How To Find—And Hold

The contemporary business landscape presents a relentless barrage of demands for Chief Executive Officers. They are urged to accelerate operations, embrace artificial intelligence, cultivate strategic flexibility, recalibrate talent management, and fundamentally re-architect their operating models. Simultaneously, they must remain vigilant against disruptive forces, including potential competitors emerging from entirely unexpected sectors. Amidst this whirlwind of imperatives, a critical strategic question, often overshadowed by the immediate pressures, demands attention: what is the fundamental "center" of a company?

This strategic anchor is the core concept championed by Rita McGrath, a distinguished professor at Columbia Business School and a leading authority on strategy and disruption. Her seminal work, Seeing Around Corners: How to Spot Inflection Points in Business Before They Happen, lays the groundwork for this philosophy. McGrath posits that in an era defined by rapid change and uncertainty, the paramount responsibility of a CEO is to "center their organizations." This involves articulating a coherent operating philosophy that imbues all organizational activities with a sense of unity and purpose. Subsequently, every significant decision must be rigorously evaluated against this established center, ensuring consistency and strategic alignment.

While this notion might appear abstract, its implications are profoundly practical for the executive suite. The traditional CEO archetype, forged in an era of mass production, cheap energy, and economies of scale, operated under a different paradigm. This model, often characterized by a hierarchical structure and clear reporting lines, relied on the CEO’s ability to delegate effectively to trusted subordinates. As McGrath notes, the leadership philosophy attributed to figures like Lee Iacocca—hiring talented individuals and empowering them—was well-suited to this environment. Companies could function as a constellation of semi-independent units, with the CEO acting as the central coordinator.

However, this organizational scaffolding is demonstrably weakening. The monolithic mass markets of the past are fragmenting, giving way to increasingly personalized products and services. Even industries that once relied on standardized offerings are compelled to re-examine long-held assumptions. A compelling illustration of this shift is evident in the marketing of seemingly ubiquitous products like Tide detergent. Procter & Gamble, for instance, recognizes that engaging Gen Z consumers requires a different approach than appealing to older demographics. The explanation of fabric softener, framed as "hair conditioner for clothing" for younger audiences, highlights how market perception and communication strategies must adapt, even when the core product remains unchanged. This underscores McGrath’s observation that while Tide itself hasn’t transformed, the market surrounding it has undergone significant evolution.

The contemporary business environment is characterized by the emergence of micro-focus areas layered atop the traditional mass-market production paradigm. This signifies a gradual erosion of the dominance of mass-market strategies. For CEOs, this evolving market dynamic renders the old playbook—characterized by broad product portfolios, standardized offerings, and siloed operational units—increasingly unreliable. The imperative is to cultivate a clearer internal logic that can navigate the increasing heterogeneity of the external marketplace.

Defining the Company’s Core: The Gyroscopic Center

The first actionable step for CEOs, according to McGrath, is to definitively establish what their company is truly centered upon. This "center" is not merely a mission statement but a tangible operating logic that guides critical decisions regarding capital allocation, strategic divestments, talent advancement, risk assessment, and the discernment of genuine opportunities from mere distractions.

A company’s center can manifest in several forms. It might be anchored to a profound mission, a deep understanding of a specific customer problem, a unique core technology or capability, a regional ecosystem, or a commitment to alleviating friction in a customer’s journey. McGrath employs the analogy of a gyroscope: "You can knock a gyroscope off its course, but it has a center and it comes back and it retains that spin."

A notable example of this strategic centering is Novartis. When Vas Narasimhan assumed the role of CEO in 2018, the company encompassed a diverse range of businesses, including pharmaceuticals, consumer products, Alcon eyecare, and Sandoz generics. The prevailing strategy at the time emphasized diversification as a buffer against patent expirations in the pharmaceutical sector, with other business units expected to carry the company through such periods.

Narasimhan, however, arrived at a different conclusion. He identified that the true engine of the company’s resilience and innovation was its scientific foundation. Consequently, he orchestrated the divestment or spin-off of business units that did not align with this core principle, firmly centering Novartis on innovative medicines. This strategic reorientation simplified subsequent decision-making. When faced with choices between over-the-counter painkillers and a high-risk, novel cancer therapy, a company with a clear center on innovative medicines has an unambiguous direction. As McGrath explains, "Once you’ve centered on innovative medicines, and that’s your mission, it’s a no-brainer."

For CEOs, the initial phase of this strategic recalibration involves fostering this internal clarity. Key questions to address include: What is our company’s core focus? What activities are we willing to discontinue because they diverge from this center? Where are we still attempting to reconcile disparate businesses or initiatives that lack genuine alignment?

Leveraging the Center for Swift Decision-Making

McGrath argues that sustainable competitive advantage is becoming increasingly elusive. Instead, leaders must master the management of "transient advantage"—the ability to identify and exploit value-creating opportunities before they inevitably erode. The critical question then becomes: "how are you finding a value-creating space?" This also implies a recognition that the most formidable competitors may not originate from within the established industry.

Future-oriented leaders must develop a sophisticated understanding of their company’s value creation mechanisms. They need to identify sustainable revenue streams and strategically redirect resources from legacy activities to emerging sources of advantage. This transition can be particularly challenging in traditionally structured organizations. Incentive systems and career progression are often tied to historical successes, creating resistance to change. For instance, an individual who spearheaded the production of two-ply rubber tires might face uncertainty and apprehension if the market shifts towards steel-belted radial tires.

The CEO’s role in this context is to facilitate a forward-looking perspective, enabling individuals to envision their place in the future rather than remaining tethered to the past. Centering thus becomes a powerful leadership tool, providing a non-personal framework for making difficult decisions. The focus shifts from "Whose business loses?" to "Does this align with the center we have chosen?"

CEOs preparing for the future should engage in a critical self-assessment, asking:

Which businesses, products, or initiatives would we not initiate today, given our current understanding?
Where are we allocating resources based on historical inertia rather than future relevance?
Which leaders demonstrate a strong capacity for learning and adaptation, and who are primarily focused on preserving the status quo?

The organizations that exhibit the greatest agility in adapting to change will not be those with the longest lists of innovation projects. Instead, they will be the entities capable of disengaging from past advantages without transforming every exit strategy into an internal conflict.

Strategic Foundation Precedes AI Adoption

McGrath is unequivocal about a significant misstep she observes among CEOs regarding artificial intelligence: "They’re starting with AI and figuring out how to use it." She advocates for a reversed approach: "I think you’re much better off starting with your strategy and then backing into where AI could be relevant."

AI’s integration should be guided by the company’s strategic center. For a healthcare company focused on patient experience, AI should be evaluated based on its potential to enhance access, coordination, diagnosis, follow-up, and overall care delivery. If a company’s center is the removal of friction, AI should be deployed to identify and eliminate bottlenecks, confusion, and effort. For organizations rooted in scientific or technical expertise, AI should serve to accelerate discovery, testing, and decision support.

Many CEOs express anxiety about their perceived lack of technical fluency. McGrath reassures them that their primary strength lies not in technical mastery but in strategic coherence. "You centered your company. You know what you’re here to do. Your center should be consistent, but how you get there might change a zillion ways."

The optimal sequence for AI integration is therefore:

Define the Center: Clearly establish the company’s core purpose and operating logic.
Identify Key Systems: Determine the critical systems that most directly support the company’s center.
Assess AI’s Role: Evaluate how AI can be leveraged to fundamentally rewire or enhance these identified systems.

McGrath draws a compelling parallel between AI and electricity. The transformative productivity gains from electricity were not achieved by simply plugging new power sources into existing factory designs. Instead, they arose from a fundamental redesign of factories to harness the capabilities that electricity made possible. A common misconception about AI, McGrath observes, is the focus on task replacement. "They’re not looking at AI rewiring whole systems." This systemic perspective is crucial for unlocking AI’s true potential.

Cultivating an Early-Warning System for Change

Waiting for certainty in today’s environment is a strategy for obsolescence. CEOs must proactively cultivate the ability to detect and interpret signals of change, even when those signals are initially weak and ambiguous. As McGrath points out, "by the time you know what the right answer is, it’s too late to have taken action."

The mastery of weak signals is therefore paramount. AI can play a supportive role in this endeavor, not by supplanting human judgment, but by augmenting the observational capacity of leadership teams. McGrath describes the concept of early-warning systems that meticulously scan for indicators of potential future events. These can include shifts in supplier relationships, emerging investment patterns, evolving customer behaviors, regulatory movements, and the development of substitute products or services. The objective is to surface these patterns at a sufficiently early stage to allow for informed testing and strategic response.

A CEO should prompt their team with the following inquiries:

What conditions would need to materialize for our current business model to face significant pressure?
What subtle signals would indicate the nascent formation of such a future scenario?
Who is assigned the responsibility for monitoring these signals?
How frequently are these observations brought to the attention of the executive team?
What incremental actions can we undertake now to preserve future strategic options?

The most impactful signals often appear insignificant when viewed in isolation. The CEO’s critical function is to foster an organizational culture that can connect these disparate pieces of information, revealing the emergent patterns and potential future trajectories.

Transforming Decision-Making Processes

Centered companies do not rely on the CEO to be the sole arbiter of every decision, nor do they operate through passive delegation. The most effective CEOs, according to McGrath, become more engaged, not as micromanagers, but as astute sensors of the external environment, adept translators of complex information, and diligent guardians of organizational coherence.

Leaders such as Jensen Huang, CEO of Nvidia, exemplify this approach. Huang maintains a deep engagement with the periphery of the company, actively reviewing weekly reports from across the organization and providing commentary on strategic priorities. As McGrath notes, "He’s not telling people what to do. But he’s participating and he’s active, he’s sensing what’s going on at the edges."

Similarly, Brian Chesky, CEO of Airbnb, emphasizes the importance of "shared consciousness." This involves a leadership team that dedicates sufficient time to collective deliberation, enabling individuals to exercise aligned judgment even when operating independently. The traditional model of one-on-one meetings, siloed updates, and infrequent alignment sessions is simply too cumbersome for the demands of the current operating environment.

At Novartis, Narasimhan transitioned towards a more committee-based decision-making structure. However, these were not bureaucratic stalwarts. "They’re not a deliberation function. They’re a decision-making function," McGrath clarifies. "And all the stakeholders that are relevant to a particular decision are engaged in the decision process." This structure empowers individuals to reach decisions efficiently without burdening the CEO with every individual request.

CEOs should critically examine their organization’s decision-making cadence:

Where are decisions being unnecessarily escalated due to a lack of clarity at the organizational center?
In which instances are one-on-one interactions a substitute for collective learning and shared understanding?
Which meetings serve primarily as reporting mechanisms, and which are genuinely designed for decision-making?
Where does the organization require a greater infusion of shared context rather than additional procedural layers?

Absorbing Uncertainty to Empower the Organization

One of the most crucial responsibilities of a discovery-driven CEO is to absorb organizational uncertainty, providing sufficient clarity for action while acknowledging the inherent unknowns. In traditional management paradigms, deviations from a plan were often viewed as problematic. However, McGrath contends that in a discovery-driven world, these deviations represent valuable data. "That’s telling you the world is not the way we thought it was."

This necessitates a shift in the language emanating from the top. CEOs should move away from definitive predictions and embrace a framework of assumptions and hypotheses:

"Here is what we believe to be true at this moment."
"Here are the indicators we are closely monitoring."
"These are the specific conditions that would prompt us to alter our course."
"Based on this understanding, here is what you can confidently operate on this week."

The objective is to stabilize the organization without stifling its dynamism. McGrath acknowledges that confronting uncertainty is emotionally challenging. However, the CEO’s role is to "lift that uncertainty from people’s shoulders so they can move forward." By embracing a centered operating logic, prioritizing strategic coherence, and fostering adaptive decision-making processes, CEOs can navigate the complexities of the modern business landscape and build organizations resilient enough to thrive in an increasingly volatile future.