What are the big challenges that CEOs face today?
One is the rampant short-termism i the modern corporate world. This i particularly a problem for the CEOs of publicly traded companies because the capital markets are so driven by short-term results.
Investors claim to be interested in companies prospering in the long run but they act in exactly the opposite fashion. This makes it very difficult for CEOs to balance the short-term and the long-term.
Most of them sacrifice the long-term in order to keep investors happy in the short-term. But that catches up with them when investors ask: “What is wrong with you; why aren’t you growing faster?” The answer: “We sacrificed investing for the long run years ago.”
The other is the management of talent. In the last couple of decades of the 20th century, talent woke up to the fact that it had overtaken capital as the most important asset in the economic equation.
Ever since, talent has been extracting more and more of the rents, leaving shareholders ever more frustrated.
CEOs have a tricky management challenge and balancing act. Part of their job is to ensure that they collect, nurture and motivate talent. But another part is to make sure that the very same talent does not appropriate all the value and leave shareholders with nothing. The irony is that CEOs are card-carrying members of the talent class and are extracting ever more value themselves. So for them, self-control is a difficult challenge.