How I Lead Today by Looking to Tomorrow

Leadership means seeing the world through a wide-angle lens. No matter what industry you’re in, it’s critical for leaders to balance short and long-term thinking and execution – to ensure that they’re ready for the challenges directly ahead, as well as the ones coming up around the corner and down the road.

It sounds easy but it is often hard to achieve. Long-term leadership means gaining confidence from all your stakeholders and then bringing them along for the ride. If you don’t build a shared vision with your stakeholders – if you don’t earn their trust – you risk losing their confidence and increasing your execution risk. But when you have that shared vision, you gain their confidence, you earn their support, and you increase your odds of sustainable success. 

We’ve seen this firsthand at EY. A few years ago, as we designed our strategy for 2020 and beyond, our process was driven by this same blend of short and long-term thinking. In particular, we relied on three sets of questions that are valuable for any organization:  

1. What will the business landscape look like in the future – in our case, in 2020? Where are the opportunities and challenges, and what will that mean for our business?

As we developed our strategy, we started with the megatrends around us. We asked where the next big shifts would happen in the global economy, in geopolitical dynamics, and within industries? And how would these changes combine to impact our clients or customers?

In the years ahead, our clients will need to navigate a world with a global population nearing eight billion. Increased urbanization, shifting work forces, and growing demands for energy and health care will alter the business landscape. This changing world will come with big opportunities, including billions of people who will join the global middle class. It will come with big questions – like where will this new middle class live, and what will they demand from businesses? And it will come with big challenges, like rising regulation that is creating a global patchwork of new rules to deal with.

As global demographics and demands shift, some of the biggest opportunities will also increasingly move to emerging and frontier markets. This dynamic helps illustrate just how important it is to look beyond today’s headlines and really consider long-term trends. Because when it comes to emerging markets at this moment, here’s what a purely short-term view looks like: a lot of volatility, increased risk, lower returns, and much slower growth than many experts expected. In other words, the kind of places that investors might want to avoid.

What this short-term perspective misses, however, is that emerging and frontier markets actually hold some of the best long-term potential around. Ten years ago, there were fewer than 50 Fortune 500 companies headquartered in emerging markets. Today, that number is 157 – and these markets will soon make up more than half the world’s GDP.

That trend is destined to continue as new technologies connect emerging markets with the global economy. The Economist estimates that about 80% of adults around the world will have smartphones in the next five years – and that’s just the tip of the iceberg transforming these places. Because on top of all this, 90% of the world’s young people – the people who will drive so much of our future prosperity – live in these areas today.

Looking beyond today’s volatility, these numbers reveal that emerging markets hold some of tomorrow’s biggest opportunities. That’s the advice we give our clients. That’s why we’re investing in places like India, China, ASEAN, Mexico, Indonesia, and Africa. And, in fact, we predict that over 30% of our own revenue will come from emerging markets by 2020.

2. What investments are necessary today to serve our clients or customers in the future, fast-changing world?

As we look to the future, our next step is determining where we need to invest to ensure that we’re ready. This is why, on top of investing in emerging markets, we’re also investing in globalizing our advisory and tax compliance practices. This way, we can help our clients navigate a world with more connected consumers, global supply chains, and mobile work forces. We can ensure they are ready for increased regulations, divergent economies, more nationalistic tendencies, and much more complexity overall.  

It’s the same with our future-focused investments in our audit practice. Looking around the world, it’s clear that this part of our business is becoming more relevant than ever. So we are developing technology, people, and processes to innovate how we deliver quality audit services.

Or consider the changing technological landscape. For the first time in history, people now spend more time looking at phone screens than TV screens – and in the process, generated 90% of the earth’s data in just the last two years.

With this paradigm shift, we have an opportunity to harness a mountain of data to revolutionize our businesses. But, at the same time, this opportunity opens up new challenges and vulnerabilities. The recent U.S. government data breach alone exposed millions of people’s personal records. That’s the level of risk we’re dealing with today.

That’s why, as this trend has taken shape, we have taken steps to bolster EY’s data analytics and cyber-security offerings. We’ve invested billions, hired tens of thousands of people, made dozens of acquisitions, and launched strategic partnerships with companies like IBM, SAP, EMC and Microsoft. All of these investments have come with short-term costs. They’ve required managers to devote resources, time and focus beyond just current operations. But we’re confident that this will pay off with long-term sustainable profitability – and prevent someone else from disrupting our business model.  That’s how we’ve prepared for a changing world, and helped our clients get ready, too.  

3. How can we build confidence among our stakeholders in our long-term vision and plan, even when sustainable results sometimes lag important investments?

Of course, leadership ultimately requires bringing your stakeholders along for the ride. That’s why you have to relentlessly communicate your vision and your strategy – explain not just what you’re doing, but why. When all stakeholders can clearly understand why your actions will help you succeed in the long term, they have more confidence in your actions and often even help innovate new ways to succeed.

This kind of constant communication is crucial with all stakeholders. In our case, that list includes clients, governments, and regulators across the world, and investors in the capital markets we serve. Importantly, it also includes our people who bring our strategy to life.

At EY, we know the quality of our people is what brings value to our clients. That’s why we constantly ask how to assemble the best team, and how to get the best out of our people in good times and bad. An investment in your people is the surest investment in your future.

That’s a tall order at EY. We employ over 210,000 people in over 150 countries. This year alone, we will hire almost 60,000 additional full time employees (and 15,000 interns) around the world – one every nine minutes.

When making hiring decisions on this scale, you need to be strategic. Every person you bring onto your team needs to have a clear purpose toward achieving your organization’s long-term goals. That’s why, when I hire someone, I don’t just ask myself about the immediate need that they are going to fill. I ask how this role is going to evolve in the future – and how it will help us get where we need to go.

Our long-term focus is also what led us to continue hiring new graduates during the recession. In the midst of an economic downturn, it was tempting to put hiring on hold. But thinking beyond the immediate challenges, we knew that any sort of hiring freeze would mean that we’d have holes in our workforce a decade down the line –creating a whole new set of challenges to deal with. So we kept hiring.

This decision may have had a short-term cost, and pure financial operators might challenge it. But it’s already had a longer-term benefit. Now that the economy is recovering, we’re not playing catch up to fill an operating gap in our workforce. Instead, we’ve been able to keep growing while improving quality – and haven’t missed a step in our path to an even stronger future.

Whether you have two employees or 200,000, this balance of long and short-term thinking is crucial for business. Articulating the vision and strategy will bring along crucial stakeholders, which is incredibly important. Long-term investment in a volatile world may not be for the faint-hearted. But it is leadership.