A company has only one ultimate decision maker: the CEO.
The CEO is the only person in a company without peers. No other individual holds such a full and final responsibility for the company. The CEO is the most powerful and sought-after title in business, more influential than any other. The CEO takes the company’s biggest decisions. These decisions account for 45% of a company’s performance.
This power and influence comes with a heavy burden.
The role of CEO can be all-consuming, lonely, and stressful. Just 3 out of 5 new CEOs live up to expectations in their first 18 months… and many CEOs struggle with their quality of life (health, family relationships, friendships) in the face of the pressures they face.
I run Vistage in Spain. Vistage is the world’s leading CEO coaching organisation. Over more than 60 years, Vistage has worked closely with CEOs to take and implement better decisions which enhance their performance and increase their quality of life.
The following post draws heavily from a recent McKinsey article “The mindsets and practices of excellent CEOs“.
The Biggest regret of CEOs
I spend time with hundreds of CEOs each year. They are good people and they want the best for the good people around them. This makes it extremely personally challenging for them to deal with underperformance. They like the people around them. They want to give them lots of opportunities. They feel that it is a personal failure when someone close to them repeatedly underperforms expectations. They give more time. They allow for environmental factors. They wait and hope.
The single biggest regret of CEOs is not dealing quickly with underperformance.
In my work with CEOs through Vistage, over half of all of our work is about the current and future performance of the people and teams that surround the CEO. We challenge CEOs to stop waiting for underperformance to fix itself.
The Differentiator between Great and Good CEOs
According to McKinsey, the distinction between good CEOs and the great CEOs is the ability to focus.
Great CEOs place “big bets”. They focus on the top 3-5 most important initiatives. They dedicate 90% of their time, energy, resources to the 5 most important projects. They say “no” often. They don’t allow their time to fill up with many different activities and different priorities.
The Good CEOs avoided this level of focus. Their prioritisation of what is truly important is less clear. They are involved in many initiatives. They allow their agenda to fill up and try dedicate a couple of hours each week to the most important projects. They try to fit the important initiatives in around their “day job” of running the company.
The Great CEO has delegated the running of the company to an effective leadership team. They have made themselves unnecessary for operating the company today, so they can dedicate themselves to building the company of the future.
Jeff Bezos says that he spends 5% of his time running the company, and 95% of his time building the future company.
The Job of the Great CEO (according to McKinsey)
What specific behaviours can make current CEOs most effective? This is a summary of the McKinsey article linked above.
The Great CEO’s job has 6 main elements.
- Setting the Strategy
- Aligning the Organization
- Leading the Top Team
- Working with the Board
- Being the face of the company to external stakeholders
- Managing one’s own Time and Energy
1. Setting The Strategy
Objective: Focus on Beating the odds…
- Vision: reframe what winning means, where do we want to be in 5, 10 or 15 years?
- Strategy: make bold moves early
- Resource allocation: stay active, top performers actively & quickly move resources to their strengths
2. Organisational Alignment
Objective: Manage Performance and Health
- Talent: match talent to value
- Culture: go beyond employee engagement
- Organisational design: combine speed with stability
3. Leading the Top Team
Objective: Put dynamics ahead of mechanics
- Teamwork: show resolve
- Decision making: defend against biases
- Management processes: ensure coherence
4. Board Engagement
Objective: Help directors to help the business
- Effectiveness: promote a forward looking agenda
- Relationships: think beyond the meeting
- Capabilities: seek balance and development
5. Being the face of the company
Objective: Center on the long-term “Why?”
- Social purpose: look at the big picture
- Interactions: prioritize and shape
- Moments of Truth: build resilience ahead of a crisis
6. Managing one’s own time and energy
Objective: Do what only you can doceo
- Office: manage time and energy
- Leadership model: choose authenticity
- Perspective: guard against hubris
If you liked this post, you will also like The CEO’s Guide to Boards and The CEO’s 7 Leadership Laws During Times of Uncertainty.