We had an event this week in Madrid with Dan Wertenberg, a Vistage Chair from the USA as the speaker.
What is the Role of the CEO?
He shared an interactive and valuable 90 minute session with the gathered CEOs about the 3+1 roles of the CEO.
- Chief Strategy Officer
- Chief Team Builder
- Chief Sales Officer
- Lead the Financial Institution
The 3+1 “non-Delegatable roles” of the leader.
Chief Strategy Officer
The single most important question of strategy is “Who is our customer?” Dan shared the learnings from the PIMS study, done in the 1960s and 1970s in the US… looking at all the factors that lead to business success.
One of the big findings of the study was that a factor that repeatedly correlated with profitability – whether the business was the dominant provider to a market segment… essentially the #1 or #2 competitor in a market.
Strategy is fundamentally about deciding which market can we be the dominant, world class, excellent provider to this customer group. The question for a business leader: “who do we serve?” and also “who do we not serve?” Dan told us that every CEO should take their leaders out for at least 4 days each year to work together on defining with ever more clarity the profile of the ideal customer.
Chief Team Builder
The CEO is responsible for building the team. Dan shared with us that we as human beings are poor at selecting talent. Interviews are not a great way of predicting an individual’s future performance in a role.
We are not good selectors of talent, but we are all capable of identifying the factors that will make it unlikely that someone will succeed, or fit with the current team. Dan suggests that we actively de-select individuals who will not fit with our organisation, and then select only from those that remain.
The second part of team building is rapidly dealing with underperformance. If a CEO does not deal with underperformance (for whatever reason), it sends a message to the whole team that underperformance is acceptable.
Chief Sales Officer
An organisation that has the ability to scale and become great needs to have a sales process that is consistent, repeatable and structured. If there is a consistent sales process, then an organisation can scale up. If sales depends on certain individuals or the right day of the week… you cannot systematically grow the business.
The CEO should also personally play an active role in any large sales process of the company… involving themselves personally in some of the meetings.
The CEO should also ensure that every 6 months, they find a way of having lunch or dinner with the CEOs of the 10 biggest customers… to learn about them and to show the importance of their business.
Leader of the Financial Institution
Dan shared that a CEO is running 2 connected but somewhat distinct organisations… the operating business… and the financial institution behind the business.
As the financial leader, the CEO needs to ensure that there is a rolling 12 month projection of income statement and balance sheet. The CEO then needs to look at how we are performing against that plan. All variations are interesting… often we pay attention to negative variation… but the lessons that can be learnt from the positive variations are extremely important… as they are the source of identifying tactics that can be scaled up.