to warrant their elevation? To find out, we researched the backgrounds of 20 such CSCOs, the majority of whom were promoted in the past five years. When we looked at their professional careers, we noticed the following three commonalities: Cross-functional experience CSCOs who have attained the CEO role have not, in most cases (90 percent), spent their whole career in supply chain functions. Almost all global supply chain CEOs, in fact, have held senior management positions across two or more business areas. If we compare this experience with that of 52 executives currently in the role of CSCO, only 58 percent have spent time outside the global supply chain. Common functions in which global supply chain CEOs have spent time include regional or business-unit general management roles (60 percent) and sales and marketing (55 percent). Less common experiences include finance, human resources, and information technology. Global experience A majority of CEOs coming from a global supply chain background have experience working abroad (65 percent), and a majority of these global citizens (70 percent), in turn, have worked in two or more countries outside their home country. This is perhaps not unexpected, given that today s global supply chains have suppliers, manufacturing facilities, and end customers spread across the globe. Having to deal with complex and geographically far-flung operations has given global supply chain leaders the know-how to handle C-suite leadership roles. Leaders who have dealt with multiple countries and cultures, preferably in both developing and developed markets, are better positioned for success because they have worked with various languages, cultures, and backgrounds and have been exposed to different types of risk and disruptions. Supply chain leaders who want to progress [need] a deeper understanding of the products that the company is offering their customers: less about internal design and process, and more about its place in the market. chief operations officer, leading global technology company Deep understanding of the company In most cases, CSCOs who have made it to the top were promoted internally to their role (90 percent). More than a third of these internal hires spent over 25 years with the company before getting promoted to CEO. Just 22 percent spent five years or less. These findings corroborate the general wisdom that successful CEOs tend to have a deep understanding of the organizational structure, leadership style, and culture of their companies. They know the company s strategy and philosophy and have a solid understanding of the organization s strengths and weaknesses. Equally important, they have gained the support of a wide internal network, on the executive board as well as within the senior management team and below.

7 7 What s next for the CSCO? Two decades ago, we could barely conceive of one individual overseeing the entire end-to-end supply chain. In a 2004 survey of 200 Fortune 500 companies, only 8 percent had a supply chain executive on the executive team. This ratio more than doubled, jumping to 18 percent, by Today, it is far more common for CSCOs to be seen as an integral part of the top management team. When we assessed 50 companies in selected industries 2 listed on the 2016 Global Fortune 500, we found that 68 percent of the organizations have someone responsible for overseeing a combination of, if not all, end-to-end supply-chain functions. Consequently, even as the global supply chain has become an increasingly strategic matter, the challenges for CSCOs have changed: A shift to systems thinking In today s challenging global markets, it can be argued that the route to sustainable advantage lies in exploiting the strengths and competencies of various stakeholders to achieve greater responsiveness to market needs. Most organizations can no longer afford to operate in isolation. Instead, they function as part of an enormous global interconnected network. Successful CSCOs have therefore shifted to systems thinking. They know when and how to partner and collaborate with competitors to ironically gain a competitive edge. As a result, skills in relationship building and influencing are now extremely important for CSCOs. In an extended enterprise, there can be no boundaries. An ethos of integrity, trust, and commitment must prevail. A systematic view of the world will become even more important than [it is] today. The challenge is not only to master the supply chain function, but also to understand and master the overall business. supply chain leader, leading global food and beverages company Successful CSCOs of the future will be those who can better structure, coordinate, and manage relationships with their partners, working in a global interconnected network committed to stronger, closer, and more agile relationships with the end customer. 2 The industries are consumer products, industrial goods, automotive, chemicals, hardware and electronics, pharma, and medtech.

8 8 Innovation under volatility: the digitally enabled global supply chain The gap between what the global supply chain provides and what the enterprise needs is growing. Closing that gap will require a new, more agile approach to investment in technology, leadership, and talent. Recognizing that fact, leaders are creating innovative digital initiatives that run alongside the traditional analog businesses. Gartner refers to this approach as the bimodal supply chain. 3 A digital supply chain could include intelligent robots in a digitally connected warehouse, big data supply chain analytics, or 3D printing at the point of sale. Global supply chain leaders who can integrate the use of digital technology across their entire business will separate themselves from those who merely coordinate the supply chain. Global supply chain leaders of the future will think digital and will have digitalization at the core of their strategy. Changing requirements for global supply chain leader The role of the CSCO has changed, and so have the requirements for success. While CSCOs in general are strategic and innovative thinkers, they lack some capabilities that will become increasingly important managing end-to-end supply chains in the future. There is for example a growing need for strategic relationship builders who recognize the vast interconnectivity across global supply chains, even more so in the future. Furthermore, CSCOs aspiring to step into a CEO role may bring meaningful leadership attributes to the table which can help them flourish, but also need to be aware of key developmental areas in which they may need to improve. CSCOs, as well as hiring executives, are encouraged to evaluate their current supply chain talent s attributes. They are responsible for delivering coaching and training at scale to develop those qualities currently lacking in their talent pool. What is increasingly important today and even more so in the future, is an understanding of the interconnectedness of the business and the impact of technology, digitation and the ever-changing value proposition of a company. Technology has changed the nature of transparency, increased pressure on the need to transform, and continues to reimagine means of engagement and collaboration. group vice president supply chain, leading global technology company Talent and risk management are the next important topics in supply chain, technology and anticipating the changes that come along with it. We have to accept the fact that we are increasingly managed by technology: 3d printing, data & analytics, digitalization, and so on. chief supply chain officer, leading fashion and retail company A focus on developing leadership across the supply chain organization is important. You must ensure the right supply chain experiences, but also make sure that supply chain leaders get experiences in other parts of the business that expose them to develop other capabilities supply chain leader, leading global food and beverages company 3 Christy Pettey, Innovate Under Every Condition: The Bimodal Supply Chain, Smarter with Gartner (blog), May 17, 2016.

9 9 The way forward The next generation of global supply chain leaders will be called upon to steer the company through complexity, digitalization, and volatility. They will need to innovate the way the company supplies existing products and services to end customers, as well as to drive growth and develop new product and service offerings. Top leaders for these multifaceted roles will have to continue to demonstrate strategic, innovative, determined, and resultsoriented leadership traits, as well as develop further their political savvy and influencing skills. CEOs and boards of companies should proactively assess their global supply chain talent pool and think about their future pipeline in the short, medium and long term. Their global supply chain talent may well become the future CEOs of the company. Hire the next generation of leaders Know and attract the top tier executives Top tier executives with all the right attributes are scarce. It is therefore important to know who they are, and understand what attracts them. Develop internal upcoming talent Know the qualities and weaknesses in the company s talent pool, and provide coaching and training to develop talent further. Ensure enough junior talent with the right mind-set and skills is coming into the organization, through attractive graduate programs and links with reputable universities.

10 10 AUTHORS Peter L. O Brien is a member of the firm s global CEO/ Board Practice and advises clients across all sectors. Peter also leads the firm s Global Supply Chain Practice and is a member of the global Industrial and Natural Resources Sector. Peter is based in Sydney. Marieke van der Drift is a Knowledge Consultant and leads knowledge management efforts for the Global Supply Chain Practice. Marieke is based in Singapore. Analysis conducted by Elizabeth Bacon and Jacob Martin. GLOBAL OFFICES Americas EMEA Asia/Pacific Atlanta Boston Buenos Aires Calgary Chicago Dallas Houston Los Angeles Mexico City Miami Minneapolis/ St. Paul Montréal New York Palo Alto San Francisco São Paulo Stamford Toronto Washington, D.C. Amsterdam Barcelona Brussels Copenhagen Dubai Frankfurt Hamburg Helsinki Istanbul London Madrid Milan Munich Oslo Paris Stockholm Warsaw Zürich Beijing Hong Kong Melbourne Mumbai New Delhi Seoul Shanghai Singapore Sydney Tokyo

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