CEO Tools

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Being a CEO “Chief Executive Officer” takes a great deal more effort and energy than just giving orders. You can’t just tell an employee something and move on. You have to understand where they are coming from and their individual strengths, weaknesses, fears, and motivations.

During the recent global recession, much attention was devoted to the mistakes that sparked the financial and economic crisis, in hopes of not repeating them. Less was given to what was done well amid the turmoil to learn, for example, how best to lead a company through tough times.

None of the CEOs we interviewed in this book claimed to have attempted anything revolutionary. What was evident, however, was their resolve in pursuing the principles they thought were right, often in the face of opposition. Leadership becomes increasingly important in tough times, when so much is at risk but it can be even harder to exercise. The leadership “musts” described in this book has made the greatest difference for CEOs on the front line.

To contribute to that understanding, we interviewed the leaders of various major companies, all seasoned CEOs or chairmen, asking them to reflect on what they felt they had learned. We were keen not to limit their comments to the recent recession and therefore also asked them to consider previous challenges they had faced in a turnaround or a crisis. The companies they lead are in different industries, face different challenges, and have performed quite differently. We are attempting neither to judge their performance nor to draw up a set of rules on how to lead through tough times. Instead, what emerges from the interviews is agreement on some broad principles that can help guide behaviour in the executive suite and the boardroom, as well as interactions with employees, customers, and investors.

The way CEOs work with their boards has changed fundamentally during the past year. In tough times, difficult decisions must be made quickly, so it’s not surprising that many CEO find themselves communicating more regularly with the board to keep it abreast of developments. Full board meetings have been supplemented by letters, e-mails, intranet postings, informal discussions, and conference calls.

Many CEOs have already accepted the need for frequent and open communication with their boards, a practice they say proves its worth when difficult decisions must be made. If directors are up to speed, they are better placed to offer both support and advice. What has changed markedly is the content of board discussions. In particular, discussions about strategy are no longer the preserve of a once-a-year off-site meeting. The pace of change crisis or no crisis makes that model unworkable.

One legacy of the recent downturn will be a reinforced belief in the value of frequent, transparent communication with employees, and not just the CEO’s direct reports. The CEOs we interviewed could not overemphasize the power of openness at all levels.

Being open about what is happening in a company is partly a question of integrity: employees deserve honesty. Openness also builds respect, trust, and solidarity, all of which in turn help employees stay focused on the task of running the business at a time when financial rewards might be limited and the future uncertain. Openness helps build morale as well. A CEO cannot mislead people and certainly shouldn’t panic them, but explaining problems and the actions being taken to deal with them builds confidence in the quality of the CEO’s leadership.

Ade’s understanding of the difference between leadership and management.

“I draw a very clear distinction between leadership and management,” Ade said. “For me, leadership is the ability to inspire others to achieve shared objectives. Managers tell people what to do. Leaders inspire them to it.”

Being a leader takes a great deal more effort and energy than just giving orders. You can’t just tell an employee something and move on. You have to understand where they’re coming from and their individual strengths, weaknesses, fears, and motivations.

“As human beings, most of us tend to project our own worldview onto other people,” Ade said. “This is especially common in less experienced executives, and I was once one of them.”

Don’t focus so much on innovating that you make strategic mistakes.

“Hyper-growth companies often get so caught up with innovation and the adrenaline rush that they chase the next bright shiny thing at the expense of getting their launch trajectory right,” Ade said.

He uses the analogy of a “rocket in space.” A small mistake can leave you very far off track in the long run. The key is to concentrate extremely hard on getting the right processes and infrastructure in place early on. Otherwise, you spend far too much time fixing things later.

Always focus on the “next play.”

Every time Duke University’s highly successful college basketball team completes a play, its legendary coach Mike Krzyzewski yells out “next play,” regardless of how well things went. They don’t over-celebrate successes. And they don’t dwell on failures, either.

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