“Many have been in denial and only now are understanding that things have changed and that cost pressures may well sink a number”.

Leadership teams are facing new questions and pressures.

This was an observation made by a leading management consultancy last week in a conversation where they noted their surprise that only now is a realisation that old models will not return in 2022 and the full extent of cost pressures about to hit. This has been a common observation made by many with the question asked “Why have many not responded faster to the crisis building around them?”

It is a hard question to answer as it has been clear for sometime that food inflation was only to be made worse by the Ukraine war, that fuel prices were already increasing and that high energy costs are likely to be with us for 18 months. All these increased costs, plus the increased taxation, will naturally impact on consumer spend and hospitality. It will see less eat out as frequently and the return to work may well be further hindered.

So the question still remains – why have many companies not responded quicker to the threat of increased costs and why have many not altered their models?

Answers do vary:

· Many argue that it has been almost impossible to adapt until there is real clarity on what a new landscape looks like. Only once there is clarity, can companies plan accordingly.

· Others argue that it has been so long since any period of economic uncertainty – the early 1990s – that many do not have the skills or knowledge of the challenges which such a period can present.

· Companies are facing an unprecedented level of challenges – health, business, environmental and economic – so it is understandable that many are struggling.

The last point is certainly true. Companies are trying to rebuild their cash reserves whilst having to face increased cost pressures, the so-called “Great Resignation” and a need to be more sustainable. As one CEO noted “It is easy to be critical but less easy to solve all the fires being faced. It will take time. The hard truth is that we have underinvested in many areas since the 2008 crash but we all enjoyed making strong results since around 2014. We forgot to invest back in key areas once we had recovered as stakeholders became more demanding. It has been a challenge and it will see a number of leaders begin to step away as it will need a new vision, new energy to see companies overcome their challenges.”

It is a perspective which many others share. It was argued during the pandemic that new leadership teams would emerge as companies seek to rebuild. There was a surprise that there was not more change made already. For many, it made them recall the 2008 crash when very few directors fell victim but many middle managers did. Would the Covid pandemic see the same trend?

To date, that has been the case but now the pressure on leadership teams is beginning to build and as few seem to have new ideas or models in play, it is felt that change will now be an inevitability.

It has often been written that the average age of a CEO has risen by 15 years in the last 15 years. Is the run now about to come to an end? As a new landscape emerges, will this now be the time when new, young leaders also emerge?

Another senior player added fuel to the fire when they noted: “Industry leaders have become a bit of a clique who have all been around for twenty or thirty years but not let new blood join their group. It would be no bad thing to see this change as it isn’t healthy. Thinking only changes with those who can disrupt. “