A few days ago, I had a chat with an old friend of mine, Hadi Wenas, the ex-CEO of Matahari. We have known each other for a long time, since our time in McKinsey. We chatted about the most fundamental challenges CEOs face – and came out with this EAT challenge.
The most fundamental challenge for CEOs
The role of a CEO is a challenging one, with a myriad of responsibilities to oversee and navigate. From setting the company's vision to leading the team, CEOs are expected to tackle challenges head-on and steer their organizations toward success. While there may be various challenges that a CEO can face, ultimately, there are only three fundamental challenges that every CEO must confront, and these challenges can be remembered by the acronym EAT: Expansion, Acceleration, and Turnaround.
Turnaround is a challenge that CEOs face when their business is not performing well. The company may be losing market share, experiencing declining revenues, or facing other issues threatening its viability. Turnaround requires CEOs to take a hard look at the business and identify the root causes of the problems. Then, they must make tough decisions such as cutting costs, restructuring the organization, or pivoting the business model. The focus must be on restoring the core business to its former profitability and ensuring the company can survive in the long term.
Acceleration is a challenge that CEOs face when their business is performing and there is still room for growth within the core business. The company may be doing well, but it has not reached its full potential yet. Acceleration requires CEOs to focus on the core business and find ways to optimize it to achieve faster growth. This may include streamlining processes, investing in research and development, or leveraging emerging technologies to gain a competitive edge. In addition, CEOs must ensure that they have a solid plan in place to accelerate growth while maintaining the company's profitability.
Expansion is a challenge that CEOs face when their business is thriving, but there are limited growth opportunities within the core business. The company's current market share is at its peak, and there seems to be no room for growth within the current market. However, it is vital to keep expanding to maintain the company's competitiveness and profitability. Expansion can come in various forms, such as geographical expansion or diversification into new product lines. CEOs must be able to identify new opportunities and make strategic decisions that will enable the company to expand its reach and continue to thrive.
Different Approaches for Different Challenges
While these challenges may seem straightforward, each one requires a unique approach to overcome. Expansion, Acceleration, and Turnaround require CEOs to be adaptable, innovative, and agile in their decision-making. The key is to identify the right approach for each challenge and execute it effectively. Here are some strategies that CEOs can use to address each challenge:
Expansion:
CEOs must focus on finding new growth opportunities. This may involve investing in research and development, pursuing strategic partnerships or acquisitions, or exploring new markets. They must also ensure that the company has the resources and capabilities to support expansion.
Acceleration:
CEOs must focus on optimizing the core business to achieve faster growth. This may involve streamlining processes, investing in emerging technologies, or creating new revenue streams. They must also ensure that the company has a culture of innovation and is continually exploring new ideas.
Turnaround:
CEOs must focus on identifying the root causes of the problems and taking decisive action to address them. This may involve cutting costs, restructuring the organization, or pivoting the business model. They must also ensure that the company has a solid plan in place to restore profitability and regain market share.
Conclusion
In conclusion, being a CEO is a challenging role that requires leaders to navigate a variety of complex challenges. However, ultimately, there are only three fundamental challenges that every CEO must confront: Expansion, Acceleration, and Turnaround.
While each challenge requires a unique approach, the key is to identify the right strategy for each situation and execute it effectively. By doing so, CEOs can lead their organizations toward long-term success and growth.
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