When I first became a CEO I worried out loud to my chairman about how I should behave with people who had previously been my peers. His reply?
“Barden, just do the damn job.”
What is the damn job?
In whose interests should CEO’s run corporations? By the late 90’s the battle at HBS and other business schools seemed to have been won by the shareholders. That took a bit of a blow with the 2008 Crash when companies’ values – and therefore their ability to invest and grow – tumbled on their stock prices. Since then, although the primary duty of the CEO still seems to be to the shareholder, other claimants are making their bid. I notice, for example, a recent post championing the approach that companies should put employees first. Another insists it is the customer who is royalty. Then, of course, there’s the perception that become popular after 2008, that organizations should be run in the interests of all the stakeholders.
Chief Executive or Chief Agent?
The debate misses the entire point. Institutional leaders are there to manage the interests of the institution – as a whole. That’s the job. Manage an organization in the interests of any group – shareholder, customer or employee – and you become their agent. Run it on behalf of all stakeholders and you become everybody’s agent – just before you become a gibbering wreck.
The job of the leader is to develop, grow, realise, nourish, pursue (and whatever other synonyms you can think of) the success of the organization. In order to do so, that leader needs to see that organization as an eco-system: a context with interlinking and interdependent dynamics. Those dynamics are always present and it is the job of the leader to manage them and their impact – all the time.
Just one question
There’s really only one question that should concern an organisational leader. “What makes this organization successful?” And no, the answer is not “making money.” If it were, why is X company an MVNO? Why doesn’t it just hire a couple of hundred buskers and send them off around the Subway system every day? Because organisations are set up to do what they assume or hope they do best . So, in order to answer what makes an organization successful, the CEO needs to clearly understand its context and texts: what is success to this organisation, with what assets and alliances and for whom and so on? How do these facets impact one another – today and in the future?
How to be drowned by a drought
This question, of what makes this particular organization successful, needs to be reviewed all the time.
To do so, you need, for example, to understand the capacity of your employees. Not because it is kind and liberal and will earn you the rosy cheeks of the righteous. But because if you do not know the mood, the appetite for change, the confusion, frustration, ideas and skills of your staff you will not get the results you want when you try to expand or innovate or even maintain quality.
To answer your core question you may also need to understand the capacities and values of your suppliers. If you don’t, if you fail to understand the impact of your pricing on their profit margins, you may find that the quality of the materials starts to deteriorate, or worse, the conditions of their workers becomes a scandal – your scandal.
It goes on: you decide to expand, quickly by acquisition. You take on new investors to help fund it. With the new volumes you can cut prices and your customer base will surely soar. It does – for a bit. Until it stops and you become the most unpopular airline/mobile phone operator/ New York busker distributor around. Why? Because you forgot that even seemingly consistent expansion often needs to be matched by extraordinary, innovative changes in customer service, manufacturing or delivery systems. So as your very irritated customers leave you, your new investors insist you cut costs – which of course means you can’t invest in new systems – and your customer base drops even further.
Failure to not only understand – but actively manage – the linkages in your eco-system means that you risk getting hit by a flood when you were trying to fix a drought. You cannot be alert to the entire system if you are fixated on your shareholders or your clients or your employees.
Leader or Chief Plate Spinner?
So what does that mean for the poor CEO? Is she to be reduced to Chief Plate Spinner? The 4 year research study I conducted with 10 top (and very successful) military, corporate and educational leaders came up with some extraordinary answers. Here are a few of them:
- They surrounded themselves with talented people who asked themselves that same question and who understood and managed towards the success of the eco-system as a whole.
- They used those senior officers to help make decisions and – more importantly – to challenge them. Steve Jobs may have asked his people “Have you thought of this?” These leaders insisted their people asked them that.
- They constantly tested and gauged the mood and capacity of their staff, suppliers, Boards, customers and shareholders. They called it ‘dip sticking’, ‘hearing the buzzing in the woodwork’, or ‘listening to the ground’. And they did not rely solely on the hierarchy for their information.
- They disliked wishful thinking. That meant, for example, they did not persuade themselves that the company could make 25% growth because that’s what the analysts said it should. Or because that would trigger their bonus plan.
- None of them thought the top-down model was sustainable. It reduces the organization to the size of the leader’s head. They saw themselves as navigators who could always find a way through – with the right crew and ship.
Three (fairly) surprising conclusions
What did I discover about them? Here are just three fairly surprising conclusions:
- They were all superb managers.
- You can’t keep an eco-system intact and thriving unless you’re really organised.
- So-called charismatic but chaotic leaders may be good for drama but they’re no good for organizations
- They were not fiercely competitive.
- Their aim was not to beat the competitor but to succeed. Trying to be better than someone – be that a colleague or a rival organisation – is at best a distraction and at worst a pair of handcuffs.
- By trying to be ‘better than’, you define yourself by the limits of your adversary rather than your ability to innovate and execute.
- By all means, know what your adversary is up to but then go on and do what is the best possible for your success.
- They all saw leadership as a job – not a role
- The job is to lead -not to act as leader.
- You don’t act with authority – you manage authority
- You don’t wield power – you balance it.
When people tell you that “Great leaders, eat last/ are filled with empathy/ are bursting with creativity” or that you should adopt the body language of a great leader ask them only one question: “Will it help me make this entire organization successful?”Or as my former chairman would put it,
“Will it help me do the damn job?”