Many who study or comment on contemporary business and politics equate corporate leadership with the ability to influence events in a coherent or knowledgeable way.
The usual narrative is that CEOs of large corporations are engaged in a complex pulling of levers to manipulate commercial or political decisions, or even global systems, in their favour.
Depending on your political leanings, corporate leaders, with all this monetary and market power at their disposal, are either villains - engaged in conspiracies to advance their own or their company’s agendas - or heroes, the embodiment of the public interest.
Through superior foresight, CEOs guide not only their companies, but contribute to steering whole economies in purposive and positive ways.
In both narratives, the contemporary corporate leader is portrayed as having great knowledge about economic, political and even social trends and developments, allowing them to strategically address or control them.
This gives some context about the B20 meeting this month – the international corporate CEO offshoot of the G20 world leaders meeting later this year, both of which Australia is hosting.
The aim of B20, headed largely by some of Australia’s most senior business figures, is to come up with policies on economic and financial issues like trade, tax and global growth for the G20 meeting to consider.
By way of context, I was the Director of Strategic Communications for the Business Council of Australia for five years in the 2000s.
During that time I worked closely with Australia’s top corporate leaders and know first hand both their strengths and weaknesses.
Here’s one observation.
Corporate leaders are increasingly incapable of coherently shaping and steering big picture policy areas like those being considered by B20.
In fact, even their core authority to shape events related to their day-to-day business dealings is under threat.
A recent book by Moises Naim, The End of Power, a leading global thinker on power, begins to put this observation into broader context.
Naim contends that transformational changes in societal and economic activity in recent years have undercut influence and authority across the spectrum of leadership areas.
Corporate CEOs, in particular, are increasingly under siege from “black swan” events and other unpredictable factors over which they have relatively little control.
Corporate leaders are now more exposed than ever to “black swan” events they have little or no control over.
This is largely because in the 21st century digitised world, the power of scale - traditionally the leverage point with which large organisations like states and corporations accumulate authority and power - is potentially open to anyone.
“Davids” can now quickly amass commercial or reputational power in ways that raise a constant threat for “Goliaths” that their brand and balance sheets might be shredded.
From my experience in advising corporate leaders, other factors are now in play that compound even Naim’s dire prognosis for today’s CEO.
In effect, the combination of globalisation and intensely interconnected world of the 21st century means that the world of business activity has become sped-up, super-scaled and super-complex.
In combination, these factors create a toxic torrent of “unknowledge” aimed at CEOs and the corporations they “manage” at faster and faster rates.
Faced with this increasingly hostile environment, corporate leaders not only lose their capacity for foresight, but for the proactive, strategic action that foresight brings.
The response is a retreat by CEOs into short-termism and an almost obsessional focus on micro detail and reactive risk management.
This is because in a world in which their peripheral vision has shrunk dramatically, these are the domains they can still exert some authority and control.
The problem is magnified because in the increasingly intense networked world of the 21st century, corporate heads are, quite simply, in the wrong place to know about and lead on big trends and issues.
We now live in a world where knowledge and information are increasingly dispersed horizontally rather hierarchically.
As a result, those occupying the top floor executive suite of large corporations are likely to be the last, not the first, to discern any new threats or trends.
No wonder the corporate refrain during the GFC was “we didn’t see it coming”.
And little wonder Australia’s corporate leaders seemed genuinely bewildered by public anger at key measures in the recent Federal Budget - measures advanced by the corporate sector through its key membership of the Commission of Audit.
All this is not to say corporate heads no longer have power; but it is increasingly “small” power that is more and more constrained - or undermined - by a range of external factors they have little direct knowledge of, or sway over.
Yet, interestingly, Naim points out the common perception is that their influence is greater and more strategic than ever.
How is this contradiction explained?
Again to draw on my experience, corporate leaders are relying increasingly on in-house spin doctors and external communications consultants to carefully prepare and present the impression they are constantly in “control”.
In this way, they aim to preserve the pretense of “big” power.
This becomes increasingly important in an era when CEO pay and prestige has never been more closely tied to “performance”.
The declining ability of corporate leaders to steer events toward desired objectives is even more acute when it comes to macro policy issues.
This field of forward thinking and strategising is infinitely broader and more complex than the day-to-day business world.
When B20 participants convene this month, they will have little certainty about what will happen next week in the sped-up, super-complex world of global markets, let alone have the strategic insight to decide on the sort of long-term macro-outcomes they are seeking.
In fact, the risk is that with a reduced understanding of how the big picture world works, B20 policies are just as likely to have a range of unintended negative consequences, than intended positive outcomes.
So what’s the value of B20?
I would hazard an educated guess it will be more about participants playing out a role of “strategic leadership” than outcomes that might shape the global economy in a meaningful way.
Yes there will be impressive announcements on what has been decided for the global benefit.
The reality is this will be “small” power masquerading as “big”.
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