Tag Archives: ceo lessons

CEO-to-CEO Lessons Learned– Peek in Corner Office: Challenges, Frustrations– Failure, Crisis, Fear, Uncertainty…

Being CEO is tough; world economies are expanding rapidly and companies are shaped by changing trends in– technology, internet, social media… and changing consumer mindsets and consumption patterns… New markets are emerging, old markets are disrupted, business models are becoming obsolete, new business models are pushing boundaries for the ways business is done.. No wonder the role of CEO is changing, but many fail to learn the lessons required to survive and thrive…

According to Evan Davies; CEOs must expand their thinking and become knowledge seekers, even when they think they know it all. They must make learning an active part of their day, seeking out experts, and encouraging the same of their team… It’s a global economy and CEOs would do well to understand the big picture– the business climate, market conditions, competitive landscape, regulatory environment, and strategic risks… Prevailing standards for corporate governance have become more formal, more rigidly codified, and more universal across international boundaries…

According to Kathleen Ekins: CEOs are sticking around longer than they should… The average tenure of a departing S&P 500 company CEO is 9.7 years. It hasn’t been that long since 2002, and study by Temple University suggests that this number could be problematic for many companies… The study measured the performance of CEOs over time and found the ‘optimal life span’ of CEOs is just 4.8 years. It concluded that after about five years, chief executives will rely more on their internal network rather than information that comes from outside markets…

This tendency to focus inward causes for some CEOs to become less attune to market conditions, customers, which ultimately hurts the company…  So, why do many CEOs over-stay their welcome when it can jeopardize the organization? According to Charles Wardell; there are three main reasons CEOs either, step down or are asked to leave:

  • Burn out or loss of enthusiasm for the job:  When CEOs begin to realize that their skills aren’t matching-up, or their enthusiasm is waning, or they’re tired of the constant responsibility…
  • External changes in the market: Often times the market dictates, causing the business proposition to change so radically that the skills of the CEO don’t mesh-up with needs of the organization…
  • Board of Directors decides enough is enough: Pushing a CEO out for whatever reason– age, competency, vulnerability… can cause turbulence and tension within a company, making for a less than ideal transition. A smooth transition at the top can never be guaranteed. This makes the change in leadership that much more scary, causing CEOs to stay-put longer than they should…

In the article Lessons CEOs Need to Learn by Rick Spence writes: Today, the captains of industry aren’t so much running the ship as manning the pumps, trying to stay afloat in the global marketplace. Not just in economic terms, but in all the categories that count, e.g.; leadership, innovation, leveraging technology, finding new ways to sell globally and mastering social media, which is crucial to reaching niche audiences…

According to Michael E. Porter, Jay W. Lorsch, Nitin Nohria; CEOs must come face-to-face with some paradoxes in leadership, e.g.; the more power CEOs have the harder it is to wield it without demoralizing other stakeholders in the organization… Although the CEO bears full responsibility for the organization’s fate… but often they don’t control most of what determines it…

So how does a CEO succeed? First, he/she must understand the essence of the role, such as ; creating conditions that help others excel, spend time articulating strategy, installing sound processes, mentoring key people... Second, CEOs must learn and master the skills and insights that are required to run 21st Century organization… For example:

  • CEOs cannot run organization alone: As demands from external constituencies (shareholders, board members, politicians) mount, control over internal operations recedes… Shift from direct to indirect means of influence; articulate clear strategy, establish guiding structures and processes, setting values and tones… while selecting the right management team to help run the company…
  • CEOs giving orders is costly: Over-ruling the thoughtful decisions made at lower management levels erodes confidence… Decision-making grinds to a halt as subordinates begin checking with the boss before proceeding on anything. Instead, promote agreement about decision-making criteria, share power, and trust others to make key decisions…
  • CEOs often don’t know what’s really going-on: Bad news is often withheld from CEOs fearing that they will shoot the messenger. How to get solid information? Engage managers, employees… at all levels to hear– ideas, opinions, suggestions…
  • CEOs are always sending a message: CEOs every move and every message– inside and outside the organization– is scrutinized and interpreted… CEOs must carefully consider how audiences might interpret their every actions, communications…
  • CEOs are not the boss: CEOs boss is the board of directors. They set compensation, evaluate performance, overturn strategy, and fire the CEO… Yet many directors have limited knowledge of the organization– its industry, markets, competition, technology, management, employees, partners… It’s in best interest of the CEO to educate and regularly collaborate with the board…
  • CEOs are only human: The rewards and adulation that come with being CEO can tempt acts of hubris… Make a disciplined effort to stay humble. Revisit decisions. Find forthright people and listen… Maintain connections to family, friends, community, hobbies… to avoid being consumed by the job…

Why do CEOs Fail? According to Ram Charan, Geoffrey Colvin; It’s an intriguing question and one of deep importance not just to CEOs and boards of directors, but also to investors, customers, suppliers, alliance partners, employees, and the many others who suffer when the top man stumbles… Some pundits opine when they see problems with CEO’s grand-scale vision, strategy… Yep, CEO must go because his/her strategy is not working…

But is it really a flawed strategy? Not according to others who say; the strategy is sound, but it was bad execution; it’s not getting things done, indecisive, not delivering on commitments… Although pundits are not saying; the CEOs who fail are dumb or evil… In fact, they tend to be intelligent, articulate, dedicated, accomplished… They work hard, made sacrifices, and have performed terrifically for years… So how do CEOs blow it? Probably the most often cited reason it that they fail to put the right people in the right jobs… and the related failure to fix people problems in time…

Also, what is so striking is that most CEOs usually know that there is a problem but their inner voice suppresses it and they won’t openly acknowledge it, and take remedial action… As one CEO said; it was staring them in the face but they refused to see it; the failure was one of– emotional strength… They just weren’t worrying enough about the right things: execution, decisiveness, follow-through, people, delivering on commitments…