Corporate America is choosing problem solvers over operational maestros. Here’s why!

From the desk of Miles Everson:

Hello!

I’m thrilled to talk about another business insight in today’s  “Return Driven Strategy (RDS).”

For those of you who are not yet familiar with it, RDS is a pyramid-shaped framework with 11 tenets and 3 foundations. When applied properly, these principles help businesses reach high levels of performance.

Today, we’re going to take a deep dive on why today’s consultants are the preferred choice for C-suite roles.

Intrigued?

Continue reading below to know more!

Corporate America is choosing problem solvers over operational maestros. Here’s why!

For most of the 20th century, America’s top business leaders usually came from  General Electric,  IBM, and  Procter & Gamble.

Alumni from these conglomerates fanned out across corporate America and brought with them a rigorous and operations-first playbook.

Fast forward to today, a new crop of corporations now dominates the list of previous employers for newly appointed CEOs.

Consulting firms like  McKinsey  and  Accenture  now provide the bulk of C-suite employees, doing so from 2020 to 2024.

This is the first time consultants have claimed top leadership spots since researchers began tracking this data. Prior to this, manufacturers or tech firms served as previous employers of would-be top executives.

With this in mind, it’s a clear sign that what’s required of executive leaders are changing on a fundamental level.

Today’s Businesses Need Problem Solvers

Back in the old days, those who climbed the corporate ladder were the ones who ran big divisions.

However, today’s CEOs are being picked for their ability to solve problems rather than operational skills. While the latter still matters, it’s no longer top priority.

This is because the modern C-suite needs integrators who can navigate challenges and disruptions, not just career operators.

In that kind of environment, consultants just offer a different kind of edge.

Accenture is a great example of this. The consulting giant spends more than USD 1 billion a year on workforce development.

The company puts its employees through rotational programs where they get to experience working in multiple parts of the business, such as strategy and consulting, ending up with them getting exposure to clients in multiple sectors.

As a result, Accenture’s alumni often possess a skill set for executive leadership.

Other consultants like McKinsey,  Bain, and  Boston Consulting Group  offer similar preparation as their people are trained to introduce creative thinking to help large organizations improve, making them well-equipped to lead companies towards growth and unpredictable environments.

Employee Skill is A Competitive Advantage

According to  Professor Joel Litman , Chairman and CEO of  Valens Research  and Chief Investment Officer of  Altimetry Financial Research, there are 14 types of competitive advantage.

Some firms get ahead by being large enough to produce cheaper goods than their peers. Meanwhile, others rely on brand equity.

Consulting firms build their advantage by hiring and training experts in specific areas and selling their time to customers as it’s often cheaper for clients to contract consultants for specific projects rather than hire directly.

However, this isn’t the case at the C-suite level, as companies will hire ex-consultants to help grow their own employee skill advantage.

The chart below shows competitive advantage from over 3,000 publicly traded U.S. companies.

The blue bars show how much of a profit boost each advantage grants above the baseline 5% cost of capital while the light blue dots show the average Uniform asset growth for companies with each advantage.

As can be seen above, companies with the employee skill advantage come in third place for profitability.

The only advantages that rank higher are “network” businesses.  eBay  is an example of a buying and selling network while  Meta  is an example of a social network.

While not every firm  can  be a network or operate like one, it cannot be denied that all businesses can benefit from employee skill.

This is exactly why companies nowadays are prioritizing CEOs who can sharpen employee skills across all levels of an organization.

Simply said, employee skill provides a competitive advantage that can propel companies to unlock higher levels of performance.

Today’s C-Suite Leaders Seen Through the Lens of RDS

RDS’ ninth tenet— engage employees and others —shows us why corporate America is prioritizing employee skill.

Professor Litman  and  Dr. Mark L. Frigo  in the book,  “Driven,”  emphasized the importance of identifying which type of personnel is needed to accomplish a firm’s goals and objectives.

These days, most people often look to intangible assets like brand and intellectual property as they’re easy to understand and offer a competitive moat, even if it’s only for a short time.

However, organizational knowhow and employee skill just may be some of the most overlooked drivers of long-term performance of growth.

Companies that hire the right people and leaders for the job tend to perform better than just about every other kind of business.

That’s why businesses across all kinds of industries are hiring at least one former consultant as they’re the ultimate employee skill experts and are best suited for solving complex problems.

The bottom line?

In order to thrive in today’s fast-moving business landscape, it’s important to hire the right person for the job… and that begins in identifying the type of talent needed in the first place.

For corporate America, the answer lies in hiring consultants who bring with them a skill set that’s tailored to solving problems and building skills.

… but for you, the answer might differ. So, the best step to take is to identify what skill your business needs first.

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If you’re looking to gain a better understanding of Return Driven Strategy and Career Driven Strategy, we highly recommend checking out  “Driven”  by Professor Litman and Dr. Frigo.

Click  here  to get your copy and learn how this framework can help you in your business strategies and ultimately, in ethically maximizing wealth for your firm.

Hope you found this week’s insights interesting and helpful.

Stay tuned for next Tuesday’s Return Driven Strategy!

There’s an unwritten rule in the business world:  Only those who anticipate challenges, seize opportunities, and execute with precision rise to the top .

Learn more about  why RDS matters  in next week’s article!