Leaders of a company in today's China must be creative thinkers, active players and versatile experts

The roles of CEOs have changed greatly in recent years because of globalization and innovative technologies such as the Internet, big data and cloud computing.

Traditionally, CEOs were effective performers and specialists. But in the new economic situation where growth models of companies are changing, CEOs as strategic decision-makers are expected to be creative thinkers, active players and versatile experts.

Creative thinkers can lead their companies to new heights, active players will help their companies find unexplored, new areas, while versatile experts are able to integrate technologies and the market to produce new profit points and core competitiveness. A CEO must incorporate all of these roles to adjust, complete and reconstruct business models.

But there is one fact that cannot be ignored: younger CEOs are more likely to attune themselves to these roles, while older CEOs appear to be stuck in their traditional roles.

The changes in the role of a CEO are the result of reactions to enterprises' external and internal environments. CEOs must promptly adjust their corporate strategies to ensure that competitive advantages can be sustained and excess profits obtained. Within the new economic environment, CEOs must implement strategic transformations, which is very different from strategic changes or strategic adjustments.

If current CEOs cannot swiftly respond to changes, or they cannot switch roles to adapt to change, they will produce dissatisfactory business performances. That in turn will create overwhelming doubt in a company's board of directors and stakeholders, which then will conclude in the CEO's firing.

In the past, once a company made a revolutionary transformation in its corporate long-term strategies, it frequently moved to replace its CEO because the person's skills were no longer applicable to the company.

In addition to being creative thinkers, active players and versatile experts, CEOs must also have the ability to discern, execute, anticipate and motivate. These four abilities help CEOs recognize new business opportunities, implement strategic decisions, grasp where the future is heading and motivate employees and managers to work for the vision of the company. If CEOs happen to be friendly and fair and are happy to interact with employees, all the better.

In the global context, although the roles of CEOs are changing, the challenges that Chinese CEOs and their Western counterparts face are distinctly different.

In the West, stock markets are normative, stock ownership is dispersed and the managers market is mature. Thus, the main difficulties and challenges for Western CEOs are in how to achieve investors' expectations by promoting the company's value. CEOs face the threat of a merger and acquisition, a loss of reputation and unemployment if they do not run companies successfully.

In China, however, most of the listed companies are state-owned, where the central or local governments are the dominant shareholders. Though the tradition of hierarchy is no longer a main barrier for CEOs and operational performances and corporate economic values are becoming standards of evaluation, other pressures - especially those with Chinese characteristics, such as maintaining regional economic stability and employment security - are still of great concern.

Private enterprises in China are usually family-owned, with patriarchal characteristics, and with CEOs who are usually managers.

Put simply, CEOs in the West face challenges mainly from the perfect capital market and pressures from the intensively competitive managers market. But in China, where the capital market and the managers market are not perfect, CEOs encounter problems of how to balance interests in the gaming of various social classes and how to deal with complicated interpersonal relationships.

Today's business world is unprecedented in its complexity and unpredictability. CEOs cannot anchor their hopes of success on preparations. Their roles have transformed greatly, and with uncertainty around them, their success can only hinge on their continual growth.

The author is a professor at the University of International Business and Economics in Beijing. The views do not necessarily reflect those of China Daily.

(China Daily European Weekly 04/10/2015 page9)