What do newly appointed Reckitt Benckiser CEO, Laxman Narasimhan, Sheryl Sandberg (COO at Facebook), Vittorio Colao (former CEO of Vodafone), Indra Nooyi (former CEO of PepsiCo, now on the Board of Amazon), John Donahoe (CEO of eBay) and Archie Norman (Chairman of M&S) all have in common? All of them spent part of their early career at one of the ‘Big Three’ global strategy consulting firms – McKinsey, The Boston Consulting Group (BCG) or Bain.
Narasimhan, Sandberg, Colao, Nooyi, Donahoe and Norman are, however, surprisingly – at least to me! – rare examples of strategy consultants making it to the top of consumer sectors. When you consider that between them McKinsey, BCG and Bain now have over 60,000 alumni – and have been advising consumer facing sectors for decades – former strategy consultants are conspicuous by their absence at the highest levels of executive leadership in our sectors.
Together, McKinsey, BCG and Bain hire some of the brightest and highest potential executives – and, even as relatively inexperienced consultants they have exceptional exposure to strategic challenges and change programmes critical to Boards – yet seeing a former strategy consultant on the Board of a consumer facing company (aside from as a Strategy Director) is a rarity. Why is this?
On the one hand, historically, many of the most successful consultants in our sector enjoyed their role as ‘advisor’ too much – they didn’t believe that corporate life could provide the variety, pace, rigour or intellectual challenge (and indeed compensation) of their consulting career. Additionally, consultants often didn’t make great hires for senior leadership roles in businesses. Compared to their peers who had grown up in industry, consultants didn’t have the leadership sophistication, functional depth, investor relations experience or stakeholder management skills – all of which is typically honed and developed over many decades service on the front line.
On leadership specifically, simplistically, a Senior Partner in consultancy on a large project would be leading a team of 30 of extremely smart and motivated consultants – compared to the CEO of say a grocery retailer, who might be leading a workforce of several hundred thousand. It requires a very different skill set to lead a team of like-minded strategy consultants, than to lead an operational business in our sector. Many consultants who tried to make the move ultimately didn’t succeed – and didn’t especially enjoy the experience, often retreating back to advisory type roles where they can once again add significant value to the C-Suite. Perhaps this is why former strategy consultants have had greater successes in smaller, high growth businesses – often with a digital dimension – and very different leadership challenges?
Over the last 2 – 3 years, however, we have noticed a new generation of former strategy consultants starting to quietly assume some of the most critical functional leadership roles in larger corporate businesses within our sector. Indeed, if you look at leading consumer businesses like Amazon, Nike, Yum!, Samsung or Walmart you will find their Director, VP and SVP ranks are now swelled by strategy alumni – who are having real impact on the businesses they now serve. So, why now – and what has changed?
Firstly, many consultants enjoyed the art of ‘transformation’ too much – and historically, transformation by its’ very definition was linked to a specific programme or time limited project delivering a strategy or set of change programmes. Now, however, ‘transformation’ and ‘change’ are the new constant – indeed, I don’t know of a single large business within our sector that is not in a constant state of transformation as they respond to changing customers, technology and products.
For instance, Philip Morris International (PMI) – one of the world’s largest consumer goods companies – is transforming from being a brand-led tobacco company, with a historic emphasis on physical distribution and manufacturing – to become a digital first, direct to consumer company with smoke-free products such as IQOS. This type of transformation at PMI is obviously enterprise wide, effecting every aspect of the organisation – and naturally, requires the brain power, strategic and transformational abilities of those who have trained in strategy consultancy. Likewise, Nike and those similar are dramatically re-engineering their businesses to create greater direct to consumer capability (see an article by my colleague Huw on this topic), as Amazon are continually expanding the art of the possible – from new delivery / network propositions, through to entirely new business models and systems.
Secondly, former strategy consultants are starting to assume some of the most critical new functional leadership roles in businesses within our sector, and are having great success in P&L responsible roles where data and insight are key determinants of success: Chief Data Officers, Chief Customer Officers, E-Commerce Directors, Insight Directors, Finance Directors, Trading Directors – and even roles like Supply Chain Director, where in a digital and multi-channel era, a new level of sophistication, intellectual clarity and strategic insight is needed to manage inventory, warehousing requirements, fulfilment and systems.
This rigour, analytical horsepower – and intellectual clarity – makes former strategy consultants uniquely positioned to excel in these roles – and, indeed, early signs show the trend here is not abating. Indeed, in an era of increased automation, where traditional labour models are evolving to require far less people intensity, a different type of leadership will be required in the future. For instance, it is no surprise that businesses like Ocado, which pioneered automated warehousing, have often employed leaders with a strategy background for business critical roles.
Whilst historically, operational or commercial leadership, or the office of the CFO were the foundational routes to C-Suite – and eventual CEO succession – in an era of big data, where insight and strategy are the key source of competitive advantage and customer understanding – we predict that former strategy consultants are now much better placed for future CEO-succession. Indeed, we see many businesses now hiring this specific profile as an explicit part of their C-Suite succession planning.
When McKinsey, BCG and Bain publish their alumni lists in years to come, you can bet they will include a sizeable number of CEOs from consumer sectors!