‘Do it nearly right, but now’ - How effective leaders navigate change and disrupt sectors: Disruption Report

Simon Freakley, AlixPartners This quality of not being satisfied is at the root of being a good leader because they're always reaching for more. They're always reaching for better performance. They always understand that a trajectory isn't linear that they need to have. They need to disrupt themselves before somebody else does it to them.

Linda Lacina, Meet The Leader Welcome to Meet the Leader. I'm Linda Lacina and I am very excited to welcome you to our New York studios here at the World Economic Forum for a very special conversation on disruption. We have with us here today Simon Freakley. He is the CEO of consultancy AlixPartners. He helps drive the annual Disruption Index.

As we all know, innovation isn't all high fives and green lights. It's stressful. There is the pressure of building something new, the pressure of convincing people of a reality that only you see and a reality that might not jive with outside timelines like stock prices or quarterly reports. And that can bring real fear. Fear of failure. Fear that you'll bring your team to failure. But as Simon's Disruption Index shows, if you are feeling the heat, you might be on possibly to a new way to make fire.

Simon is going to take us through the most fascinating takeaways of this year's Disruption Index. He's going to help us understand it, harness it, and help leaders take their teams through their toughest moments.

How are you, Simon?

Simon Freakley, AlixPartners Very well, thank you. A pleasure to be with you.

Linda Lacina, Meet The Leader It is a pleasure to have you back, sir. This is your second time on Meet the Leader. I can't I can't tell you how much I appreciate you coming back.

Simon Freakley, AlixPartners Thank you.

Linda Lacina, Meet The Leader Well, why don't we get started with a little bit on the Disruption Index? Can you. Can you level the playing field for us? What is the Disruption Index and what's it great for tracking and keeping notice of?

Simon Freakley, AlixPartners Well, the Disruption Index came about because we realized having a the privilege of a front row seat with our clients, looking at the problems that they were addressing and the opportunities they were trying to rise to, that actually the long economic cycles that traditionally executive teams had had to manage by reference to over the years were less of a challenge than the disruptions that were happening in economies in their particular markets. And so we saw time and time again that particular disruptions were represented, the biggest challenges for CEOs. And so we decided to study them.

And so in 2019, we put a team of our best and brightest consultants on studying across the world, 635 companies in five key industries in the major economies. And we studied what they were dealing with in terms of challenges, how they were performing in the face of those challenges and thought we could learn from them. I then rolled out that Disruption Index, the first Disruption Insight report at Davos in 2020. Of course, just before the mother of all disruptions was about to happen. And so what we found was, of course, that disruption was allowed alive and well even before the pandemic came along. But then the pandemic turned everybody's world upside down.

Linda Lacina, Meet The Leader And what sticks out to you from this year's Disruption Index? What's really startling to you?

Simon Freakley, AlixPartners Well, one of the key takeaways from this year's Disruption Index, which is our fifth, is that actually business leaders have gotten much more adept at dealing with disruption now. The individual disruptions of demographics and technological change in a climate issues, labor market issues, they're all there, and they layer on top of each other, turning a rolling sea into a choppy sea. But actually, business leaders have become much more adept at dealing with those disruptions, capitalizing on the opportunities and meeting the challenges.

Linda Lacina, Meet The Leader And what are where are the moves being seen when we're looking at what we're going up? What's going down? Well, both on on a macro level, what are the big changes that you're seeing?

Simon Freakley, AlixPartners Well, there are a number of the major disruptions are continuing. So it's not the brand new significant disruptions are happening, but we're reaching a tipping point. And so, you know, it's not a surprise that technology, of course, is continues to be a major disruption. But the way in which generative AI has burst into our consciousness, making everybody think about what it means for their businesses, what it means for their markets, what it means for their jobs, that something has become profoundly obvious through this year's disruption Index. And every single business is having to work out how they remain relevant, how they remain competitive. So that's certainly a feature. But also there are some tipping points going on. For instance, in the labor market, you know, all major economies are shrinking in terms of their labor force. And so we have, for instance, in the US, the largest number of baby boomers retiring this year, age 65. So that's changing the shape of the marketplace. Major economies such as China have their falling birth rates and therefore falling numbers of people coming into the workforce. So what does that mean for not just the working population? What's it mean for health care? What does that mean for caring of the elderly? What does it mean for the pressure on country budgets as they plan for that? There are some big shifts happening this making everybody take stock. These are these are very, very large shifts where we're reaching a tipping point and people are realizing the significance of the challenges that they. Therefore, I have to manage to.

Linda Lacina, Meet The Leader One of the things I found really remarkable about the study was that leaders can see that changes are coming. They often know exactly what those changes are, but they often don't know how it will shape them. And that's often sort of one of the sticky parts. And the same thing with with AI. We know it's coming, but we just don't necessarily know how it's going to change us. Can you speak a little bit about that and what we should keep in mind when we're looking at disruption?

Simon Freakley, AlixPartners It's so interesting, Linda. As you know, as I speak with our clients every day. Generative AI is probably taking up 75% of strategy discussions. What it means for the business, what it means for the industry, what it means for the world. But at the moment is probably accounting for 2 to 3% of budget line items. People understand it's big, it's going to be transformative, is going to create their world, but they don't quite know what to do about it. And so the share of mind, as opposed to the share of budget is very different.

$27 billion was spent on startups and 2023, $150 billion was spent on the development of large language models. But people still haven't quite worked out what it means for their business. And so I would say that this is probably the number one issue on chief executives minds when we did our disruption index this year. We asked people what is the biggest opportunity? What is the biggest challenge? I expect them to say this was the biggest challenge. In fact, the majority of CEOs said it was their number one opportunity. So I think people are leaning into it. But but the really smart CEOs are understanding what is the business problem they're trying to address with this technology, not just how to use this shiny new object.

Linda Lacina, Meet The Leader And also sort of taking action on it.

Simon Freakley, AlixPartners Yes. Well, one of the things that profoundly comes out of our study and certainly most of my experience over the years is that the best CEOs do it nearly right, but do it now. They prioritize pace over perfection. And at a time like this, when things are moving so quickly, that is a real survival skill for CEOs.

Linda Lacina, Meet The Leader You said that leaders are getting better at handling disruption. And certainly many of the people that were polled in your survey were saying, hey, we're seeing a little bit less. There was a little bit less last year and the year before. What is it? What's happened that's helped CEOs be a little bit more attuned to moving with all these shifts?

Simon Freakley, AlixPartners I think for those CEOs that led their companies through the pandemic know everything since the pandemic feels more manageable. It was just such a profound challenge for every business, every business leader. The anxiety they demonstrated through our surveys during the pandemic, evidence that. But as the pandemic has slipped away, certainly in terms of effect on business and now somewhat in the public consciousness, CEOs feel more confident in dealing with the disruption we've seen year after year since the the peak of the pandemic that CEOs have felt more confident to lean into these disruptions and see the opportunity, not just the challenge.

So, I think it's partly a survival instinct that's done it. But we also shouldn't lose track of the fact that in the last ten years, the average tenure of a CEO in an S&P 500 company has dropped from seven years to 4.7 years. So there's been an acceleration of turnover of executives. I think that the demands on CEOs now are greater than ever. I think the burnout challenge is is more significant than ever. And so that's manifesting itself in terms of tenure. But those CEOs sitting in their seats are doing a better job of rising to the disruption. But no, almost all of them say they're going to have to fundamentally change their business models in the next three years. Over a third of them say they have to change their business models in the next 12 months.

Linda Lacina, Meet The Leader To a year. Let's dig into that a little bit, because there was a couple of really, really startling statistics. One is that 63% of CEOs say that they're afraid their company won't be able to keep up with the pace of disruption. That's from the index. And then 58% say that they personally feel that they're falling behind on knowledge and skills. Are they being too hard on themselves?

Simon Freakley, AlixPartners I feel they are being too hard on them. They're being realistic. And of course, it was never it was never possible for a CEO to run every single aspect of an enterprise. But I think even more so now with with the pace of digital innovation, very, very few CEOs are actually digital natives. They're trying very hard indeed to become digitally fluent. And the way that most CEOs do that is by having teams around them that really are full time engaged in these developments and understand them. So having the right people in the team is almost more important than the CEO understanding it themselves.

But the statistics you just quoted evidence of the fact that CEOs probably being at the very pointy end of these issues understand the speed at which these issues are developing and feel the anxiety of maybe not keeping up. Now, interestingly enough, of course, it's a bit like a skyscraper. If you if you stand right at the top of the skyscraper, you feel the buildings sway in a way that you don't if you're halfway down the building or certainly at the bottom. And it's a little bit like that for CEOs that at the top of their building, they feel the forces of the wind and the swaying of the building. Others may be lower down. The organization don't see or feel that. And so the CEOs really are the canary in the coal mine in this respect. And I think what you see through these results is the anxiety they feel as they fear not keeping up.

Linda Lacina, Meet The Leader And I think what strikes me, too, is that this sense of anxiety, the sense of pressure is sometimes a symptom of just paying attention. Do I have that right?

Simon Freakley, AlixPartners Yeah, No, I think that's absolutely right. And of course, that's somewhat what the CEO is paid for. The CEO is paid to worry about everything and then work out what are the things that the few things that they can really lean into and make a difference on. So I think the the positioning of a CEO in the enterprise gives them that bird's eye view and they have to then shrink or narrow their focus onto the things that can really make a difference. And I would say that's one of the features of the best CEOs, their ability to have a 360 degree view of what's going on and then choose with laser focus on those things that will move the enterprise forward.

I somewhat joked that we should rename our disruption index the anxiety index because that is how CEOs typically express their concerns about what they see. But, you know, in our fifth Disruption Index just published, what we've identified is about 8% of companies that we call the superstars and the superstars of those companies who managed to grow not just revenues, but also profits. And when when you study those, as we have done, the 8%, the companies that are really growing fast and are very profitable, they're facing many of the same market pressures. They say they're facing all of the same disruptions, but it's the choices they make and the pace at which they move to action that actually sets them apart in terms of performance.

Linda Lacina, Meet The Leader And with anxiety. Right. And how can we make it constructive? Clearly, it can be a focus or it can be something that can help you prioritize and pay attention. How can leaders make sure that they're making their anxiety constructive for their team, for the organization?

Simon Freakley, AlixPartners Well, part of it, I think, is experience is understanding that actually you can't worry about everything and you certainly can't solve everything. So the ability to choose where to focus, effort and investment is critical to a CEO success. So I think whether they realize that themselves or whether they're helped with, you know, a coterie of experienced advisors to do that, then that's the that's the outcome that everybody is looking for. And of course, there is so much to worry about, but one can't get distracted or indeed paralyzed by that is what are the 2 or 3 things. It really is the 2 or 3 things that form the essence of a differentiate and distinctive strategy that well-executed can actually drive an enterprise forward.

One of the things become profoundly obvious, not just through our disruption work, but also through our client experience is actually that there are very, very few. In fact, I've never met one a perfect strategy that actually the companies that do the best are those that execute a strategy well rather than one that has the perfect strategy because that's elusive. And so the execution of a good strategy will beat a perfect strategy, poorly implemented every single time. And as we stare at these 8% as superstar companies, this is a feature of what they do. They do it nearly right. They do it now. And also they never make themselves a hostage to a previous strategy. They look at most current data and analytics and they will pivot their strategy to meet those new conditions.

Linda Lacina, Meet The Leader How can teams better align with the nature of change? Right. We're talking about, hey, it's really not aligning with something just, to the letter for the sake of doing it. You need to iterate. You need to change. There's going to be anxieties over these things. What struck me is that there's a statistic in there that offices that saw themselves as disruptors were more likely to have anxiety over things like job loss or other types of change. Change is uncertain, but in a lot of cases, the uncertainty is, is is a symptom of the fact that you are building and you are pioneering and you're going into something new. How can we help people understand that change comes with it, certain things that are uncomfortable.

Simon Freakley, AlixPartners These things have been true, Linda, you know, long before artificial intelligence or any other feature of the current opportunities or challenges and this is what we're really talking about, is what makes a good leader. You know what? You know, a good leader creates followership. How does the person create followership? They sketch a vision of what's possible. They show what some of the basic building blocks are to make that vision not just attractive, but also possible, is purposeful and as possible, and give people a sense of confidence how they can really lean into the fulfillment of that strategy. These are basic leadership qualities.

I often. Say that chief executives have to be their own chief communication officers, their ability to create a picture of the future, create a sense of possibility that actually is a viable strategy and then carry people in the fulfillment in of executing that strategy. These are basic leadership qualities. And I would say out of all of the things that we look at, the common denominator of the most successful companies is the quality of leadership.

Do they worry about all sorts of things? Of course they do. It's human nature. Should they worry about all sorts of things? They probably should. The ability to then really focus and narrow down to the 2 to 3 things that are critically going to make a difference in the implementation of a differentiated strategy and therefore become a standout in their market are the features of the best leaders, are the features of the best companies.

Linda Lacina, Meet The Leader If I'm a leader listening to this and I want to be amongst those who are really, really good at bringing people along, really good at explaining people, the vision where we're going so that they kind of come with us and change with us because things have to iterate, things have to go well. What are some steps that I should take? What are examples that you've seen of people who are communicating or putting mechanisms in place where people know what the vision is?

Simon Freakley, AlixPartners I would say three things. I think that because of course all business strategies have to be enabled by human beings, all of us want whatever we're doing to be purposeful. So I think the first thing to do is to show that the strategy is purposeful. This is a purposeful use of your time, of your career, of your life. So it's a worthy thing for us all to be investing our time. And so, number one, they have to be able to sketch a purposeful strategy. Secondly, they have to be able to show that that strategy is possible. So it's not a pipe dream. It's something that might be bold but is possible. And then to be able to give illustrations of why it's possible to make people understand that this is not just jumping into a void, This is some this is a journey that can be traveled successfully. And then finally, and possibly even most importantly, a leader has to be authentic. The leader has to, in their own way, which can be quite different to others. They have to be authentic. So because human beings are smart, they understand whether they're being told the truth. They understand whether somebody is grounded in reality and they read the authenticity of a leader through their communications. And so a purposeful strategy that's possible, articulated in an authentic way. To me are the common denominators of what I see as being the most successful leaders and the most successful companies.

Linda Lacina, Meet The Leader If I'm a leader listening to this and I want to make sure that my team can be as innovative as possible, and I'm considering either a remote workplace or a hybrid workplace, what should I keep in mind? Is there a framework now that we've got all this? We've got all these case studies, all these best practices we've seen over the last few years. What should I be putting in place to make sure that I'm really driving the innovation and getting the collaboration that I need to what needs to be put in place? What are those ingredients?

Simon Freakley, AlixPartners Well, connectivity, of course, is so important. The connectivity is important as is possible, of course, virtually as well as in-person. But for those jobs that represent careers where one becomes masterful by working alongside others who are further along in their career and are masterful, you know, our own firm, for instance, you know, we're an experienced model. We experience consultants. And so the way that people learn is not just through their MBAs and other qualifications, but by working alongside senior professionals. So having enough in-person time for many roles is very important. Now we've landed on a three day week, Tuesday, Wednesday, Thursday, and then, you know, if people are in on Fridays or Mondays, that's great. But they don't they don't need to be in. Many of our people, of course are at a client sites in any event. But that works for us. But every single enterprise has to work out what is right for them. But in so many jobs where it's an apprenticeship model, where we learn to be masterful by observing and working alongside masterful people, creating enough opportunities for that interaction to happen is so important. And every single business leader, I think, is still grappling with that. I happen to think that we haven't fully landed yet in terms of what new normal is. I think it might take us a number of years to do that. Obviously, post-pandemic there's been there's been a very tight labor market and an even tighter skills market. So as companies have competed against each other to get labor, a lot of jobs have been made available on a fully or partially remote basis as a way of attracting people to join. As the labor market frees up, the skill market loosens. I think that enterprises will be asking people to be in person a little more than they have.

Linda Lacina, Meet The Leader There is a great breakdown in the index about five great things that technology leaders do differently. Can you take us through those?

Simon Freakley, AlixPartners Yes. Well, let me just in no particular order, what what we found is that not just technology companies and technology leaders, but particularly so they understand how to use that technology to their advantage, how to use it to disrupt them. Markets naturally create competitive advantage. So let me let me give you an example. You know, a number of our retail clients know that the most powerful lever that they have to drive profitability is pricing. And by using analytics, by using generative AI to have a very dynamic pricing model, they can be forever changing the prices of things based on, you know, the matter data and understanding buying preferences to optimize their revenue line now because they're, you know, they've studied this and they're fluent in it. They're able to use to that example, dynamic pricing informed by generative AI to really outperform their their competitors. So their facility and confidence in it, you know, drives great outcomes. Now they're also willing not to become a hostage of any particular technology or particular platform. You know, I was with a client recently who spent 700 million pounds converting onto a particular platform. I won't say the platform there, you know, almost at the end of the transformation, only to realize that when they arrive at the end, they'll have to do it all again because the technology is so comprehensively evolved since they started their journey that now there's a much more efficient and actually much less costly way of trying to create that that technology platform. So the confidence to be able to pivot on the back of not just new information but new technologies also marks out as a hallmark the ways in which technologies technology leaders make this work to their advantage. I think the years ago I used to be chief executive of a company called Kroll.

Before I was a AlixPartners and Kroll had a number of investigative and security elements to it. And one time I brought the whole senior leadership team together. So about 150 people. And I had a Harvard Business School professor come and run a number of case studies, and we broke into groups by discipline. So we had the financial investigators and we had the room for turnaround a restructuring people, and we had the business intelligence people and we had security people. And we ran these three case studies. And each of the three case studies, the security team, one, they got to the right answer most quickly and everybody's going, how can that be? You know, we have these best of class financial journalists have these best in class business turnaround people. How is it the security people always win this? And the security group was run by a number of highly specialized special force, former special force operatives. And when the business school professor on the stage sort of really drilled down into what they did and how they did it, it turned out that the defining skill that they had that made them triumph in these time based business case studies was that they never, ever made themselves a hostage to the last set of facts. As new facts became available, they instantly incorporated it into their plans. And of course, when the business school professor asked them about this, they said, you have to understand in our former lives, this was a survival need unless we baked new information into our plans instantly, you know, we might not survive it.

And so as a proxy for business leadership, which is you can never be a hostage of the last set of facts, you have to pivot really quickly on the back of new facts to evolve your strategies, to make them fit for purpose. So as we look at technology leaders, more than others, what they tend to do is to remain agile and bring this agility to the evolutions and the implementation of their strategies.

Linda Lacina, Meet The Leader One of the other takeaways from the report is that some of the things that Index valued in leaders wasn't just the ability to have a really, really big vision, have really, really great ideas, but it was that ability to prioritize and prioritize priorities are always changing. Do you think that sort of maybe a surprise to people that it's not just about the vision that again, it's about know really what are you saying is important right now?

Simon Freakley, AlixPartners Yeah, well, it's dreams and details, right? So you have to have the vision. But the execution is all in the details. So time and time again, what I see from the privilege of a front line with our clients, but also generally in the work that we do and our disruption work, is that is the execution of the strategies that marks the best leaders out there ability to take what might be not the perfect strategy, but a good strategy and just rigorously execute it day after day after day with clear accountability of follow ups. Not feeling remotely embarrassed about changing course if new facts show that that isn't the best choice.

So having a low ego, high performance ego, but low personal ego in terms of not worrying about changing course based on new information, but ultimately it's those that execute best that win. And in the superstar category, I mentioned the 8% of the companies that we study in the ability to have rigorous execution was the common denominator together with strong leadership that marked those kind.

Linda Lacina, Meet The Leader Companies out getting back to that 58% number that we had earlier, that, you know, CEOs felt like they a 58% felt like they, you know, need to update their skills and their knowledge and all that. In your mind, you are in a special position to to see a big landscape of leadership. What skills do you think people should be kind of if they could get 5% better on something right now? What would you recommend?

Simon Freakley, AlixPartners Well, it's so interesting, Linda, because I think what that 58% stat shows is that that's actually one of the most important qualities for a leader to have as curiosity is to be curious, not just to satisfy spirit, but to want to maximize and to understand if one could do something differently or do something better, what would that be and how would that manifest itself in terms of not just personal performance, but business performance?

So I think curiosity, this insatiable need to understand what could be done better, what could be done differently is actually a defining characteristic and not being prepared to accept good performance, but really strive for great performance. And interestingly enough, what I see in my client work is that sometimes leaders who find themselves as being CEOs of really major enterprises, you know, they're looking at, you know, a decent growth trajectory. They look at a decent shareholder return. They've often got great brands and they feel okay about that and they don't feel a need to change. But actually, when you do any benchmarking against the best of class companies or superstars in our in our language and find that actually that the superstars are a top quadrant performers, but maybe some of these others are second or third quadrant performers. And those CEOs that don't actually feel the need to do things differently to get to the top quartile are the ones who ultimately get displaced, you know, because having a decent return, showing decent growth in and of itself is not good enough. If on a benchmark basis they're not in the top quartile and can run with the hounds.

So I think this desire for this quality of not being satisfied is at the root of being a good leader because they're always reaching for more. They're always reaching for better performance. They always understand that a trajectory isn't linear that they need to have. They need to disrupt themselves before somebody else does it to them. I often say to CEOs, Look, you really need to be your own activist. If you just imagined what an activist could say about your company and your leadership and manifested, you know, all the things that you really hope they wouldn't say, well, write them down. Write yourself an activist letter and then work out what you're going to do about it. Don't wait for somebody else to point that out to you or wait for one of your competitors to steal your market share.

Linda Lacina, Meet The Leader What's another sort of gut check for someone? All of us strive to to do more, but we may not realize that we're not pushing far enough. What's a gut check I can make or any leader could make to make sure that they are truly innovating and not just optimizing?

Simon Freakley, AlixPartners Well, I think that, as I observed, not just leaders, but leadership teams, the most functional leadership teams I observe are those who once somebody is in the leadership group, it's really quite a level playing field that actually the CEOs or business unit leaders, they encourage people to challenge them because as the old expression goes, a good idea doesn't mind who had it.

And this whole sense that the CEO or the business leader can't have all the good ideas, in fact, they're almost certainly not going to have all the good ideas. So fostering an environment where irrespective of grade or of of level or title or position, the people are empowered to bring their best ideas to the table so that the enterprise can capitalize on those. And as I look, we talked about the technology companies earlier. I think in technology companies, maybe more than most, they do have this democratization of ideas. The business leaders don't feel embarrassed to pull on. And in a in a fast changing digital world, the best ideas are almost always in a come from somebody other than the CEO. So unless they foster an environment in which they can encourage and then gather those best ideas, they're going to lose out of their competitors. So I would say having a culture that encourages the contribution of best ideas is one of the hallmarks of really healthy organizations.

Linda Lacina, Meet The Leader Another interesting insight from the report is that there's a little bit of a gap between the innovation and the sense of disruption and the anxiety being felt by the CEOs and the sense of, hey, we're moving forward, we're really doing all this stuff. And the anxiety is felt by, say, execs in the company. How do we bridge that gap to make sure that everybody is sort of on the same page, but also moving in this in the same direction and feeling feeling the same urgency?

Simon Freakley, AlixPartners Well, I think is back to this point as to the responsibility of leadership. I think that, you know, that leaders right on the front line of the disruptor. In the industry, not just their business, will maybe see things that others won't. And so it's they have to be able to narrate that. They have to be able to narrate from the front line some of the things that they are concerned about, challenges they see coming, opportunities they see others capitalizing on that maybe their company hasn't. And so you're right, they've the disruption index, which as you know, came out of not just a whole body of study, but also 3000 individual interviews of senior executives, chief executives around the world, that wherever we are, whichever industry, whichever geography, the chief executives were more anxious about these things than others lower down the organization. So it puts a real responsibility onto the senior leaders to narrate to the organization what they're seeing, the rate of the organization, what the the ruins that they're reading, and to try and get the best thinking from the enterprise as to how to respond to that. So once again, it's so important that chief executives are not just great communicator, they're also great listeners. They have the ability to ask good questions and then listen really carefully and try and gather from their teams the best thinking, because often, almost always, group heroics will will beat individual heroics. And so trying to try to develop a culture of group heroics is what we see often marks out the best companies.

Linda Lacina, Meet The Leader We talk about being able to to be agile and and be disruptive. Well, what are these qualities in the index to sort of break it down? What are the qualities of businesses that are prepared to be disruptive, are prepared to move quickly, are prepared to to adapt? What are they have and what do they need to have in place in terms of the finances, in terms of, you know, being able to move quickly with decisions? What should they what are those qualities?

Simon Freakley, AlixPartners Well, one of the most important things we say is that to the extent that you can keep your costs variable, it enables you to make very quick course corrections. And so we advise our clients to, to the extent possible, to move fixed costs into variable costs. So rather than buying things, you know, leasing things, rather than putting themselves in a position of having all of their labor force on permanent contracts, maybe having some contracting resource or some outsourced resource, thinking about having some services provided on a pay by the drink basis rather than having it all in-house. So the ability to keep costs as flexible as possible is one of the things. The second thing that I point out is the people that often are able to act on their best opportunities are people that have the flexibility in their in their liquidity to do it. So selling non-core assets so that there's cash on the balance sheet and consolidating assets down such that there are the borrowing facilities in place to be able to take advantage of a special opportunity when it comes along.

So people that really understand what are the assets and the businesses that are making the most of their money and divesting of those assets and those businesses that are not primary and to ensure that they have the borrowing capacity and the cash on hand to move on special opportunities or be bold in terms of M&A to capitalize and double down on those primary activities. So having balance sheet flexibility with access to cash is is really important.

And then I would say that people who are simply not afraid to do a radical change in strategy if their reading of the market, requires them to do it because market shifts can happen very quickly. And of course, if they have kept their costs as variable as possible, if they do have borrowing capacity and cash on their balance sheet, they can make these pivots really quite quickly without completely destabilizing the corporation. So these are some of the things that I see people doing that really are able to navigate through these uncertain times and then capitalize on the opportunities that are presented to them.

Linda Lacina, Meet The Leader And you talked a little bit, too, about decision making and how agile teams really need to be prepared to make decisions quickly. What does that mean for the format of the team? Or if we're looking at like at the some some block and tackle stuff that needs to be in place to make sure that decisions can be made quickly, what should be there?

Simon Freakley, AlixPartners So one of the great advantages, Linda, of course, now with these analytical tools, you know, very broadly available is that if you have the data, even if the data isn't perfect, if it isn't scrubbed, or even is in separate forms and formats in different places, the ability to use the data that we have to make better decisions.

So, you know, if you're a manager within an organization is actually saying rather than just using some of the more, you know, traditional forecasting methods, how can we use the data to tell us to spot pattern recognition, to tell us maybe some different ways of thinking about it? And, so -- a practical example would be, you know, we go to the budget cycle every year and, you know, people do a budget. They might have a. A base case, there might have a stretch case, they might have a worst case. But actually with analytical tools that are now readily available, you can do an unlimited amount of scenarios, plan scenarios, so that actually when circumstances change, you're not thinking about it for the first time. You've actually done an alphabet soup of different scenarios to work out what you might do.

I think what every manager and organization can do is to use their data, use some pretty basic analytical tools -- and not just get by this, you know, stuff is available. You can get a Microsoft pilot license commercially, of course, for a relatively small amount of money now -- and to use your data to make the best predictions, which will then inform your choices.

And interestingly enough, what I'm seeing time and time again is that the winners and not the people are not the people with the best large language models. They're the people with the best data. And the best data doesn't mean it's the most perfect data. It just means the richest data. And of course, the the tools now are very adept at importing data in different forms and formats. Doesn't have to be scrubbed. And one data lake to actually inform the models, then learn from this from the iteration of the data in terms of their predictions. So using the predictive analytics on your own data is diamonds under your feet. But most people don't do it.

Linda Lacina, Meet The Leader I like that phrase, Time is under your feet.

Let's talk a little bit about you and your your background. How when we when we talked a couple of years ago, there was a fascinating detail that I had learned about you, that you are the son of a boat builder and one of your first jobs was working in your father's business. Right. And but I read recently that you helped a family friend out who also had a boat building business, and they they needed to lay you off. And it kind of got you inspired to learn about business change. Can you talk a little bit about that and how it kind of changed you and inspired you?

Simon Freakley, AlixPartnersYes, Well, you're quite right. I was I was at university and I had a holiday job. One of my father's friends who owned a different boatyard employed me over my summer vacation. His business hit the wall. So the business went into restructuring. I was laid off aged, aged 20 or 21. But the most valuable insight for me was that I observed these people coming in, doing the restructuring. I thought, what an amazingly interesting job. I was doing a business degree, so I was quite interested anyway in those things. And that is what led me into joining Arthur Andersen, as well as specializing in business restructuring, because I observed these people doing what I thought was really interesting work.

So yes, accidentally I fell into business restructuring and having been laid off as part of a restructuring. But observed people do their work. My father, you mention, was a boat builder. My mother was a schoolteacher, but I grew up in the family boatyard. And so every weekend that was either, you know, scrubbing barnacles off the bottoms of boats or painting the bilges or something. So I was very much on the ground floor of that business. But ultimately a lot of it was about client service. The people that owned the boats, the people that rented the boats. And I think as a child growing up in an environment where ultimately all of this was done in service of the customer, did give me an insight into the importance of a customer to a business. And so I've never forgotten some of those early lessons around, you know, the importance of, you know, customer service and the importance of doing good work and the importance of, you know, doing your best work. And frankly, that's been just as true for me as chief executive of AlixPartners as it was working in my dad's boatyard all those years ago.

Linda Lacina, Meet The Leader Other things that you do today that you would never have done if you'd never had that experience.

Simon Freakley, AlixPartners I think -- difficult to answer that question, of course. But what I would say is that my father's leadership style was a very encouraging one. You know, every day, every working day, he would start off for a couple of hours, walk it, walking around the boat yard and chatting to every employee, just understanding what they were doing, helping them, helping focus them if they needed focusing, listening to the problems they were having with whatever they were doing, you know, giving his view as to how they might go about that. And so as a child, I spent many, many, many, many hours with my father in vacations and whatever, you know, just traipsing around after him. So understanding the importance of listening so that one understands as a business leader what the real underlying challenges are I think is something that I was given a master class in myself as a as a young person. So I'd like to think that I've retained some of that. Obviously, it was ultimately a customer-focused business, so I've always respected the role of the employee, but also the role of the customer. And so I think these lessons stay with us. And also, we weren't we weren't wealthy, we weren't, you know, we weren't privileged. You know, we were working people. Even though he owned a business. It was a small family business. And I'd like to think that that has helped me keep my feet on the ground.

Linda Lacina, Meet The Leader When we talk a little bit about disruption, I read that at 47, your life changed personally. You got married shortly after that. You had your first child. How did that disruption in your personal life, how did that sort of inform how you look at change overall?

Simon Freakley, AlixPartners Right. Well, I didn't I didn't set out not to be married until I was 47. And it just sort of worked out that way. But I did get married as I was somewhat joke with my wife. I married my second wife first. And so and which has been terrific. We were blessed with our first child when I was 49 and then another one four years later. So that that's pretty disruptive to a life, but turned out to be the very best things, of course, that ever happened to us.

But I think that, you know, for all of us, you know, we have the practicalities of our lives. We try and balance, you know, our careers and our ambition with the day-to-day responsibilities and realities and fulfillment of our family lives as well. And whilst in the details, it might manifest itself differently, the importance of leading a balanced life and a values-based life is something that we're all managing. And so, you know, I sometimes, you know, I'll be in the middle of some massive client situation or big M&A situation, and I'll go home and be trying to get the kids into the bath or whatever else you know you do as a parent of young children. So I think all of these things keep us grounded. But but now I've thoroughly enjoyed my career, but obviously the kids have been quite the very best thing that ever happened to me.

Linda Lacina, Meet The Leader Is it also a daily proving out of the reality that you have to change plans, you need to adapt, You adapt course.

Simon Freakley, AlixPartners Yes. Well, yes. I'm blessed with an extraordinarily capable and tolerant wife, so I give most of the credit to her for these things. But yes, I mean, clearly, you know, life, you know, what's the expression? Man plans and God laughs. You know, that actually, you know, we think that we have so much control over our lives, but the truth is we have very little control over our lives. We just try to make the best choices we can every day. But know the the rough and tumble of family life and children and real issues and what have you, of course, you know, keeps life real. And it doesn't mean that the you know, the one's responsibilities as the chief executive or client responsibilities aren't real, too. But, you know, there's just a reality to all of that.

Linda Lacina, Meet The Leader If if you were going to look back at your career and sort of say, hey, is there one thing that, gosh, I wouldn't be able to to do without. Either an experience or a lesson learned, you know, would that be is there something kind of looking back, you could say, gosh, I wouldn't have I wouldn't have done this on my own unless this experience happened. This turning point.

Simon Freakley, AlixPartners In any of my achievements don't suggest I've had many of them. But in any of my achievements, none of them have been achieved on my own. So the one profound bit of learning from anything I've managed to achieve is it's taken a village and that village can be largely in the office, it can be somewhat at home, it can be, you know, friends and family. You know, very few things that we achieve are done on our own. And I think that the ability to have high quality relationships where they may, where they may not always tell you what you want to hear. They may not always agree with you. But having people that really care and you care about them.

Is it Maya Angelou said that "The nature and quality of our relationships determines the nature and quality of our lives"?I've absolutely found that to be true. So I would say that the learning for me is that the power in groups of people coming together to achieve things will outperform individual heroics every single time.

LInda Lacina, Meet The Leader Is there a piece of advice that you've always been grateful for?

Simon Freakley, AlixPartners My goodness. That's a that's a that's a tough question. I would I would say, listen, before you speak, is the one bit of advice that I'd be most grateful for. Because often if one just pauses to listen, new information comes available and then what you might say might be different.

Linda Lacina, Meet The Leader So our time is almost up with you. Simon But not quite. So before we go, we've got these little quick takes we're going to do with you. So what I'm going to do is I'm going to say a part of a statement. I'm going to have you finish my sentence, if that's all right. Very good.

Your biggest work pet peeve is.

Simon Freakley, AlixPartners My goodness, people turning up on meetings or virtual meetings with a large deck that they want to lead me through during the meeting. Unless they send it to me before the meeting, I always say internally, 24 hours, I won't talk to them about it.

Linda Lacina, Meet The Leader I love it. The one thing you can't work without:

Simon Freakley, AlixPartners While my notebooks and my pens. So I love notebooks and my favorite ones at the moment is Mnemosyne -- they're very inexpensive but beautiful to write on and my Micron pens of which I have dozens and dozens and dozens.

Linda Lacina, Meet The Leader Innovative leaders always say this:

Simon Freakley, AlixPartners Do it nearly right, but do it now.

Linda Lacina, Meet The Leader An innovative leader never does this:

Simon Freakley, AlixPartners Never criticize in public. Always praise in public but criticize in private.

Linda Lacina, Meet The Leader AI will make the biggest change to:

Simon Freakley, AlixPartners Every person, every company, every industry, every geography.

Linda Lacina, Meet The Leader A safe answer. The secret to success is:

Simon Freakley, AlixPartners Understand that the best ideas may come from others. So gather them and then act and act now.

Linda Lacina, Meet The Leader Perfect emails are always:

Simon Freakley, AlixPartners Short. Clear. Concise.

Linda Lacina, Meet The Leader And the best meetings have this in common.

Simon Freakley, AlixPartners Clear agendas. Action points coming out of them and rigorous follow up.

Linda Lacina, Meet The Leader Very good. Simon, it has been a pleasure having you on the program.

Simon Freakley, AlixPartners Much indeed.

Linda Lacina, Meet The Leader Really, really thankful for you to be here for a second time. A repeater. Wonderful. And thank you so much for being a part of this.

Check out more episodes of Meet the Leader at the world Economic Forum website wef.ch/podcasts.