The world’s best CEO (the times are changing)
I turn to page 50 in the latest edition (Nov 2015) of Harvard Business Review and a smile comes to my face.
In this year’s ranking of the world’s top-performing CEOs* a Scandinavian claimed the top spot! Lars Rebien Sörensen and Novo Nordisk has done a brilliant job finding solutions to treat diabetes, while building a profitable business over the past century. But the reason for my delight is not only because we respect Novo Nordisk’ work or that it was a fellow Scandinavian that finished no. 1. Rather, the main reason for the smile on my face is the calculations that made Lars and Novonordisk earn the top spot. The traditional way HBR has done these ranking the past years is that they focus only on the pure financial performance of these companies. This year, however, they teamed up with Sustainalytics and brought in a social, environment, and governance (ESG)-measure and ranking that was weighted 20% towards the companies’ overall ranking (financial performance weighted 80%). The effect of this was that Novo Nordisk who was ranked high in both areas (no 6 in financial performance and no 15 for ESG performance) finished first. Due to poor ESG ranking, Jeff Bezos and Amazon who were ranked no 1 in financial performance (and would be named the best CEO in the world in HBR kept their criteria from last year) ended up in place 87!!
I can not help thinking of Bob Dylan.
And we’ve only seen the beginning!
* Every year HBR ranks the top-performing CEOs based on a number of robust metrics that measure their long-term performance. This year’s ranking ended up with 907 CEO (from 896 companies) taken from the S&P Global 1200, an index that comprises 70% of the world’s stock market capitalization. CEOs with tenures shorter than 2 years and CEOs who have been arrested or convicted of a crime were excluded from the ranking.