Today’s challenges require younger leaders: 5 paths companies should try
In the face of tough challenges that require new solutions, organizations are being urged to bring younger leaders into positions of influence and power earlier. Martin Reeves, chairman of Boston Consulting Group’s think tank, has identified five techniques for companies to consider. The average age of CEOs at Fortune 500 and S&P 500 companies has risen from 46 to 55 years old over the past two decades, a statistic that initially shocked Reeves. He believes that while experience is valuable, leaders must also possess curiosity, innovation, and risk-taking abilities. Reeves argues that the older the firm and its leaders, the less vitality and risk appetite it has. To address this issue, Reeves proposes the following paths for companies:
1. Consultation: Involve the next generation in setting strategic direction by creating a shadow board or young leaders’ council. This will provide non-executives with valuable experience and bring new ideas and perspectives to the table.
2. Co-leadership: Twin experienced leaders with younger ones across various levels of the organization to create apprenticeships and foster talent development.
3. Vertical separation: Establish separate bodies within the company to propose and approve novel policies, similar to the legislative system employed by governments.
4. Horizontal separation: Introduce younger leaders in businesses where innovation and energy are most needed, while maintaining older leadership in more stable areas of the company.
5. Substitution: Accelerate the leadership pipeline by imposing term limits, stricter retirement rules, or creating new roles for experienced leaders. This could be combined with targets or rules to ensure age diversity in key posts.
Reeves believes that while the last option may be the most controversial and least likely to be implemented, the other four paths are practical and necessary. In an era of volatile change, leaders need to be agile, open to new ideas, and attuned to innovation. Age can play a significant role in addressing these challenges. Reeves concludes by urging companies to renew the vitality of their leadership and avoid clinging to outdated ideas and individuals that may inhibit the necessary changes facing businesses today.
Analyst comment
Positive news. Market: More opportunities for younger leaders in leadership positions, fostering creativity, innovation, and risk-taking abilities. This could lead to increased agility and adaptability in organizations, addressing the challenges of the volatile market.
