Ten Deadly Sins of CEOs and Business Owners¹

[Editor's Note: Being the CEO or business owner can be a lonely job. It is important to get good feedback so that you can keep a balanced perspective. Below are just ten of the deadly sins that can be committed by the guy or gal at the top. I have been at the top or owner of eight companies - and I know it's not always easy to see yourself clearly. This is a reprint of a previous Issue for Growth. I think it still holds true. As always, we welcome your comments.  - DPM]

                                                                                                                                 

Talking Too Much. You never learn by talking, but some CEOs imagine the world to be in desperate need of their constant wisdom. It is a rare subordinate who will risk stifling a CEO. Be inquisitive, ask questions, and listen at least 75% of the time.

Goals Are Too Aggressive. It is wonderful to have a BHAG (Big Hairy Audacious Goal) or vision. It's another to develop overly aggressive goals on a routine basis. Unrealistic goals "demotivate," especially when compensation is involved. One CEO expected his company to continue its 30 percent annual growth rate, not appreciating that with a larger base and a rapidly maturing market their era of high growth in that market had to end. The result discouraged managers.

Personal Power Building is More Important than Value Building. Some CEOs tend to make decisions that enhance their scope and influence, even at the expense of increasing shareholder value. This can be paradoxically true even when the CEO is a large shareholder or the business owner. Dr Robert Kuhn puts it this way: "I want a CEO whose greed exceeds his ego. Good CEOs and business owners should be motivated more by amassing wealth for their shareholders rather than by building empires for themselves."

Not Respecting or Recognizing the Ideas of Others. CEOs and business owners can be egotistical. Highly successful almost by definition, many CEOs would seem to have every right to be self-impressed. However, when you hold the top spot, puffing yourself up at the expense of subordinates impedes the organization. You benefit when your people are encouraged and empowered to generate novel ideas. Recognition of these good ideas breeds more ideas.

Not Focusing on Accountability and Execution. Some CEOs and business owners love new ideas, programs, and initiatives. They introduce change for the sake of change. One company we looked at recently had seventeen (17) major strategies for an upcoming year. Focusing on a executing well on a few carefully selected strategies, developing clear objectives, and holding managers accountable, can be the difference to success.

Managing by Summaries.  A CEO should perceive the world as it truly is; if cluttered and chaotic, so be it. When information is always "high level," predigested by staffers, a CEO may perceive an artificial world, a virtual reality as it were, of cleanly manicured lawns. Most CEOs have great instincts about their businesses, and such instincts should be nourished by raw data, like, for example, call reports of customers.

Don't Fall in Love. When you sit in the corner office, follow your head not your heart. Every business must have a strategic or financial purpose, and if a business happens to make you feel good that's fine as long as your emotional attachment doesn't interfere with your rational decision-making. CEOs are notoriously vulnerable when making acquisitions.

Feeling Invincible.  CEOs must have superb track records-some are almost unblemished -so they have a proclivity to imagine themselves as invulnerable. The natural corollary is a robust confidence, even if subconscious, that past success assures future success. I can't tell you how many dozens of CEOs I've seen who refused to sell their companies at what would turn out to be, in hindsight, their peak market values, simply because they were convinced that tomorrow's prospects would mimic yesterday's triumphs. Looking backward and looking forward, a humble, healthy respect for the subtleties of serendipity is the beginning of wisdom.

Halo Hiring. In some organizations, many of the senior executives look like the CEO. I mean this quite literally and it can be very funny. Not just obvious characteristics like gender and race, but also personal traits like size and stature, political philosophy, sporting interests, demeanor, even style of dress. In a globalized world where customers and suppliers may be very different kinds of people, it is not wise for the executives of a company to be homogeneous, and hence, uniform in their thinking.

Beware of Averages.  Averages can deceive. For example, assume that, in a pharmaceutical company, prices are declining for one-half of the drugs and increasing for the other half; the fact that the average price of all drugs has remained steady is worse than meaningless information. Strategies for drugs that kept prices steady might not work at all with those whose prices were decreasing or increasing. The same is true for net profitability on an individual customer basis. Averages hide meaningful information. The information extremes or "skew" is your friend.

Could you benefit from having a strategic business coach?  Contact me to discuss why having one of our coaches who is an experienced CEO / business owner could help you be a better leader and could make a world of difference in your company's results.  

It's Not What Keeps You Up at Night.... But What Gets You Up in the Morning?

[Editor's Note: When my alarm goes off at 4:00am, I am usually up already, getting coffee, and bounding into the opportunities of the day. That's me... and while many people may think I am a little strange to be up at 4:00am, I can't wait to get started on each day. I came across this blog post from Sally Helgesen recently and it made me think that in this age of talent shortage, we need to be spending more time on what engages and motivates people - the positives. I hope you find this useful. -dpm]

It's Not What Keeps You Up at Night.... But What Gets You Up in the Morning?

What keeps you up at night? It's a question we've heard posed in nearly every panel and senior leader interview conducted in recent years, and as a result, it has become tiresome and rote. But I believe the effect of this query is more pernicious than simply boring - stay awake long enough to think it through, and you'll recognize its essentially negative nature. The question assumes that leaders are in the habit - indeed, that they have a responsibility - to let worry pervade their every hour, even those precious few required to refresh, balance, and sustain human effort.

That's why it was bracing to hear the chief economist of a global bank describe how his CEO responded to this question at a recent meeting of senior employees. "I'm sick of that question," the CEO had said. "Besides, it misses the point. More important is: What makes me leap out of bed in the morning?"

The CEO then told his listeners that "the terror of missing an opportunity" impelled him to get up every day. Within 24 hours, the bank's shiny new headquarters became known throughout the company as "the tower of terror." That's hardly the most positive vision. But if we focus on the invocation of opportunity rather than terror, we'll recognize that the CEO made an important point: It is vastly more productive to spring out of bed eager to spot new opportunities than it is to greet the day in a defensive crouch brought on by post-midnight agony fests. And it is a far more powerful way to lead an organization.

In other words: In an economy in which the harnessing of human knowledge offers the chief - and perhaps only - competitive advantage, the need to engage human talent has become paramount. And just as leaders on the lookout for opportunity can build and stimulate engagement, they also can undermine engagement by exuding negative energy.

If you understand what motivates people to get out of bed, you understand what engages them.Beverly Kaye, founder of Career Systems International, an engagement and development consultancy, is coauthor of the engagement classic Love 'Em or Lose 'Em: Getting Good People to Stay, now in its fifth edition (Berrett-Koehler, 2014). She has been examining the sources and advocating for the importance of employee engagement longer than anyone I know. "One of the first questions we asked people when doing our original research on engagement in the 1990s was what about their work motivated them to get out of bed in the morning," she told me. "If you understand that, you can understand what engages people."

People want a few basic things in their work, Kaye pointed out: "They want to feel valued, they want to be able to use their skill sets, and they want to be challenged by new ways to exercise and build those skills." If jobs don't give people the opportunity to fulfill these basic needs, many employees will leave - and the best are often the first to go. "And those who stay will often check out mentally and simply disengage, which from an organizational point is probably worse," she said. If jobs don't give people the opportunity to fulfill these basic needs, many employees will leave - and the best are often the first to go.

 

Leaders who are optimistic inspire confidence throughout the organization. Over the years, Kaye and her researchers have also asked thousands of people why they left their organizations. "What we hear usually comes down to some variation on their not being able to see any opportunities in their job," she said, which is why a focus on opportunities is critical in a leader. "People's experience at work is determined by their manager, and the experience of managers is determined by those who manage them, going all the way up to senior leaders....Leaders who are optimistic about what their people can accomplish, and see challenge through the lens of opportunity, inspire confidence throughout the organization." Optimism cascades down.

By contrast, leaders who worry excessively - the up-all-night types - can set a cautious or even frightened tone that spreads discouragement. In Kaye's experience, "worried leaders tend to fail their people in one of two ways. They may be distracted and overlook signals people send about what they are capable of. Or they micromanage, either because they don't trust their people or as a way of managing their own anxiety." Both approaches inhibit morale and make it impossible to build a culture of engagement.

The CEO needs to prepare the company for the future, which is all about seeing the opportunities in the larger picture.

It's interesting to note that the CEO who pushed back on the original question - "What keeps you up?" - had been chief risk assessment officer at another large financial institution. A former member of his executive team who heard about the pushback observed that the answer showed how much the CEO had grown as a leader. Worrying about what could happen, Kaye observed, is practically a job description for risk managers. "If you don't have a few sleepless nights, you may not be doing your job," she said. "But a CEO has a different brief. He or she needs to prepare the company for the future, which is all about seeing the opportunities in the larger picture."

Jim Kouzes and Barry Posner, my gurus in all things leadership, note in their classic work, The Leadership Challenge: How to Make Extraordinary Things Happen in Organizations (Wiley, 1987), that successful leaders always "challenge the process." That is, they look for opportunities to go beyond the status quo and innovative ways to improve the organization. Kouzes and Posner are clear that doing so always requires some degree of experiment and risk, as well as a willingness to accept the consequences when a risk does not pan out.

In a highly uncertain environment, that's a pretty good prescription for what most of us can do. And recognizing it might bring us to a renewed recognition that wakeful worry does not a good leader make.

   

What are your thoughts? Share your reactions.

Strategic Coaching to Accomplish Results

David Mead

Strategic Planning & Execution, Board Member - The Mead Consulting Group

Over the past few years, I have been asked repeatedly why Mead Consulting Group does not promote the coaching we do with CEOs and business leaders. My response has typically been that it is such an overused and “abused” term. We have not wanted to be lumped into the bucket of people who bill themselves as business coaches but who have limited or no real life business experience.
For many years, helping company leaders execute and grow as leaders has been a core part of our DNA. Our entire consulting practice is built around helping companies reach the next level – helping them to get results. Leadership, communication, strategic thinking, setting priorities, motivation, team development, alignment, accountability, and personal development are all part of the process. These are developed by close interaction with our client’s leaders. We refer to it as CEO coaching or strategic coaching, but in truth it usually involves the entire senior team.

A recent conversation with a client brought back to mind my personal situation - when I was thrust into the CEO role by the death of the Founder. My best strategic coach was one of the Board members who took me under his wing. I was 27 and he was 73. He had lived quite a life, from growing and selling businesses to failed partnerships, lawsuits, large acquisitions, employee issues. He had forgotten more than most people ever experience. He was an irascible cuss and didn’t suffer any fools. I was able to leverage his failures and successes. He helped me achieve my goals, and made sure I was prepared for almost any situation that came my way. He was the person who helped me understand the importance of developing and focusing on strategic plans that can actually be executed.

I saw an article a number of years back that listed some reasons why business leaders could benefit from having an experienced strategic coach. Long ago I turned these into my own list – which I will outline below. It is this same focus that our senior consultants bring to every one of our clients.

• You gain a needed confidante
• They force you outside your comfort zone
• You get personal attention from someone who knows your business inside and out.
• You hear the hard truth - that people inside your company won’t share
• You get objective, unbiased opinions
• You learn how to turn your ideas into reality… Or hear why you are chasing too many shiny objects and need to focus
• You are held accountable for getting important things done – focus on strategic issues not what shade of mauve the office furniture will be.
• You get exposed to a huge external network
• You gain confidence in your decisions and actions

If you want more information about how we help CEOs and business leaders continue to grow and accomplish their goals, please contact me.

Scenario Planning Part 5: Why every company should be doing scenario planning!

If your business or industry is predictable, you need not continue reading. If, however, there is uncertainty about the future of your markets or industry, then your company should examine the way it plans.

Making assumptions gives us a false sense of security and puts blinders on us. 

What is the old line about the word “assume” making an “ass out of you and me?” Not to be profane, but traditional strategic planning totally botched the economic downturn/recovery of the last five years. Traditional strategic planning is based on assumptions. The planning group makes certain assumptions about the future – about variables such as economic, political, social, technological, regulatory, environmental, etc. Making assumptions is just another way of saying we are attempting to predict the future.

Really? I would suggest that there are situations where economic, social, political, technological, regulatory, and environmental factors will drive fundamental change in every business and industry of every person reading this e-Letter. It’s really only a question of degree, pace, and timing.

In Scenario Planning Part 4 – Benefiting from Disruptions, we discussed how various organizations (e.g. Blockbuster, Kodak, Encyclopedia Britannica) could have avoided significant market pain by utilizing scenario planning. Without being overly critical, these organizations were complacent – and they made assumptions about the future that proved to be very wrong. Each was overtaken by forces that were not within their traditional industry competitive analysis.

Have the courage to consider the tough questions. How will your business be impacted by the following?

·        Technology - How much will technology change your industry? Will your business or industry be affected by any of the following

o   Mobile ordering; Mobile product/ price comparisons

o   Mobile payments

o   “Showrooming” in brick and mortar stores and buying online  (e.g. Best Buy and Amazon)

o   Contextual offers/specials, loyalty programs, other specific knowledge about customers

o   Social commerce

o   Apps for everything

o   Efficient visibility and management of supply chains (from end user order entry – directly impacting each step of the supply chain)

·        Social/Environmental

o   Power moving to the consumer (away from institutions)

o   Buyers have equal or greater knowledge than sellers

o   Changes in culture, attitudes

§  Will today’s 20-something millennials abandon the desire for home ownership?

§  What long-term impact will the “green” movement have on markets, products

·        Demographics - Is your customer base affected by demographics?

·        Aging population in certain markets

o   What does the negative birth-rate and aging population mean for European economies like Greece, Spain, Italy, etc.

o   Baby boomers retiring, selling businesses, eldercare, etc.

·        Economic

·        Will the new housing construction market stay at the bottom for another 10 years?

·        Is the U.S. facing a period of structural high unemployment?

·        Long periods of “stagflation” or inflation

·        Will increasing labor rates make China less competitive? How will outsourcing look in 5-10 years?

·        Regulatory – The list is endless…

·        Healthcare?

·        FDA?

·        Trade?

·        Tax reform (Elimination of subsidies, elimination of deductions (e.g., mortgage interest), business expenses, etc.?)

Some organizations will say scenario planning is too difficult and elect to take a simpler course.           

Most organizations perform traditional strategic planning or business planning/ budgeting because it is comfortable and addresses a short timeframe. However, we now know that the world is uncertain and interconnected. Companies can no longer ignore uncertainty or try to assume it away.  As author H.L. Mencken is quoted, “For every complex problem, there is an answer that is clear, simple, and wrong.”

That is your opportunity. We’ve seen the number of companies doing scenario planning triple since 2008.                                                                                                                                                                                 

Since 2008, the number of our clients that are doing scenario planning has more than tripled.  Companies that are scenario planning are examining different possibilities of the future and determining their competitive response. They are modifying the trends and information that they monitor so that they can develop “early warning” signs. These companies are building flexibility into their planning and adaptability into their leadership and culture.