Leading a Business: The 3+1 Roles of the CEO

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.

The Importance of Persistence… The Ant Philosophy

Persistence is one of the most important qualities that a person can possess. It is the ability to persevere, to keep going even in the face of obstacles and setbacks. In life, success often depends on persistence more than anything else.

In this video:

on Ants and Obstacles… they just keep going
Rivers… they just keep flowing
110m high hurdles… don’t look at the obstacles
How do you face obstacles?

Whether you’re trying to achieve a personal goal or working towards a professional goal, persistence is key. It takes time and effort to achieve anything worthwhile, and setbacks and failures are inevitable along the way. But those who are persistent keep going, even when things get tough. They don’t give up, they don’t quit.

“I have not failed. I’ve just found 10,000 ways that won’t work.”
Thomas Edison

One of the most famous examples of persistence is the story of Thomas Edison, who failed over a thousand times before he finally invented the light bulb. When asked about his failures, Edison famously said, “I have not failed. I’ve just found 10,000 ways that won’t work.” Edison’s persistence paid off, and his invention changed the world.

Persistence is also important in relationships. Maintaining strong relationships takes effort and patience, and there will inevitably be disagreements and challenges along the way. But those who are persistent in their relationships work through these challenges and come out stronger on the other side.

In summary, persistence is an essential quality for success in all areas of life. It allows us to keep going when things get tough and to overcome obstacles and setbacks. So if you’re working towards a goal, don’t give up. Keep going, keep pushing, and keep being persistent. Your efforts will pay off in the end.

If you liked this post, you will also like 6 keys to leading positive change and Developing a Vision Statement.

Don’t Make This Mistake: Good Intentions but No Actions

“The road to hell is paved by good intentions”

Be careful that your good intent results in good action.

Only action changes our world.

We see our Intentions, Others see our Actions

We should evaluate actions by their consequences, not their intentions.

Soft intentions, often create unintended consequences.

We judge ourselves by our intentions, others judge us by our actions. We are often so clear on our intent, that we are blind to how our actions might look to another person.

“Could do” vs “Will do”

Could vs Will – “I could do what you are doing!” – could = anyone “could”; doing it is the thing.

Anyone could make a call

Anyone could define a vision

Anyone could…

Could changes nothing.

An action (even half a step) begins the change.

3 Life and Leadership Lessons from my Father

My father is by all accounts a successful leader. There are 3 “superpowers” that he has that I think have helped him have such a positive effect in each of these environments.

My father has had a long and successful career in business leading to a decade as the Chairman of the Board of Accenture, and then as a board member for several public companies, and now as a leader and advisor for arts, culture and universities.

2 years ago, I shared a list that my father made back in the 1980’s on “Leaders and Non-Leaders” which listed 40 contrasts helped him guide his journey as a business leader.

3 of my Dad’s “Superpowers”

Remember people’s names
Decide fast & Don’t think of it as “your decision”, (this allows flexibility to change without emotion/sunk cost)
Never lose sight of the overall purpose & long term

I was in the medieval town of Pedraza again this week, where I made this video.

3 things people need from a Leader

Alan Mulally, ex-CEO of Ford, spoke to the Vistage membership recently. He shared his own life story, and his advice to CEOs on how to lead in these times of uncertainty.

People need from Leaders:

Who are you?
Where are we going?
Do you see me?

I share what people are looking for in the video below.

If you liked this video, you will also like Indra Nooyi ex-CEO Pepsi on Leadership in Times of Crisis and Leaders must develop 2 capacities in the people around them.

Build Strong Foundations

Build Strong Foundations before you grow higher.

Are you investing in your own Foundations – or are you building the house of your life on sand?

Leadership coach Luis Soares shared the story in the video below a few years ago on a leadership retreat for Vistage Spain.

There are two metaphors in the video:

Building a house on solid foundations before you build higher
The bamboo grows deep, extensive roots before it grows up

5 Areas where you can deliberately invest in the foundations of your life:

Health – get fit, eat well, learn about sleep
Wealth – build savings, have emergency fund (you could survive 6 months without income)
Network – connect to others, help them, demonstrate trust and competence, find mentors & act as a mentor (connect to 1 new person every week) (Webinar Recording: How Leaders Network)
Skills – read, study, practice (dedicate at least 10 days per year to professional development… or you are becoming “talentless” soon)
Spirit/Purpose – who are you? what do you stand for? where are you going? what are your values? (Finding Purpose: Step 1)

How are you building the foundations of your house, and of your life?

What do excellent CEOs do? (according to McKinsey research)

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.

Photo credit: fauxels on Pexels.com, Liza Summer on Pexels.com, SplitShire on Pexels.com

Leaders Must Develop 2 Skills in the People around Them

If you are a leader, you need to work on developing 2 skills in the people around you:

Influence and
Decision Making.

The Importance of Influence Skills

Without the people around you learning how to influence others, they will always need your involvement to get anything done.

The Importance of Good Decision Making

Without the people around you taking good decisions, you will always need to step in to stop disaster from happening. In the IESE MBA program we have a course called “Analysis of Business Problems”. We teach a 6 step process for business decision making:

What is the Problem?
What are the Criteria?
What are the Options?
Compare Options to Criteria
Select Option
Create a Plan

What is the fundamental characteristic of a leader?

What makes a person into a leader?

Charisma? No.

Communication? No.

Experience? No.

They deserve a promotion because of past efforts? No.

What ideas do you have?

There is one characteristic without which you cannot be called a leader.

Followers? Yes… but what do you need to have as a leader so that others actually follow?

The Fundamental Characteristic of a Leader

A Destination.

You know where you are going.

…and then the power to Communicate

…and then you need to develop the ability to engage with people so that the destination becomes a shared destination.

If you can begin to paint the destination in the minds of others with stories you begin to engage not just their hands, not just their skills, but their whole self in the committed pursuit.

A Shared Vision of a Worthwhile Destination

How do you engage those around you to commit to the journey?

Don’t “motivate” people.

Figure out something that is worth doing. Figure out how it will make your life better, how it will make their lives better and how it will make society better.

Help others understand that being part of it will be better for them and their life.

How do you share this destination with others? How’s this as a script:

Let us move forward: This is a good use of our time…
Here is what is in it for me…
Here is what is in it for you…

Business as an Infinite game

Simon Sinek shares a powerful concept in his book “The Infinite Game”. He has popularised the distinction between Finite games and Infinite games.

Chess is a finite game. Soccer is a finite game. Tennis is a finite game. They each have a set of agreed rules, and a clear victory condition at which time the game ends. The objective in a finite game is to end the game as victor.

Business is not a finite game. Life is not a finite game. Leading human beings is not a finite game.

Success in life is keeping it engaging to play for all those involved (including yourself!).

A game everyone plays voluntarily is more successful than a game where some must be compelled to play.

If you are going to set up an organisation, you can compel people to perform with threats and fear. It is much more effective to engage them to play a game that is meaningful for them, and for you… and for society as a whole.

How to lead the whole Person

Imagine these two requests from a leader:

“Go home and take 4 hours to think about how you will contribute to this organisation over the next year” or
“Go home and take 4 hours to think about your life and formulate a plan for your life with this business being a part of the plan”

Which is the question of the bigger leader?

Jordan Peterson reports a 10% increase in contribution where leaders ask the 2nd question to their teams.

You want yourself and your team to see that working for you serves their higher order purpose.

If not, this is not the job for them. Help them find a place where they can serve their higher purpose.

If you liked this post, you will also like Finding Purpose and Defining a Vision for your Life and What is Leadership?

This post was inspired by Jordan Peterson in this Bigthink video:

What kind of Leadership do we need now?

In his 30 years of asking this question, Wharton Business School Professor Stew Friedman has heard one word become increasingly common: Flexible

Elements of Flexible Leadership

What does it mean to be flexible as a leader?

flexible adjective

capable of bending easily without breaking; able to be easily modified to respond to altered circumstances.

What context do we need to know in order to easily adjust our plans and strategy to altered circumstances?

Flexibility requires Context

In order to be consciously flexible as a leader, you must have clear the relative value of different aspects of your life. As a leader of teams, you need to help others develop their own clarity and explicitly use it in your decision making.

Dr Friedman says that too many people take a binary approach. They take for granted that professional and personal are two ends of a weighing scale. Increase one, reduce the other.

This is not a straight trade off. This trade-off approach leads to unnecessary sacrifices.

In Vistage, our stated mission is to increase both profesional effectiveness and enhance quality of life. We place both at the core of the question. We don’t want your life quality sacrificed for professional effectiveness, nor vice versa. We want a conscious integrated decision.

The key of flexible leadership for yourself and for those around you is to get clarity in 3 ways:

Be Real
Be Whole
Be Innovative

What does it mean to “Be Real”?

You know what matters to you
You live in accordance with your values consistently
Your daily actions are aligned with values
You can communicate values with personal stories
You can describe your legacy
You hold yourself accountable before all others

What does it mean to “Be Whole”?

You are good at clarifying expectations
You help others
You build supportive networks (you cannot live a good life on your own: without peers, coaches, mentors)
You apply all of your resources effectively
You manage boundaries intelligently (sometimes firm, sometimes loose)
You weave disparate strands of life together

What does it mean to “Be Innovative”?

Your focus is on results
You resolve conflicts among domains
You continually challenge the status quo
You seek new ways of doing things (crowdsourcing solutions, ask for help)
You embrace change courageously
You support innovation attempts by others

Video: Dr Stew at Google

How Flexible is your Leadership? What areas are clear, unclear for you? What action will you take?