Over the past decade, a remarkable transformation has come into play with new C-level positions like the Chief Digital/Digital Transformation Officer, Chief Sustainability Officer, Chief Experience Officer, and even AI Ethics Officers emerging to drive better decision-making. However, as you read this, yet another evolution of the modern C-suite is underway. And this time, it is in the form of collapsing and merging roles. In 2024, 66% of Fortune 500 companies had a CMO, compared to 71% in 2023. The drop in percentage may not seem large, but it does reflect the trend of certain roles being taken over by other leadership positions.

With many leaders and organizations anticipating further expansion to C-suite roles in the future, this raises a few necessary questions: consolidation or expansion, which route is more effective? Does a new approach to leadership roles and responsibilities mean new risks? And finally, what kind of leaders do organizations need to navigate this change?

A Double-Edged Sword or A Win-Win Situation?

The pressure to innovate, especially in the face of rapid technological advancements, led to organizations seeking specialized leadership to guide them through digital transformation. But technology wasn't the only development that demanded attention from businesses. Along with it came changing customer expectations, a 'new normal' of working, a workforce with evolving needs, economic shifts, and climate crises. The result? Businesses responded by expanding their top leadership. Roles like the Chief Experience Officer, Chief Diversity Officer, Chief Compliance Officer, Chief Risk Officer, and Chief Information Security Officer did not exist just over a decade ago.

Rethinking the organizational chart and the makeup of the C-suite isn't something new. Businesses need to and must evolve with the times, but whether they need an alphabet soup of executive positions is worth examining. Which brings me to the trend that has emerged. Markets are tightening, operations are becoming more complex, and organizations are realizing that there may be merit in the consolidation of leadership roles. Why does this work?

1. The Need for Speed: More layers in the leadership structure could mean slower response times. At a time when speed is of the essence and organizations are expected to demonstrate adaptability, consolidating roles (like CFO and COO) enables quicker decision-making, fewer reporting layers, and a more agile C-suite.

   
   

2. No More Silos: Collaboration, as we have learnt is key for business success. Fewer leadership roles result in more effective collaboration and better communication, avoiding the risk of fragmented departmental approaches.

   
   

3. Stronger Leadership Pipelines: Merging roles can have a positive impact on succession planning. Consolidation demands cross-functional expertise, which in return strengthens the leadership pipeline, enabling smoother leadership transitions when needed.

   
   

4. Better Efficiency: Quicker alignment, faster decision-making, and better collaboration all contribute to increased efficiency, which in an era of cost-cutting, is something investors/shareholders are demanding.

   
   

Merging roles and shrinking the C-suite can be a strategic advantage. But is this approach without its pitfalls? Probably not. There are some risks associated with having a top leadership team that is expected to take on multiple responsibilities regardless of their individual roles. Broader mandates put leaders at risk of burnout or becoming ineffective due to the sheer scope of responsibilities. There is also a risk of confusion and inefficiency, which can cause tension within the C-suite if the roles are not well-defined. Clustering leadership roles may not necessarily result in better performance. Not to mention the strategic gaps. Hastily consolidating leadership roles might cost organizations valuable focus on niche areas such as data governance or ethical AI practices. Additionally, consolidation runs the risk of diluting critical expertise. Specialized roles exist for a reason; the more important question for organizations to consider is what specialized capabilities does it need?

The Demands from Leaders of the Future: Cross-functional, Collaborative, Clear

With the simultaneous contraction and expansion of the C-suite, leaders will need to step up. However, it's worth remembering that no matter which direction an organization chooses, one thing remains constant: the need for highly skilled, adaptable leaders who bring an appetite for cross-functional expertise. Leaders today are expected to don multiple hats. Regardless of role, there are clear expectations that executives should come to the C-suite with strong business backgrounds. The top 10 most-cited skills in Deloitte's analysis of 46,000 job postings reveal three areas that are common across the C-suite: business strategy, business operations, and business management. Today's top leaders need not be masters of everything, but they must understand and speak the new language of future-centred leaders. At the same time, the tremendous technical shifts in the makeup of the C-suite also call for leaders with exceptional personal and human skills to help assess how they bring solutions to market, communicate their vision to internal and external stakeholders, and lead their teams through strategic execution.

In essence, leaders need to be equipped with:

• Cross-Functional Acumen: Leaders must understand how different parts of the business intersect and influence one another. Think technology, regulatory and compliance expertise, and strategic vision.

  
  

• Executional Clarity: Even as roles converge, clear delineation of responsibilities is crucial to avoid strategic drift. Leaders play an integral role in ensuring effective implementation.

  
  

• People-Centric Skills: It's important to remember that communication, empathy, and collaborative problem-solving remain timeless attributes that will only grow in importance.

  
  

Concluding Thoughts

The duality of expanding roles and the shift towards consolidation reminds us that the C-suite is ever-evolving in itself. While expansion gives companies the specialized leadership they need to take on emerging challenges, consolidation of roles promises speed, agility, and sharper execution. But neither strategy is a magic wand. Without clear definitions, aligned expectations, and the right leadership capabilities, a "shrinking" C-suite could very easily become a source of friction rather than efficiency. At the same time, filling up the C-suite with new titles without examining the strategic, operational, and business impact can be short-sighted. The path forward is in striking a balance, understanding what approach works for an organization's success. The titles may shift and collapse, the dynamics of the world we operate in may change, but the fundamentals of solid leadership remain constant.