We can’t predict the future. But, thanks to data and research, we can make decisions today that drive progress for tomorrow. Especially when it comes to business. You just have to know how to break the information down and make it useful.
The task of balancing what you can control (talent acquisition, succession, manufacturing processes, operations, financial reporting) with what you can’t (pandemics, wars, economic oscillations, global supply chains) has led many CEOs and executives to invest in guidance to help them break down the data and refocus their efforts on what’s most important for the success of their teams, their business, and their own careers. “There’s that old military saying that goes, You only get what you inspect, not what you expect,” says Judith Wallenstein, global leader of CEO advisory at Boston Consulting Group (BCG). “You have to find a way to empathize with your organization and make decisions relevant to them. That starts with understanding who are the folks in the know who can give you a better view of what's going on.”
Giving that better—or best—view is what Wallenstein and Nikolaus Lang, the global leader of BCG’s think tank, the BCG Henderson Institute, do. They burst the bubble that can often form around CEOs via their executive teams, and focus on what it takes to have a successful tenure in business now and tomorrow. Every year, BCG hosts around 200 individual programs for CEOs and C-suite executives of large companies, as well as co-learning communities, bringing together CEOs from healthcare, automotive, tech, mining, banking, and dozens of other industries to discuss today’s hurdles and tomorrow’s opportunities.
Wallenstein and Lang, along with BCG’s conversational AI agent GENE, dig into the data, uncover the biggest challenges and opportunities businesses will face in 2025 and discuss how today’s data can help create strong businesses and executive leaders for the year to come.
The Problem: The Real Potential of Generative AI
A whopping 90 percent of C-suite executives claim that generative AI is a top priority, but finding how to integrate it can be a friction point for teams. But while nearly everyone agrees that gen AI is important, 66 percent of leaders are ambivalent or dissatisfied with their progress on AI and gen AI. A mere 6 percent of executives report being able to upskill the tech in a meaningful way, according to a January 2024 survey. “I think a lot of CEOs are wondering, am I missing out somewhere here?” says Lang.
The Play
It’s all about finding a use case that fits your company’s needs. But, as Lang notes, company leaders also need a clear understanding of where both opportunity and risk lie, and how to adapt their organization. “Executives should embrace experimentation, especially when considering gen AI implementation,” he advises. “We discovered that people find it challenging to calibrate the right level of trust, not using gen AI enough where it can add significant value—or over-relying on it in areas where it lacks competence. We also found that generative AI can be a powerful exoskeleton, enabling and empowering employees to take on tasks that may currently be beyond their skill set, helping them meet changing job demands.”
One study from BCG’s Henderson Institute shows that gen AI helped shrink the performance gap on a data cleaning task between general consultants with no coding experience and experienced data scientists by about 75 percent. “These findings have major implications for activities such as talent acquisition and internal mobility, learning and development, and strategic workforce planning,” says Lang.
The Problem: Talent Shortages
Most of the inflation you have in Europe and in the US is service inflation because we have a talent shortage, according to Lang. “There is a huge talent gap coming up,” he says. “It’s something we see not only in the West, but also in Asia.” Japan and China have some of the world’s most rapidly aging populations. Couple this with new technologies, and upscaling a team alongside technological advances is a major hurdle.
The Play
In Lang’s view, the talent shortage requires that CEOs think through where they recruit talent in aging populations. “A CEO has to have the ambidexterity to attract young talent into an organization while upskilling more mature talent,” Lang adds. “If you’re not upskilling your 30- to 35-year-old employees and you're not becoming attractive for the minus 35-year-old prospective employees, you will have a massive talent issue.”
CEOs must prioritize increasing the employee value proposition and the acquisition of new talent. Aside from that, Wallenstein believes the answer is simple. Literally.
“The first role of the CEO is in a way to be the simplifier in chief because rightly or wrongly, most members of your workforce are not going to have the long-term perspective to say, Wow, businesses faced similar challenges 40, 50 years ago, right?” says Wallenstein. “For many folks in your workforce and leadership team, AI use cases and a reinforced focus on talent piles on top of what they already had on their agenda. In many organizations the view that your workforce has of leadership is that leadership will come in with a really simple statement, therefore pushing all the complexity on how to get it done down to us.” She advises that CEOs need to do precisely the opposite. They need to be a “simplifier in chief.” Ask: What are our three priorities on talent? And then decide what are the three things you are going to take off of the agenda in order to complete these priorities.
The Problem: Messy Macroeconomics and Geopolitics
Global conflicts—namely in Ukraine and the Middle East, but also in Africa—have intensified. Lang predicts specifically that Ukraine will experience military instability similar to what happened historically in North and South Korea, while instability in the Middle East will impact global trade lanes. “This has an impact on macroeconomics because of supply chain disruptions, as well as increased military spending that will fuel inflation,” says Lang. “If I'm an executive today, one of my key concerns is ensuring I can help maintain my supply chains and keep my prices stable.”
The Play
“It’s time to focus on building your geopolitical muscle to make your supply chain more resilient,” says Lang. “This means multiple sourcing, developing an ability to handle price volatility and inflation, and redesigning your organization for a fragmented world by having several regional headquarters that are agile and flexible.”
Last but not least, Lang also suggests building your company’s geopolitical competence by focusing your team on hiring talent that is informed and proactive about trade lanes, geopolitical scenarios, and supply chain redesign.
What’s on the Radar
Succession Planning
You would think it’d be one of the most germane jobs of a new CEO to decide: Who can replace me five or 10 years down the line? But, “succession planning is generally a weakness in many companies,” says Lang. The function of succession planning is to ensure that a CEO can fulfill their core job—leaving behind a stronger company than they found it—by identifying three successors who are decidedly better suited for the job than the current CEO was when they filled the position. However, there are only a small number of companies where this practice is a strong aspect of the culture.
“The moment you get selected for the role of CEO, it’s part of your job to collaborate with the board to select these potential successes and shape their development journey for the next two, five, or 10 years—and you must have a plan that allows these candidates to take shape, while also allowing your succession plan to be agile,” says Wallenstein. For example, there was a contested CEO race in the Fortune 500, she recalls. “The company went external, and the three internal candidates left, right before the CEO literally dropped dead from cardiac arrest 18 months later. No one in the company could succeed him. To remain agile, succession planning for the CEO needs to happen on different timelines. You have to know who would be picked if they had to do the job 18 months from now, five years from now, or 10 years from now.”
Scenario Planning
“Another weakness in many companies is a lack of preparation,” says Lang. CEOs are working in an ever-shifting world. One way to adapt to those shifts is through scenario planning. “One of the fundamental changes I have seen over the 27 years I've been with BCG, is that 27 years ago CEOs would create a strategic plan for five years or 10 years, identifying just their future top line and bottom line. But now, strong CEOs with strong management teams are depicting different pictures of the future with different scenarios, which allows them to think in a much more flexible way.” That means making plans for what-if situations, for instance, a major conflict in the Pacific, another pandemic, or a massive cyberattack at one of your factories. “I think that intellectual agility marks a big difference between strong CEOs in the current environment and those less prepared. You will only be able to create influence if you're adaptive in your understanding of the world.”
And honestly, the beauty of scenarios is they're precisely wrong, but they're generally right.
What to Look Forward to
Optimism
“The optimist in me would argue that as a global community, we are faring somewhat better than we thought. The economic landing has been softer in many parts of the world than we expected it to be. Through a year of unprecedented global elections and votes, democracy has shown more resilience in major elections than many of us feared. Yet, enormous volatility remains, and wars have entered into the daily reality of our workforces. This poses a new set of challenges for the CEO. When you look at all the complexity of trade as well as geopolitical turmoil and war—the realities that our workforces are concerned about—how do you make sense of all of that for your organization? How do you keep your workforce looking forward positively? It takes a lot of a CEO's energy to provide positive momentum. We still have a lot to get through in 2024. Yet I hope that we will be in a better place at the beginning of 2025 than we were a year ago. If CEOs can embrace that, too, and contribute to creating a positive way forward, that makes me optimistic. ” — Judith Wallenstein
Investing
“Despite my feeling that we will still be experiencing inflation in 2025, we've managed to have a soft landing in the US and a slightly more ruffled landing in Europe. But economically speaking, we are going into an era where we will have lower interest rates and capital markets that might be more interested in investing. The higher availability of capital, combined with the obvious efficiency and effectiveness potential of AI and gen AI, provide a more attractive environment for leaders. If I'm a CEO of an American corporate leader, I would also be really positive about investing.” — Nikolaus Lang
