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Focus on adaptability and tolerance of uncertainty

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Leigh Clifford AO has made a formidable contribution to Australian business. He is Chairman of Crestone, Director of Bechtel Inc (USA), is an immediate past Chairman of Qantas, and former CEO of multinational miner Rio Tinto. In 1997, PwC Partner Matt English invited Clifford to be part of the first Australian CEO survey. At that time, he was the Australian head of what is now Rio Tinto.

None of the CEOs taking part in PwC’s first Australian CEO Survey could have predicted the pace and direction of change that has occurred since 1997, says Leigh Clifford. 

The extent of China’s economic rise, geopolitical change in the Middle East, the odd economic crisis, the scale of disruption and innovation caused by the internet, the emergence of new industries and demand for new skills, could not have been predicted a quarter of a century ago.

Skills and upskilling

Looking back over the past 25 years, who could have foreseen the changes that were about to occur. “Making predictions is skating on thin ice. It’s better to say ‘what skills do people need, and what do organisations need to do to ensure their longevity’.”

Educational needs, skills, and consumer behaviour have all changed dramatically since that first PwC survey. The development of the internet created opportunities for new enterprises to emerge and engage with customers, changing consumer behaviour globally. Digital transformation of work created a demand for a new mix of soft and technical skills. Clifford says at the time of the survey, Rio Tinto was experimenting with remote-controlled mining trucks. Today, we’re fast heading towards driverless electric passenger vehicles. Mining in many respects has led this technology. With the digital transformation of work snowballing, finding employees with a mix of skills and upskilling has become top of mind for CEOs. 

Unlike those surveyed in 1997, CEOs also need to be skilled communicators, able to respond swiftly and effectively to the 24 hour news cycle and social media. “If an incident occurs in your corporation, it is around the world in hours, if not quicker. People’s opinions, and jumping to conclusions, is instantaneous. The urgency with which you can marshal your forces to respond to issues is crucial. If you don’t have all the facts - say you don’t know but will find out,” says Clifford. “Corporates have to make sure the response is factual. The noise out there is not subject to that same scrutiny.”

Risks and responsiveness

The role of today’s CEO is high risk. Tenures are short, averaging around 5 years. Clifford’s advice to CEOs is simple - “keep up with technology,” even if, as he puts it, “It feels like you’re clinging to a wall of flaking paint by your fingernails. To ensure longevity, business leaders need to have people around who will challenge and push the envelope on opportunities and threats,” he says. “Having a diversity of views, together with respectful debate all helps enhance business longevity.”  

Leaders are tasked to make calculated decisions and have a tolerance for risk. But when things go wrong, they need to react. In natural resources, where Clifford spent much of his career, safety is critical. The mantra was “If it’s not safe, don’t do it.” 

Another fundamental change is that leaders today are also more engaged in a broad range of issues. “You can’t help but be engaged because your employees, customers, shareholders and governments ask you to take a view. They want broad engagement.”

Challenges and change

As a result of the pandemic, and the global political environment, CEOs are once again having to rethink the way forward in terms of globalisation and the emergence of what Clifford calls islandisation. “People are concerned about their ability to produce vaccines, fuel and computer chips etc. There’s going to be a lot of soul-searching about individual countries being able to satisfy their needs by domestic production. That’s going to come at a cost but I think it’s inevitable.”

On the other hand, Clifford says businesses have demonstrated how adaptable they can be as a result of the pandemic. Many leaders are rethinking strategies, where they are based and how they communicate with customers.

Over the past 25 years there has been a lot of emphasis on innovation. Clifford says that’s all well and good but adaptability, tolerance for uncertainty and agility are needed in addition for success.

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Matt Graham

Matt Graham

Managing Partner, Assurance, PwC Australia

Tel: +61 412 744 547