Every CEO is being told to do more right now. Move faster. Adopt AI. Build optionality. Rework talent. Rethink the operating model. Watch for disruption. Prepare for competitors that may not even come from your industry.
Rita McGrath’s advice: Before CEOs chase the next tool, market or technology, they need to answer a harder question: What is the ‘center’ of this company?
“What I think we are moving towards for CEOs is a world where their primary task is to what I call ‘center their organizations,’” says McGrath, a professor at Columbia Business School, author of Seeing Around Corners: How to Spot Inflection Points in Business Before They Happen and a longtime authority on strategy and disruption. That means articulating “an operating philosophy where everything is kind of coherent,” and then making choices consistent with it.
That may sound abstract, but it isn’t. In fact, for CEOs, it creates a very practical agenda.
But that scaffolding is weakening. Mass markets are fragmenting and products and services are becoming more personalized. Even companies selling seemingly standard products are having to rethink old assumptions.
Take Tide detergent. “You would think that would be the same thing for everybody,” McGrath says. But Procter & Gamble has had to think differently about how to sell Tide to Gen Z than to older consumers. Fabric softener, for example, needs to be explained to younger consumers as “hair conditioner for clothing.”
The point is, Tide has not changed, but the market around it has.
“We’re starting to see different layers on top of the mass market production paradigm that suggest a much more micro focus for where products and services are going to be,” McGrath says. “We’re seeing the slow erosion of the mass-market-dominant paradigm.”
For CEOs, that means the old model—broad portfolios, standardized offerings, delegated silos—is becoming less reliable. The company needs a clearer internal logic because the external market is becoming less uniform.
1. Define what your company is really centered on.
A company’s center is the organizing logic that determines where capital goes, what gets killed, who gets promoted, which risks are worth taking and which opportunities are distractions.
It can take several forms. A company can center on a mission. It can center on a customer problem. It can center on a core technology or capability. It can center on a regional ecosystem. Or it can center on removing friction from a customer’s life.
“Think of like a gyroscope,” McGrath says. “You can knock a gyroscope off its course, but it has a center and it comes back and it retains that spin.”
She points to Novartis. When Vas Narasimhan became CEO in 2018, the company included pharmaceuticals, consumer products, Alcon eyecare and Sandoz generics. The prevailing logic was that diversification was critical: When pharma patents expired, other businesses could help carry the company through.
Narasimhan reached a different conclusion. “He said, you know, that’s actually a false theory,” McGrath says. “What saved us every time was the science.”
So Narasimhan sold or spun off the pieces that did not fit and centered Novartis on innovative medicines. That made future decisions easier. If the choice is between over-the-counter painkillers and a risky new cancer therapy, a diversified company will debate both. A company centered on innovative medicines knows where to lean.
“Once you’ve centered on innovative medicines, and that’s your mission, it’s a no-brainer,” McGrath says.
For CEOs, the first move is to force the same clarity inside their own companies:
•What are we centered on?
•What are we willing to stop doing because it does not fit?
•Where are we still pretending unrelated businesses or initiatives belong together?
2. Use the center to say no faster.
Sustainable competitive advantage, in McGrath’s view, is increasingly rare; instead leaders have to manage “transient advantage,” where companies find value-creating positions and exploit them before those positions erode.
“Transient advantage to me comes down to how are you finding a value-creating space?” she says, noting that “the most important competitor you may face is not even in your industry.”
Leaders of the future, she adds, will need to get much smarter about what their companies are building, identifying which ways are they making money sustainably, and then pulling resources out of legacy activities and redirecting them toward the next source of advantage.
“In traditionally run organizations, this is really hard because so much of the incentive structure, the career structure, the progress depends on, ‘Hey, I’m the guy that made two-ply rubber tires. If we decide that two-ply rubber tires are giving way to steel belted radial [tires], then all of a sudden I’m like, whoa, where do I fit in this world?’ So how do we get people to a point where they feel comfortable transitioning to whatever the next thing is?”
The CEO’s job is to help people see themselves in the future rather than cling to the past. That makes centering a leadership tool. It gives CEOs a non-personal way to make hard calls. The question becomes less “Whose business loses?” and more “Does this fit the center we have chosen?”
A CEO preparing for the future should be asking:
• Which businesses, products or initiatives would we not start today?
•Where are we funding activity because of history rather than future relevance?
•Which leaders are best at learning and moving—and which are protecting the past?
The companies that adapt fastest will not be the ones with the longest list of innovation projects. They will be the ones that can disengage from yesterday’s advantage without turning every exit into an internal war.
3. Start with strategy, then apply AI.
McGrath is blunt about one of the biggest mistakes CEOs are making with AI:
“They’re starting with AI and figuring out how to use it,” she says. “I think you’re much better off starting with your strategy and then backing into where AI could be relevant.”
In other words, it should be aimed at the company’s center. If your healthcare company is centered on patient experience, AI should be evaluated by how well it improves access, coordination, diagnosis, follow-up and care. If your company is centered on friction removal, AI should be used to identify and eliminate points of delay, confusion and effort. If your company is centered on science or technical capability, AI should accelerate discovery, testing and decision support.
“I think a lot of CEOs right now are kind of freaked out because they feel like, I don’t know about this thing,” McGrath says. “I don’t think they should be so worried.”
The wisdom CEOs bring is not technical fluency—it is 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 practical sequence: 1) Define the center; 2) identify the systems that matter most to that center; 3) ask where AI could rewire those systems.
In this respect, McGrath compares AI to electricity. The productivity gains from electricity did not come from plugging new power into old factory designs. They came when factories were redesigned around what electricity made possible. “One of the things about AI that I think a lot of people are getting wrong is they’re looking at AI replacing tasks,” she says. “They’re not looking at AI rewiring whole systems.”
4. Build an early-warning system.
If CEOs are waiting for certainty, they are waiting too long. What they need to be doing is listening for signals of change. The strength of that signal usually rises over time. Early on, it is weak and noisy. Later, it becomes clear. But too often, she adds, “by the time you know what the right answer is, it’s too late to have taken action.”
That is why CEOs need to get better at working with weak signals.
AI can help here—not by replacing judgment, but by expanding what leadership teams can see. McGrath describes early-warning systems that scan for indicators tied to possible future events: supplier shifts, investment patterns, customer behavior, regulatory movement, emerging substitutes. The point is to surface patterns early enough to test them.
A CEO should ask the team:
•What would have to be true for our business model to be under real pressure?
•What weak signals would show that future beginning to form?
•Who is responsible for watching them?
•How often do they reach the executive team?
•What small moves could we make now to preserve future options?
The most important signals will often look unimpressive in isolation. The CEO’s job is to help the organization connect them.
5. Change how decisions get made.
Centered companies do not depend on the CEO making every call, but neither do they run on passive delegation.
McGrath sees the best CEOs becoming more engaged—not as micromanagers, but as sensors, translators and keepers of coherence.
Leaders such as Nvidia’s Jensen Huang, she says, are deeply involved in sensing what is happening at the edges of the company. Huang reads weekly notes from across the organization and comments on priorities.
“He’s not telling people what to do,” McGrath says. “But he’s participating and he’s active, he’s sensing what’s going on at the edges.”
She also cites Airbnb’s Brian Chesky and his emphasis on “shared consciousness”—a leadership team that spends enough time thinking together that people can act with aligned judgment even when they are not in the same room.
The old model of one-on-ones, siloed updates and quarterly alignment meetings is just too slow for the current environment. At Novartis, McGrath says, Narasimhan moved toward more committees, but not the slow, bureaucratic kind. “They’re not a deliberation function. They’re a decision-making function,” she says. “And all the stakeholders that are relevant to a particular decision are engaged in the decision process. So [Narasimhan said], ‘we have a decision structure so people can get a decision made, but I’m not doing it on my own. And people are not petitioning me one-on-one.’”
CEOs should look hard at their own operating cadence:
•Where are decisions getting escalated because the center is unclear?
•Where are one-on-ones substituting for shared learning?
•Which meetings exist to report, and which exist to decide?
•Where does the organization need more shared context, not more process?
6. Absorb uncertainty for the organization.
McGrath says one of the most important jobs of a discovery-driven CEO is to absorb uncertainty and give people enough clarity to act while acknowledging what is still unknown.
In traditional management, deviations from plan were treated as problems. “In a discovery-driven world, that’s data,” McGrath says. “That’s telling you the world is not the way we thought it was.”
That requires a different language from the top. CEOs need to talk less in predictions and more in assumptions and hypotheses:
•Here is what we believe right now.
•Here is what we are watching.
•Here is what would cause us to change course.
•Here is what you can operate on this week.
The point is to steady the organization without freezing it.
“Recognizing things are very uncertain doesn’t make it any emotionally easier,” McGrath says. CEOs need to “lift that uncertainty from people’s shoulders so they can move forward.”
