August 2009 | Commentary | Viewpoint

Finding and Attracting C-Suite Leadership

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The days of fragmentation characterizing global logistics are drawing to a close. With globalization, more companies are striving to become end-to-end service providers for global customers. They see an opportunity to greatly improve profitability by offering higher-value services and gaining increased market share.

To get there faster, they will continue to pursue mergers and acquisitions at every link of the supply chain. This opportunity has also attracted the interest of new investors such as private equity firms and pension funds, which have changed the ownership landscape and introduced new business imperatives.

These trends dramatically alter the types of competencies that logistics companies will need in the C-suite and among senior management. By 2010, when the race will have been determined in many logistics markets, key skills likely to be found among executive teams of leading companies will include the ability to:

  • View technology systems as a competitive differentiator, not a cost center. As companies move along the value chain and broaden their service propositions, they will no longer see IT as a cost center but as a means of outflanking the competition. The modern-day executive must be able to use industrial technology as a strategic tool.
  • Think like an investment banker.Operationally, companies that aspire to be end-to-end service providers need the financial agility required to move shipments through different countries, currencies, tax zones, and customs requirements. To compete effectively in an environment with a complex array of operating drivers and capital allocation issues, they also need superior analytical and problem-solving skills.

    Strategically, the leadership team must be adept at evaluating and executing mergers, acquisitions, and divestitures. They need to thoroughly understand the financial engineering behind each agreement, and know what makes a good deal on both the buy and sell sides. In effect, they must think like investment bankers or private equity investors—whether they are working for them, selling to them, or buying from them.

  • Build C-level relationships with customers.Selling outsourced services requires relationships with the customer at the C-level, where the ultimate authority to make these large commitments resides. Logistics leaders need to be able to develop trusted advisor relationships with the top-level management of the customer base, and demonstrate to CEOs and their boards the strategic and operational value of the services offered.

  • Leverage diversity.Operating globally across a diverse customer base requires leaders who have lived and worked overseas, who understand the cultural nuances of different regions, and who have successfully managed multicultural teams.

    As logistics companies become more global and diverse across the industry verticals they serve, their organizations need to reflect diversity—not only in their executive ranks but also among the board of directors.

  • Develop a deep talent bench. Organizations require strong reserves to enable them to enter emerging markets by geography, type of service proposition, and industry vertical. They may also need to attract best-in-class talent from the industry and their customers across operations and functional positions including chief financial officer, chief information officer, chief marketing officer, operations leaders, and account management.

    Acquiring such talent takes more than today's casual networking methods. Instead, it requires a rigorous approach to talent management that includes benchmarking, performance reviews, succession planning, and skills development. Top talents expect such rigor and a clear career path; they are unlikely to join or stay with companies that lack that rigor.

    Effective human capital management also requires leaders who can work successfully with labor unions, across different countries with various labor laws.

  • Turn sustainability into a profit center. Pressure will only grow more intense for global companies of all kinds to address sustainability—the social, environmental, and economic impacts of their operations. Leading companies not only comply with new regulations, they make sustainability a competitive advantage.

    Global diversified technology company GE, for example, is attempting an initiative entitled "Ecomagination," which focuses on the environment in addition to sustainability and green business practices. By 2010, the companies best positioned for success will be those that have not only seen the writing on the wall but also the possibilities for a favorable bottom line.

    Many logistics companies are beginning to seek executives with these competencies. But logistics executives who can lead across a more sophisticated service proposition are in short supply. Many companies will therefore look for talent among supply chain executives of global companies or among businesses that provide end-to-end outsourced B2B services.

    Wherever the talent comes from, and whoever finds and attracts it first, will lead the way in logistics in 2010 and well beyond.

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