On the final episode of this season of Fortune’s Leadership Next podcast, co-hosts Alan Murray and Michal Lev-Ram look back on 2023 and what some of their favorite guests had to say about life as a CEO today. They discussed highlights from conversations with Reid Hoffman, co-founder of LinkedIn and partner at Greylock; Vicki Hollub, CEO of Occidental Petroleum; Ken Frazier, chairman of health assurance initiatives, General Catalyst; and Karen Lynch, CEO of CVS Health.
Murray and Lev-Ram also discuss a conversation they had with Jason Girzadas, CEO of Deloitte US, about what’s to come in 2024. The buzzword or, we should say, acronym of the year ahead? VUCA, which stands for volatility, uncertainty, complexity, and ambiguity. “It’s the new normal,” Girzadas says.
Listen to the episode or read the transcript below.
Transcript
Ken Frazier: I think one of the things that makes it possible to make decisions, tough decisions, is to ask yourself, what are your values? I believe that values help you have both the wisdom to figure out what's right and the courage to do what's right.
Alan Murray: As Ken Frazier points out, a lot of tough decisions come your way when you're a CEO. Particularly in today's world, where there are no shortage of challenges.
TV News Reports: Many Americans believe their standard of living is worse than their parents.
Yes, prices have risen a lot, but so have wages.
It is no surprise that the business owners are incredibly concerned about climate change and weather-related issues.
Fierce fighting continues in Gaza as battles rage in the southern part of the territory.
Across the country, some major U.S. retailers are running into pushback for pro-LGBTQ commercials or merchandise.
We have a branding crisis that's created a rainbow of hell for itself.
There's no question. Artificial intelligence will remake the workplace.
Workers fear they could lose their livelihoods to A.I. The OECD said there is little evidence so far this is happening, but it may be because A.I. development is in its early stages.
Murray: Today, we're taking a look at some of the challenges CEOs faced in 2023—it was an epic year—and the many conversations we had about them on the Leadership Next podcast.
Leadership Next is powered by the folks at Deloitte who, like me, are exploring the changing rules of business leadership and how CEOs are navigating this change.
Welcome to Leadership Next, a podcast about the changing rules of business leadership. I'm Alan Murray.
Michal Lev-Ram: And I'm Michal Lev-Ram.
Murray: While we have had an amazing year, so many interesting interviews with leaders on Leadership Next. But I have to admit, and I almost feel bad saying this, choosing among the children, that Ken Frazier, the former CEO of Merck, who we heard right off the top, was probably my favorite, certainly one of my favorites.
Lev-Ram: So, Alan, it is really tough to pick among the children, but why Ken Frazier? Explain.
Murray: You know, I think he's kind of a profile in courage. If you listen to the things that he's done over his career from the very beginning of his time as CEO of Merck, when he made the bold decision early on in his tenure to say, Hey, you know what? We're not going to respond to this pressure for short-term earnings goals. We're a science firm, and we have to invest in research and development to be great, and we're going to do it. From that, to the time he resigned from the President Trump's advisory committee, which was a very hard thing for a regulated industry to do, to the work he did after the racial reckoning that happened in the later part of 2020. For all of those reasons, I think he's shown enormous courage as a business leader and shown the importance and the power of business leadership in society.
Lev-Ram: Yeah, and this is a theme that showed up, you know, time and time again in our interviews. We're going to hear more from Ken and other highlights from the season today as we look back on some of the big topics, including this one, that have come up over the course of the year and as we look to the year ahead.
Murray: Yeah, And having said that about Ken Frazier, I do think we all have to acknowledge that the big topic of the year without competition is A.I. What ChatGPT did to the business conversation over the course of the last 12 months?
Lev-Ram: Yeah, it's amazing how many conversations this has come up in. I mean, just pretty much all of them, hands down. So, let's bring in someone else who is spending a lot of time thinking about the potential that A.I. holds for really all companies. The CEO of Deloitte US and our partner on this podcast, Jason Girzadas. Deloitte, of course, works alongside several Fortune 500 global companies. So I asked Jason how corporations are approaching A.I. and what he's seeing on the horizon.
Jason Girzadas: Well, thanks. Yeah, it is a pleasure to be with both of you. And I think 2023 will certainly be at least largely characterized as when generative A.I. has become part of our collective consciousness and, importantly, a part of all of businesses' thinking and thought process. And from my perspective as the CEO of Deloitte US, it is on the agenda for every one of our clients and CXO agendas, board agendas. And from a number of different perspectives, I think the optimism is certainly high. The confusion factor and anxiety levels are also high, because I think there's significant promise, but still early days of a real impact. And what our clients, I think, are motivated by is the significant diverse categories of potential impact. We're starting to see certainly productivity enhancements and a number of middle-office-, back-office-type processes. I think there's certainly real promise in terms of marketing and personalization of content, creative content generation. But I think the real promise is yet to come with respect to new business models, differentiated business models that really create new sources of value for enterprises.
Lev-Ram: And what is the number-one challenge or concern that you think enterprises are looking at before they make a big move into A.I.?
Girzadas: I think the number-one concern is making sure that there's actual business impact and not just a proliferation of proof-of-concepts, proliferation of pilots and creating more complexity. I think there's a recognition that organizations and enterprises need to experiment and innovate and learn, but at the same time. not wanting to cause more confusion. I mean, if you step back, right, the enterprise executive leadership teams that we deal with have immense complexity. And so you're looking at another disruptive technology that obviously has great promise, but trying to be very thoughtful, purposeful about where and how they can get business benefit from it, versus causing more risk or greater cost. I mean, these technologies are not inexpensive. They also have risks associated with them. And so I think these are prudent decisions that all enterprises are going to have to work through. But the business impact quotient is still not where it needs to be. And I think that's what we need to watch carefully in 2024.
Murray: Earlier this year, we also had LinkedIn co-founder Reid Hoffman on the show. He's really, Michal, become kind of the guru in these conversations around A.I. I love listening to him. We also had him at our Brainstorm A.I. conference. He was an early investor in OpenAI, so he was there at the beginning. OpenAI, of course, brought out ChatGPT last year. He even wrote a book using ChatGPT called Impromptu. We just heard Jason talking about companies being cautious in their approach. We've mentioned some of the risks associated with A.I. I really like how Reid is thinking about tackling these challenges.
Hoffman: Now one of the things I love about A.I. as a technology, and again, part of the reason why I did Impromptu was to say, Well, I can be part of the solution. Like, say, take customer service. You say, Alright, well, a bunch of customer service people are not going to have jobs. All right. Well, how do you reskill them? How do you help match them to other jobs? How do you give them superpowers to do other jobs? Well, A.I. is an answer on all three of those things. And so when you say, Well, what should we be doing as leaders? What should we be doing as government people? What should we do? Well, let's help people. Let's use the technology to help do the transition to being in the full swing of the cognitive industrial revolution. But by the way, this technology will get to the point where it's essential, and if you disarm your people long term with it, you'll eventually be Luddites. You know, you'll be like, Well, we're going to work our looms by hand, and you guys are going to be using the steam engine. Ultimately, that doesn't work out.
Lev-Ram: So speaking of the future, I want to change direction a bit here and talk about ESG, specifically about the environment. On the one hand, it feels like we heard companies talking a bit less about their sustainability efforts this year. But on the other hand, we had two different oil CEOs on the show who made some pretty compelling cases that climate is key to their company purpose. So let's listen to what Vicki Hollub, the CEO of Occidental Petroleum, had to say about this.
Vicki Hollub: Well, first of all, I care a lot about climate change, because I live on Galveston Island. The increasing ferocity of the storms in Galveston are damaging a lot of people. And you look at what's happening in California, it's heartbreaking. It's heartbreaking what's happening all around the world. So climate does matter to me. And I do believe that you can be a CEO of an oil and gas company and do something to address it. But I will say that we at Oxy are uniquely positioned to be able to do this, because one of the things I think it's hard for any business ever to do is to be something that you're not. And so I think you always need to do things that help you leverage your core competence. And if you can’t do something that leverages your core competence, it may not be sustainable. But we are leveraging our core competence in the way that we've developed a strategy to mitigate and ultimately by 2050 neutralize our carbon footprint and not only do it for ourselves, but to help others do it as well. And ultimately, as I guess we're going to talk about the technologies to do that. But the important message is that you have to look at your business and figure out a way to become carbon neutral.
Murray: Okay, Michal, since we're declaring favorites, I'd have to say that's way out there for me as well. Vicki Hollub is amazing. She is running one of the most efficient oil companies out there, but so sincere about the power of using her technology skills to capture carbon and put it in the ground that you can't help but be impressed by her commitment to the environment.
Lev-Ram: You know, Vicki is one of just 52 women running Fortune 500 companies. It's a bit depressing, but that's the highest number ever. So I guess that's progress. It's a win. Lots more room for progress, though.
Murray: Yeah, Michal, I know that our producer, Megan Arnold, one of her favorite moments of the season came during the interview with Karen Lynch, the CEO of CVS Health. CVS is No. 6 on the Fortune 500. Karen is running the largest company ever run by a woman. And here's what Karen told us about getting to the top.
Karen Lynch: When I was young in my career—and this is a great story—when I was young in my career, I walked into a room and it was all men. And I said, Where should I sit? And a guy looked at me and he said, You should sit over in the corner because women just take up space in the boardroom.
Murray: Ooh.
Lynch: Right. And so that might give you a sense, and so I share that story, because you know, when I was named CEO, I came out in a T-shirt. And my husband said, You're wearing a T-shirt on your first day as CEO? I said, We're virtual. My shirt said, “Taking up space.” [Laughter.] And I shared this, I shared this story with our diversity council a couple of weeks ago, and our diversity council, one of our colleagues went home and told her young daughter about the story and about taking up space. She sent me—her daughter sent me a note and said, We heard your story and I'm a Girl Scout, and at Girl Scouts, we talked about what we can do to take up more space. And they sent me a picture. They all got T-shirts that said, “Taking up space.” I was so excited, so I don't know why, but I do know that those girls, no one will ever tell them that they should sit in the corner because they're taking up space. And that's where I think the opportunity lies ahead of us and the future generations to see more women in big, powerful leadership positions.
Murray: So, Michal, does that give you some more hope for the future?
Lev-Ram: Yeah, absolutely. I mean, look, first of all, Karen Lynch, love this story—and she is so inspirational to so many women. Yeah, we're seeing progress. There's a long way to go, like I said. But but we'll take it.
Murray: Michal, I want to return to where we started this episode, with Ken Frazier. You know, one of the big reasons I thought it was important for us to launch this podcast four years ago was because we were seeing more and more CEOs stand up, speak out, take stands, use their superpowers to influence social issues. In the past, these CEOs would have focused on kind of the Milton Friedman line, the social responsibility of business is to make a profit. Period. But there was a real change that happened over the course of the decade, and that was one of the compelling reasons to start this podcast. But then this year it started to feel like those voices were getting a bit quieter and some companies were facing serious backlash for staking out a position on what's called ESG. Ken Frazier, though, is still without a doubt one of the leaders who convinced me that this trend deserved to be explored and is going to continue. And I think all leaders should listen to what he told us on this point.
Frazier: I first of all, don't believe that CEOs or businesses want to be in the middle of political disputes. And I try to be careful about whether or not I want to get into the middle of political disputes. But I also believe that in the long run, we need to have an environment in our country that is conducive to commerce and it's conducive to people. And that comes down to a set of principles that we were taught early in school, if we went to school in this country. And there's certain things like, you know, the rule of law, the right to vote, equal treatment, equal opportunity, you go through that list of fundamental American values. And if it's a fundamental American value, it is my view that if our elected officials are either abandoning or ignoring their responsibility to uphold those principles, it falls to the American people to ensure that those principles are upheld. I happen to think CEOs are among the most influential American people. So if people have a responsibility to stand up for principle, then I think CEOs ought to stand up for those principles.
Lev-Ram: You know, Alan, I feel like this was a recurring theme that we heard from so many CEOs who don't want to step into the middle of really kind of tricky and icky political conversations and political disputes. But we did see CEOs and leaders, including Ken Frazier, who still really believe that, on certain issues where it's core to who their company is, who their employee base, who their customers are, that they are standing up for those principles, like Ken said.
Murray: And at the end of the day, Michal, I think it's because the best companies think this contributes to their profit-making model. That this is the way they engage their employees, they engage their customers, and that taking a long-term view to their business requires them to do things to create a better world and a better society.
Lev-Ram: Well, let's wrap up by going back once more to the CEO of Deloitte, Jason Girzadas, to hear what he's thinking about as we head into the next year and who knows what that holds. But Alan, before we hear from Jason, he mentioned the word or the acronym VUCA. Have you heard of that before?
Murray: Oh, yeah. Let me see if I can get it for you, Michal. It's volatility, uncertainty, complexity, and ambiguity.
Lev-Ram: All right. Well, at least.
Murray: How about that?
Lev-Ram: It's four things that are just so wonderful to to the ear. We're going into 2024 armed with acronyms. So, here is Jason once again.
Jason Girzadas: Yeah, I think we talk about VUCA. Kidding aside about the acronym, I mean, it's an apt description. I mean, it's what people are feeling in their daily lives. It’s what businesses and organizations are navigating, because the degree of volatility and uncertainty and complexity and ambiguity is unprecedented. And I think it's the new normal. And so I talk about it. I certainly talk about it with my organization, and our partners and principals and managing directors, because I want them to understand that is the new normal. And I think we have to embrace that.
But there is a pivot, there is a response, and the response is to have greater vision in the face of that volatility, to have a deeper understanding of what the issues are that are driving the change, to have clarity around the choices that you have, and to, frankly, increase agility. I think the agility is an important part, because that's how we adapt and we learn and change course as we need to. So it's not just to admire the problem, it's to say, we have to pivot to a different way of being. And look, I think the VUCA version of 2024, I mean, clearly at the top of the list has got to be the tremendously destabilizing wars that are occurring in this world, along with the economic malaise and whether or not we can return to growth. I think all organizations are facing that. We recently did our survey with Fortune's survey of CEOs, and, you know, there is a significant rise in pessimism about what the growth prospects are in 2024. So I think that's at the top of most executive team's agendas, in terms of what are going to be those sources of growth.
Now, I always think there's upside, there are always bright spots, and I think for me, there is the possibility of, really, differentiation through emerging technology as well as purpose-driven leadership. I think those are real bright spots for organizations that embrace this environment and its complexity, but do so with confidence, with clarity in what they're about and and how they're using technology to differentiate themselves in the market.
Murray: Michal, it's going to be a VUCA new year. That does it for us here on Leadership Next. We'll see everyone back here for a new season in January.
Lev-Ram: See you soon.
Murray: Leadership Next is edited by Nicole Vergalla.
Lev-Ram: Our executive producer is Megan Arnold.
Murray: Our theme is by Jason Snell.
Lev-Ram: Leadership Next is a production of Fortune Media.
Murray: Leadership Next episodes are produced by Fortune’s editorial team. The views and opinions expressed by podcast speakers and guests are solely their own and do not reflect the opinions of Deloitte or its personnel. Nor does Deloitte advocate or endorse any individuals or entities featured on the episodes.
