The model for assembling a team of top executives hasn’t changed much in recent decades. With titles such as chief operating officer, chief financial officer or chief human resources officer, companies have largely filled their C-suites with people who possess specialized expertise in one aspect of the business.
Now, a new paper by Eamonn Kelly of Deloitte Consulting argues that this model is poorly matched for today’s business climate and is in need of a massive overhaul. Kelly writes, “The bottom line is that if a company sticks with the C-suite model it probably has in place today, it might find it hard to remain competitive.”
So what’s wrong with the C-suite as we know it? Kelly says that today’s structure—in which functional specialists head up discrete teams—allows the divisions of a company to operate in silos with little integration or cohesion. That may have worked just fine in simpler times, he contends, but it’s ineffective for complex 21st-century businesses. Many firms are increasingly global enterprises, with workers and consumers in far-flung corners of the world. And rapid technological innovation means that the various divisions in any enterprise are increasingly interdependent. The advertising team relies on the I.T. team to engineer its new e-mail campaign; the human resources team relies on the marketing team to help build its employer brand.
The answer, Kelly writes, is to rethink how C-suite jobs are defined and the kind of people we hire to fill them. He calls this idea “C-suite 3.0,” and says it would be a key break from the iterations of leadership structures that have been most prevalent in the post-industrial era.
The need for a C-suite 2.0 began to crystallize in the 1980s, Kelly says. He defines C-suite 1.0 as the model embraced by General Motors and others as early as the 1920s, in which a tight-knit group of centralized, generalist managers comprised the leadership team.
Between today’s model and its predecessor, Kelly notes two key differences: Power has broadened in C-suite 2.0 to a larger group of people. A 2013 study by Harvard University researchers found that the number of people in the C-suite at large U.S. firms has doubled since the 1980’s. Three quarters of the increase was due to the addition of functional managers, or managers that oversee a specific unit of the business.
Kelly doesn’t ultimately offer up a precise vision of what C-suite 3.0 should look like. While he argues it needs to be characterized by less fragmentation and greater alignment, he also says that going back to a small group of generalists probably won’t serve today’s companies well.
If talent professionals are going to rethink how to build a pipeline of candidates for their most critical positions, Kelly says it’s up to them to define what that should look like.