Leading in an Unpredictable World
We are entering a period in which “there will be no long-term predictability” in business, according to Accenture CEO Pierre Nanterme. “Leaders will need to learn to manage chaos and to do it in a highly disciplined way.”
Pierre Nanterme, chairman and CEO of the global professional services firm Accenture, has his hands full. He has set an ambitious agenda for his $31 billion enterprise to at once undertake its own digital transformation while also bringing a new set of digital capabilities to market in service of the firm’s thousands of clients. As Nanterme describes it, Accenture is its own case study in digitization. The Accenture chief recently sat down with MIT Sloan Management Review editor in chief Paul Michelman for a conversation about the challenges of digital transformation: for Nanterme’s own organization, for leaders of the organizations he counsels, and for society. Edited and condensed highlights of that in-person conversation, as well as subsequent exchanges via email, are captured here.
MIT Sloan Management Review: You’ve written that leaders need to be both business savvy and technology savvy. On its surface, that’s a statement that’s very easy to agree with. But when we’re thinking about senior leaders who may have come up at a time when technology did not loom nearly as large, what do we mean by “technology savvy?” What’s the level of skills, the level of knowledge that a senior executive needs now?
NANTERME: The point is to have the right level of understanding. The future of the organization and the business model will involve combining business and technology opportunities. Digital technologies are becoming absolutely pervasive enablers of any new business model.
Now, the point is not for CEOs and other top leaders to be tech experts. The point is that you need to have a basic understanding of technology capabilities to figure out your new business models. This is certainly why many CEOs are spending time in Silicon Valley as an educational experience — to see use cases in action and to meet the next generation of leaders. And many of these tech leaders are already running the companies that are going to enable the CEO’s next business model, which is going to be more facile, more global, cheaper, and more scalable.
And there’s another important point here — and this is what’s unique with the current wave of digital technologies — they can massively rationalize your operations. I do not remember many disruptions, if you will, which are enablers of new business as well as enablers of your own company’s rationalization.
Let’s stay on that theme. You’ve spoken about creating a “digital first” organization in two directions at Accenture: on the client-facing side and within the organization itself. And I think that challenge rings very familiar to executives; we’re all struggling with how to respond to the market in a digital world, while also trying to future-proof our organizations.
What have you learned from taking on both of these challenges simultaneously? Where are they mutually reinforcing, and where do they diverge?
NANTERME: They are mutually reinforcing. What I’ve tried to do leading Accenture is to consistently take the angle “digital first,” and to be obsessed that we’re going to bring digital into everything we do every day. Because indeed, that’s going to enable the services we’re going to bring to clients: what we’re calling “the new.” We specifically define “the new” as a set of five capabilities: interactive, mobility, analytics, cloud, and security. These are both the digital capabilities that enable our own evolution as a company and the capabilities we’re going to bring to the market.
This is happening now. We have digitalized our governance: We’re operating without any headquarters, without almost any in-person corporate meetings. Even me. I’ve been digitalized in the form of a hologram for large events. So when I talk about digitization, I mean it literally. We’ve digitalized all our corporate processes: finance, human resources, training, communications, and so on. And we did so in a very deliberate way, based on our belief that the digitization wave is the major disruption of our time. It will reinvent what we are proposing to our clients and how we operate the business. What’s true for us is true for our clients.
So are you finding that the firm is a lab for what you can then deliver to the market?
NANTERME: It’s more than a lab. It’s a case study. We are making Accenture a case for our clients. We are a giant. We operate in 120 countries. We have over 375,000 employees, so we have all the challenges of a large, global corporation. We are no different from the companies we serve.
When I’m talking with other CEOs, half of the discussion is peer to peer. You’re leading a large corporation; I’m leading a large corporation. Tell me what you do — how you organize your global governance. I understand you have no headquarters; I understand your leadership team is distributed around the world. That’s great. You’re closer to the market. How are you enabling that?
And the other 50% is about my job as CEO, which is to propose our services. Being a digital services provider as well as one of the most digitalized large global companies creates massive synergies and huge credibility in my dialogue with other CEOs.
How have the dynamics of those conversations changed?
NANTERME: It’s changed dramatically — and certainly with an acceleration these last six quarters. I think it’s in correlation with the level of acceptance of the digital disruption by our clients. We had the 2008 to 2010 crisis, then the 2010 to 2013 recovery, where the focus was productivity, tactical cost reduction, and capital requirements.
And then, after 2013, digital is starting to kick, but it’s initially kicking as a technology — say, putting infrastructure in the cloud — so it’s for the chief information officer to manage. Or, yes, I understand digital is to have a website. So, I have a website, and I put my server in the cloud, and look at me, I’m digital.
That was the mindset in 2012, 2013, even into 2014. And then suddenly, let’s say 2014 and certainly 2015, businesses started to figure it out. It was probably with the rise of Airbnb and Uber that suddenly, CEOs were realizing that what they conceived of as “being digital” was just the tip of the iceberg.
And only in the past 18 months, leaders are saying, “What we’re talking about is a massive disruption. It’s going to challenge fundamentally the existing business models. I could disappear because of the thing I didn’t really get. Now I’m getting it.”
Suddenly, when you talk about digital, it’s the CEOs you’re talking to. Companies are appointing chief digital officers, and they’re reporting directly to the CEO.
So in spite of all of the hoopla around concepts — big data, the cloud, analytics — it took the emergence of new companies upending seemingly non-digital industries like transportation and travel to really get CEOs’ attention.
NANTERME: Yes. I think for the last 10 years, digital has been a productivity game for most companies. And now that’s not enough. It’s not about being more productive in what you do. It’s about fundamentally changing the way you produce, execute, and deliver the services and the experiences you provide, because technologies are enabling new entrants to take your business for a fraction of the cost. It’s become a totally different dialogue.
In a similar vein, you wrote that success is no longer about changing strategies more often but about having the ability to execute multiple strategies concurrently. Can you expand on that statement? And what about digitization has wrought that?
NANTERME: It’s about agility. Because all CEOs, including me, are operating in a world where it’s almost impossible to predict things in the short term, and you need to be prepared to navigate. Of course, you need to have a direction that you believe is correct. We set the direction for Accenture to lead in providing digital-related services.
Now, we need to map out how we’re going to get to the destination we’ve set for the business, even while we know the world will continue to shift during our travels. There will be new technologies that shape, even transform, the business landscape, so we will need to execute multiple strategies — or pathways — in order to make sure we get to where we want to go.
We’ll use the metaphor of an ocean crossing. Not too long ago, I just needed one boat to make a voyage. And that boat had a predetermined course from which we would not need to veer.
Today, I need a fleet of speedboats, each following different paths across the sea. Some are fast, some are slow, and some are figuring out the nature of their boat. Where I’m going to land, I don’t know exactly. It might be Miami or it might be New York, but I know I need to cross the ocean. I know generally where the future is, but I can’t afford to be more absolute in my path than I am at this point in the voyage.
What’s new — and what’s making management so uncomfortable — is leading amidst this massive unpredictability. Even without digitization, you are dealing with volatile markets and macroeconomic factors. Together, it’s incredibly destabilizing.
Leaders need to be prepared to reinvent along their journeys. You set your direction clearly and you understand that you will need to figure out almost every month what that direction requires. What are the capabilities you need to grow or to acquire? Where do you need to turn and to adjust?
That’s the art of navigation: You know the destination, but you have no map.
How do you, as the CEO of a massive global enterprise that itself has to manage with this challenge, simultaneously oversee relationships with thousands of clients, each of whom is also dealing with this challenge? There’s infinite complexity. How do you stay focused?
NANTERME: You need to understand the complexity of things and then oversimplify the execution.
So you put all of what we’ve discussed on the table, and you say, “Wow.” OK, then we’d better start structuring. Let’s begin by putting things in the right order. In order to reach our destination, we need philosophy, principle, architecture, investment, and so forth.
For instance, we are recreating the business architecture at Accenture. We now have five businesses — built around our new capabilities. We focus on five things. Not three. Not seven.
Of course, we should always take a look at new ideas, because one might turn out to be a big one, but first we are going to scale, especially when we have evidence that we have found a gold mine.
There are things you’re making predictable even when the precise destination is still unknown. And this is what we are doing in a very deliberate way.
I’m assuming that you’re giving similar advice to your peers out in the world.
NANTERME: It’s exactly the same. We say to our clients, “Now you understand all the possibilities. It’s time to make choices and to stick with it.” Because you will have to align your investment, align your communication, align your training, and stand up for the direction you choose. It has to be an obsession: Stick and scale. And when I say “obsession,” I mean it. Because you will have so many distractions, so many people asking, “Are you sure you’re doing the right thing?” You need to be deliberate. “Yes, I stick, I scale, and I go for it.”
You have said that “businesses could be more incentivized to assess the social impact of their digital investments.” You believe that digitization and social impact have kind of a special relationship that is different from business activities in the pre-digital age.
NANTERME: Absolutely. The latest wave of the digital revolution will change people’s lives. Life is not about productivity gains or privacy issues, two of the issues we’ve associated with technology advancements over the past 10 or 20 years. But with artificial intelligence [AI], cognitive computing, and machine learning, we are talking about things that can enhance humanity. And that’s a different game.
But these technologies raise lots of difficult issues and concerns.
For example, there is a whole set of ethical issues in the way we are going to combine technology and the human mind and body — not just having them work together but how they physically interact. When we introduced the computer, it didn’t change you physically. Now we’re talking about a world where there’s going to be less disease, where people could live much longer and in good health. And who knows how technology may enhance the brain itself.
Is it the end of days, or is it the beginning of new days? I believe it’s the beginning of new days. I believe in progress. I believe that all of this is good.
But the concerns are real, and that’s why we need to have a better understanding of the value digital technology could unleash for society — to have a truly balanced conversation.
We can reasonably begin to measure the value of a self-driving car or a new battery technology on business. But for society, what does it mean? It means that people unable to drive will be mobile again. If they are mobile, they can do things. And what they’re going to do will have a value.
My parents reached a point when they couldn’t drive. But if tomorrow they could drive, they could move. They could move from one place to another, and that place could be a movie or it could be a job. Either way, this is a profound change.
The mobility of people and products is the essence of trade. So when you have mobility back, especially when people are living longer, more value is being created. What is the economic value of living 20 more years, especially mobile years? You can contribute to the economy longer. You can work longer. You’re going to consume longer. In our work with the World Economic Forum, we attempted to measure the value these new digital models could unleash. Our analysis put the figure at $100 trillion.
Yes, there are lots of issues, and there are times new technologies look more evil than good, but there is a disproportionate value for society.
But even as all of this new value is created, there’s an inevitability that some workers will be displaced, right?
NANTERME: Yes, of course, but it’s not universal.
One thing we do know is that technologies like AI are not going to affect all regions or sectors the same way. The efficiency gains and growth opportunities will vary by industry and by costs of labor. You need an economic equation that justifies replacing man with machine. I’m not sure that equation is going to be met in a lot of cases.
We have about one billion people in the United States and Europe, and more than six billion in the rest of the world. In the U.S. and Europe, there will be disruption — but this is where you have the best education and training. This is where we — companies and governments — can best manage the trade-offs and provide the training for people to move into new added-value jobs. We can educate our people for the new economy. We have the resources.
But when you go to many other places in the world, perhaps you will never see any robots because there are not going to be any economic equations that make sense.
Accenture is very global. I’m traveling all around the world. And so I need to be careful to consider the concerns I’m hearing about in Boston in the right context. Go and visit Indonesia, and maybe you will come back and have a different view. Or go to Kenya or go to Mozambique, Angola, even some parts of India. And I think there is still a great deal of work that will be done by man.
We need to look at the world with a fresh perspective. And for the role of management, that means something important. We need to get past evaluating people on their numbers. I have a company full of people who can make their numbers. They’ve all been to good schools and they know how to get the job done; they all know the recipes.
What I care about now is: Are you curious? Are you keen to learn? Are you prepared to jump into the new? Are you prepared to lead in volatility and ambiguity? Those are the traits of the new leaders.
I find the unknown and the complex more fun than scary. If it’s the other way around for your leadership, then you have a problem.
We are at the end of a management cycle that has covered the past 50 years, and we are beginning to write a new book for the next 50. There will be no long-term predictability. Leaders will need to learn to manage chaos and to do it in a highly disciplined way.
So if you ask me what do you see for your company in 10 years? I see nothing. It’s too far out. I don’t have a clue, and I don’t care. But the next 18 months are crystal clear.
This interview was originally published on July 19, 2016, with the title, “Conversation with the CEO: Pierre Nanterme, Chairman and CEO, Accenture.” It has been updated to reflect edits made for its inclusion in our Fall 2016 print edition.
Paul Michelman is editor in chief of MIT Sloan Management Review. He tweets @pmichelman on Twitter.
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