COVID-19 rendered every CEO’s agenda irrelevant. Immediately pivoting, they focused on guiding more adaptable organizations that could thrive in a more turbulent world.
Now, as we all reflect and reassemble in the aftermath, CEOs have a chance to redefine their agenda. Through roughly 300 virtual forums, we’ve met with executives from around 1,200 companies across 40 markets to identify the imperatives that will shape those new agendas.
One theme has become clear: CEOs need to restore equilibrium in their priorities. They must shift their time away from working with corporate headquarters and running the current business, to focus on the future of the firm.
So how can CEOs rediscover the lost art of business building? Four steps can help leaders tip the scales back toward developing new businesses for their customers and front line.
Sponsor business building
“Scale insurgents,” or firms that have succeeded at becoming both big and fast, are leading the way into a new era of business. Their CEOs master both delivery and development. Delivery includes those initiatives where customers benefit from the flawless execution of a known routine. Functions are designed to deliver. Development consists of testing and learning your way to new solutions and building new businesses, with an appetite for risk. Customers benefit from the speed and quality of your adaptation to their feedback. Functions aren’t designed for business building—in fact, they often see it as a distraction from delivery.
To become winning scale insurgents, CEOs’ mindshare must shift toward a 50:50 split between delivery and development. Sure, the share for their meetings will more likely be 75:25, as running a business requires far more activities. And communication share should be closer to 90:10, lest CEOs give off the wrong impression that the “next new thing” matters more than their delivery heroes who meet customer promises. But for the purpose of the CEO agenda, it’s time for an equal balance.
Rediscover the insurgent mission
Almost every great company starts with a goal to disrupt its industry on behalf of underserved customers. For instance, at Audible, the founding idea is about unlocking the power of the human voice. Founder Don Katz says, “The power of the human voice can be achieved with audiobooks, but that is only the beginning of what is possible for us. When we focus on our mission, our world expands. It doesn’t narrow.”
Great companies don’t win on purpose alone. The best CEOs also reconfirm their “spiky capabilities”—the three or four competitive advantages that ensure they win repeatedly in the market. For De Beers, that includes extraordinary insight into why consumers buy diamonds, or the power of the “gift of love.” For Nike, it includes the ability to work with sports icons to cocreate high-performance shoes, or the power of sponsorship.
The insurgent mission and spiky capabilities are often lost in the daily grind of delivering the current business. The tyranny of functional excellence programs takes over. Leaders believe their job is to make their function “excellent” through hundreds of initiatives, even if they don’t benefit customers. These programs overwhelm the agenda.
Thus, when leaders move into business building, they don’t build on a solid foundation. New things feel like a distraction. Paradoxically, then, business expansion starts with focus.
Wear your CEO and your chair hats
CEOs wear two hats. A lot can go wrong when leaders don’t understand this.
First, they serve as the CEO of a portfolio of delivery and development options. They’re responsible for the firm’s strategy, identifying and pursuing options to run the existing business and build new businesses.
In business building, CEOs need to manage several investment themes—bold beliefs about the world that guide a sustained investment. On the one hand, leaders should dream big. The themes should target a large and growing future profit pool. And they should have a differentiated competitive advantage.
But on the other hand, investment themes must be tangible. CEOs should be able to assemble a team, find partners, and utilize key assets from the core businesses, without distracting from them.
The second hat is that of a “chair.” Too often, CEOs fail to designate a leader of the new business. This seldom works. Instead, leading CEOs appoint a CEO or founder for each investment theme, then become the chairperson of the new business.
With their chair hat on, top CEOs help the new founder navigate these tensions as they systematically move the new businesses through the necessary phases: discovery, testing and learning, creating, and scaling. They don’t allow projects to become paralyzed in any one phase.
Close the talent gap
Most CEOs mention “gaps” when they discuss business building. Functional leaders, including those in HR, are typically focused on hiring talent for delivery, not development. The systems they manage have a delivery bias.
To combat this issue, some CEOs are discovering new lenses to apply to their existing talent. They’re uncovering hidden pools of talent with key development skills and achieving the full potential of their people. Rather than increase the talent gap, the reorientation toward business building reduces that gap.
But internal talent alone won’t fill all the gaps. And filling them through one-at-a-time hiring takes too long and doesn’t lead to real capability breakthroughs. One of the key benefits of business building is the access to new capabilities and ways of working that transfer to the entire business.
Acquisitions and partnerships can help. But fair warning: New teams will fundamentally challenge the existing culture. Leading CEOs use M&A as an opportunity to create a new culture that brings together the best of both organizations. They embrace the cultural turbulence of business building and role model the change.
We’ve heard many CEOs say they feel they’re entering one of the most exciting phases of their careers. The shift to focusing on customers, the front line, and business building means learning new skills. It also means unlearning some habits and instincts that are no longer fit for purpose. But many CEOs are up for the challenge: They’re keen to thrive in the era of the scale insurgent and build new solutions for customers in a more turbulent world.
James Allen, Mikaela Boyd, and Dunigan O’Keeffe are partners with Bain & Company. Bain & Company is a partner of Fortune’s Breakthrough series.