You need an excellent CEO. According to “CEO Excellence: The Six Mindsets That Distinguish the Best Leaders from the Rest”, CEOs who rank in the top 20% of financial performance generate, on average, 2.8 times more total return to shareholders during each year of their tenure than do average performers. Moreover, the extent to which a CEO is a significant predictor of a company’s performance has more than doubled since the mid-twentieth century.
Six responsibilities
They interviewed several top CEOs, and six key responsibilities emerged:
- Setting the direction
- Aligning the organisation
- Mobilising through leaders
- Engaging the board
- Connecting with stakeholders
- Managing personal effectiveness
The best CEOs
The best CEOs are exceptional futurists and have an excellent information dashboard. They are perception pioneers. The best CEOs hardwire their view of the future into their company’s strategic planning. They are into scenario planning. They consider the second-, third-, fourth-, fifth-, sixth-, and seventh-order consequences. Excellent CEOs are always looking to the next S-curve while ensuring the current one is delivered on. The best CEOs connect the dots and have a good filter for what in their environment is signal and what is noise. This aptitude will be even more crucial in the future amid what will undoubtedly be an ever more raging torrent of trends, ideas, and information. They think like owners.
It is thought at the top
They also found that it is lonely at the top. Peerless is the work they use. The CEO role is the intersection of all contradictions. It is a horrible, all-consuming, complex, and a hundred-hour-a-week job.
What is being a CEO about?
It is 20/80, reframing, leading by example, intersections, success definition, mission, man on the moon vision, values, passion (the strategic box), customer delight, employee delight, ownership, movement, the soft stuff, rigour, consistent storytelling, single narrative, organisational design, balance, accountability, autonomy, talent development, coalition and team building, authenticity, disciplined execution, trust, radical transparency, rhythm, ESG, authority, character and servant leadership. It is about legacy and history.
The research
- If you want your company’s investments to be big enough to move the needle, your capital expenditures to sales ratio need to exceed 1.7 times the industry median for ten years.
- The most successful companies reduce administrative, sales, and labour costs more deeply than others and, in so doing, achieve 25% more productivity improvement than their industry’s median over a ten-year period.
- CEOs who make too few moonshot-size moves—or make them too late in their tenure—fall behind the pack. This move is deemed big when a company shifts more than 60% of its capital expenditures among business units over ten years.
- 83% identify capital allocation as a key lever for growth—citing it as even more important than operational excellence or M&A.
- The best CEOs use performance milestones. They release additional tranches of investment only when there is strong evidence that previous tranches are yielding results.
- The best nurtured and pruned their business nearly three times more often than the rest.
- The impact of choosing a “treat the soft stuff as the hard stuff” mindset and taking the actions it calls for is dramatic: The odds of a strategy being successfully executed more than double from 30 to 79%, and the impact of that execution is 1.8 times greater.
- Of the fifty most valuable roles in a typical corporation, we found that only 10% are positions that report directly to a CEO; 60% exist at the next level down, and 20% are at the level below that.
- Research shows that only 10% of board members feel they have a solid understanding of the dynamics of the industries in which their companies operate. Only 21% feel they fully understand how their business creates value.
Interesting concepts from the book
The book covers concepts such as zero base strategy, “Decency Quotient” (DQ). “Kando,” which in Japanese means to “wow” people, culture cabinets, books (at Microsoft, Carol Dweck’s book Mindset mandatory reading for executives), helix organisations, unstructured time, focus areas, intrapreneurship, the Matrix (the best CEOs take the red pill), Navy Seals, left tackle, aptitude and attitude, ruthless prioritisation, combining data, dialogue, and speed, DACI, MOJO, the Joyful Observer, template and tempo, information asymmetry, toy elephants, “The Art of War”, informal power, Shinkansen (the bullet train), feedforward, energy management, Patagonia (the company), embedding purpose into the core, chaos monkeys (simulations and stress testing), Brazilian jiu-jitsu, breathing, dancing, the oscillation between energy expenditure and recovery, compartmentalisation, a “To-Be”, the difference between victory and winning, mood management and listening tours.
Decathlon
The authors believe that the role of a COE has more in common with being a decathlete than mastering any one skill. Good athletes (and the Navy Seals “gear up” (donning helmet, riding clothes, reflectors, etc.), finding the right seat height, and pumping the tires. Toolsets are important. Read “The habit of excellence”.
The future CEO
Whatever the future brings, the best CEOs of the future will be even more ethically accountable, diverse, resilient and impactful. As CEOs, we are called to serve as societal leaders, using our voices to advocate for policies that benefit many stakeholders. CEOs as zeronauts.
Other books
In this blog, you will find links to at least 10 other books. I could have found many more. Ultimately, the book reminds me of “The new leadership literacies” and “The captain class”. It is very similar to “The CEO test“. It always seems to come back to the lessons from the military and sports. I think that is going to be my next book about books. Any book tips appreciated.
