I picked up an old copy of Fast Company magazine yesterday. It is the 2012 March edition featuring the world’s top 50 most innovative companies. Apple was first, with Facebook, Google, and Amazon topping out the list. Now six years later—aside from a few new editions like Tesla, Airbnb, and Uber—there are no established companies stepping up to challenge the original four.
These unicorn companies, and many near-unicorn companies, are the darlings of Wall Street. Many of them achieved unicorn status even while they remained private companies. But can Wall Street’s love affair with the unicorns ever end? It seems like what they want is for companies to “speed up and grow fast, die slow, or get ready to be acquired.”
The biggest challenges for CEOs and their boards today come from global geopolitical uncertainties; unprecedented technological disruption and reskilling employees in a tight talent market. Digital technology transforms the way consumers and businesses interact and transact. And their innovation efforts are not yielding any meaningful results. Every CEO (and their board) need to urgently rethink their strategy in this AI-driven world. The main questions every CEO needs to be asking (or at least have a working hypothesis for) include:
- What fundamental values of your current strategy will become less relevant once AI is able to change the basis of competition in your industry?
- How would discontinuities affect your current strategy and how fast will they play out?
- How ready is your organization to handle any coming shifts or industry-level disruptions? Have you begun your agile transformation?
- What drives the valuation multiple in your industry and what causes valuation to break out of the current range?
- Who are the dominant investors in your company and what are the views of the future state of your industry? Is your company strategy in sync with these views?
- Are you investing in a portfolio of technology investments that are aligned with future opportunities or just overspending on maintaining legacy technologies?
- Are your innovation efforts and investments creating real value or option value, or is it simply public relations?
- Do you have a strategy in place on how the applications of AI will fundamentally be shifting value creation and migration to other players?
- Have you explored new business model designs based on coming discontinuities in your industry?
- What trade-offs are required in your company when facing investing in the future, strengthening the current core, and distributing free cash flow?
I hope every CEO is prepared for preparing to answers these strategy questions—or at least most of it. Let’s spend less time on golf courses and sail boats and allow more time for off-sites.