Insights

Tough at the top

The article Tough at the Top in Market Leader (June issue) didn’t go far enough in highlighting the challenges facing today’s CEO. Let’s look at the 8 areas from the original article.

1. Give a clear sense of direction

Working with different company directors I can see the importance of a clear sense of direction. The culture of the senior team is vital. Simon Sinek summed it up “When people believe in what you believe, they work with their blood, sweat and tears. When they don’t believe in what you believe they work for your money” My fear is that too often CEOs rely too heavily on money and not enough on creating beliefs which are so strong your employees will walk an extra mile over hot coals!

Bigger isn’t better, better is better. Mediocrity is the enemy of greatness. As Steve Jobs said “Be insanely great”.

CEOs need to be braver, bolder and more decisive. They need to do less to achieve more. Go for stretch targets, go out of your comfort zone, push for real improvements. Achieve what others say is impossible.

2. Bring the customer into the Boardroom

Too many companies pay lip service to this. Go further! Bring your competitors’ customers, your ex-customers and your unhappy customers into the boardroom. However beware of only listening to the customer. Don’t just listen to them. Observe them.

As Henry Ford said “if we’d asked the customer what he wanted he’d have said ‘a faster horse'” We need to anticipate what the customer needs in the future before they know they need it.

3. Communicate clearly – inside and outside

Too often communication from companies is only about the positives. The negatives are avoided. Confront the tough stuff. Have more courageous communications. Work harder at communicating how the business is tackling problems, crises and challenges. Communication is about building trust. No trust, no sale.

Tesco’s early handling of the horse-meat scandal was excellent. When it first happened they stated what had happened, said what they were doing to resolve the situation and said they’d update us with progress.

4. Be flexible but not floppy

Remember yesterday does not predict tomorrow. Do not assume today’s customer will be tomorrow’s customer. In the past year or so we’ve seen the demise of previously successful businesses which failed to adapt to their changing market, ie Blockbuster, Clinton Cards and JJB Sports. Retail has changed so much – so have many other industries. Other companies which failed to adapt and retain their dominance are Yellow Pages and Nokia. Change sneaks up on us. Often we don’t notice it or delude ourselves it’s not happening. Sometimes we need a near death experience so we take change seriously.

5. Take risks but don’t bet the company

Companies want innovation but lack tolerance of mistakes. They can’t have it both ways. Innovation requires acceptance that mistakes will be made. Think like a hungry start-up or challenger entrepreneur.

“Take calculated risks. That is quite different from being rash” George S Patton.

6. Build the team around you.

Build the right team and be more ruthless with the wrong team members. Let under-performers sink or swim. Often poor performance is tolerated for too long. Take courageous decisions sooner. Take decisions before you need to, then they are ‘brave’ decisions. If you wait till you have no choice and are forced to take that decision, then that’s no longer a brave decision.

7. Listen with humility and act with courage

You learn so much more when you listen than when you speak. Most of us need to speak less and listen more. (Me included!) The arrogance of success can make us go deaf.

Don’t wait till you have 100% certainty. Know when good enough is enough to go with and when good enough isn’t.

8. Earn your reward by building trust

I agree that most people are ok with CEOs being paid well and earning attractive bonuses when they perform, deliver results and grow a business. Where there is frustration is when CEOs are highly paid in bailed out banks or monopolies such as the water industry and receive eye-watering bonuses (no pun intended) for under-performance.

Here are two further thoughts.

A recent article in Harvard Business Review identified the 3 rules for business success which have a wonderful clarity and simplicity.

Rule 1: better, not cheaper

Rule 2: grow revenue before cutting costs

Rule 3: focus on rules 1&2!

Keep the main thing the main thing.

Don’t let the short term over-rule the long term. Don’t screw the future of the business to hit this Quarter’s target.

Article first published in Market Leader June 2013