The Chief Executive Officer is one of the most coveted titles, and least understood jobs in a company. Everyone believes that CEOs can do whatever they want, are all powerful, and are magically competent. Nothing could be further from the truth. By its very nature, the job description of a CEO means meeting the needs of employees, customers, investors, communities, and the law. Some of a CEO’s job can be delegated. But several elements of the job must be done by the CEO. Read on for the details of what makes a CEO.
What is intrinsic to the CEO’s job?
This isn’t a traditional job description; it’s an examination of the actual roles that a CEO plays (legally or de facto) within a company. A CEO’s job description includes a few important areas. Any individual CEO may take on any tasks that they wish, but these are the things that can’t be delegated:
While a CEO may get input for some of those duties, it is the CEO’s—and only the CEO’s—responsibility to perform those well. Being the CEO, they can spend the rest of their time doing whatever they decide they want to spend their time on. But ultimately, everything else about a given CEO’s job is optional.
Admit it. We all feel a touch of awe when someone has it: the CEO title. The power, the salary, and the chance to Be The Boss. It’s worthy of awe!
Too bad so few CEOs are good at what they do. In fact, only 1 in 20 are in the top 5%. Many don’t know what their job should be, and few of those can pull it off well. The job is simple—very simple. But it’s not easy at all. What is a CEO’s job?
More than with any other job, the responsibilities of a CEO diverge from the duties and the measurement.
A CEO’s responsibilities: everything, especially in a startup. The CEO is responsible for the success or failure of the company. Operations, marketing, strategy, financing, creation of company culture, human resources, hiring, firing, compliance with safety regulations, sales, PR, etc.—it all falls on the CEO’s shoulders. Being responsible means that the CEO is the one held accountable for the success of the company’s efforts, across the board. But of course, the CEO doesn’t actually do all that work.
The CEO’s duties are what she actually does, the responsibilities she doesn’t delegate. Some things can’t be delegated. Creating culture, modeling values, building the senior management team, financing road shows, ultimate approval of how money gets spent, and, indeed, the delegation itself can be done only by the CEO.
What is the CEO’s main duty? Setting strategy and vision.The senior management team can help develop strategy. Investors can approve a business plan. The Board can approve, advise, or ask the CEO to revise a business strategy. But at the end of the day, it’s the CEO who ultimately sets the direction:
Which markets will the company enter? Against which competitors?
What will the company’s product lines be?
How will the company differentiate itself? Will it be low cost? High service? Convenient Locations? Flexible financing? High-touch? Mass produced?
The CEO decides, sets budgets, forms partnerships, sells off incompatible product lines, makes acquisitions, and hires a team to steer the company accordingly.
Modeling and setting the company’s culture, values, and behavior
The CEO’s second duty is building culture. Work gets done through people, and people are profoundly affected by culture. A lousy place to work can drive away high performers. After all, they have their pick of places to work. And a great place to work can attract and retain the very best.
Culture is built in dozens of ways, and the CEO sets the tone. Her every action—or inaction—sends cultural messages (see “Life Under a Magnifying Glass”). Clothes send signals about how formal the workplace is. Who she talks to signals who is and isn’t important. How she treats mistakes (feedback or failure?) sends signals about risk-taking. Who she fires, what she puts up with, and what she rewards shape the culture powerfully.
This can not be emphasized enough! People imitate a CEO’s behavior when deciding how to act. The book Pre-suasion by Robert Cialdini, documents at length the ways in which, for example, a dishonest CEO makes employees feel as if they can cut corners, steal from the company, and generally behave according to those same standards.
A project team worked weekends launching a multimedia web site on a tight deadline. Their CEO was on holiday when the site launched. She didn’t call to congratulate the team. To her, it was a matter of keeping her personal life sacred. To the team, it was a message that her personal life was more important than the weekends and evenings they had put in to meet the deadline. Next time, they may not work quite so hard. The emotion and effect on the culture was real, even if it wasn’t what the CEO intended. Congratulations from the CEO on a job well done can motivate a team like nothing else. Silence can demotivate just as quickly.
If vision is where the company is going, values tell how the company gets there.Values outline acceptable behavior. The CEO conveys values through actions and reactions to others. Slipping a ship schedule to meet quality levels sends a message of valuing quality. Not over-celebrating a team’s heroic recovery when they could have avoided a problem altogether sends a message about prevention versus damage control. People take their cues about interpersonal values—trust, honesty, openness—from CEO’s actions as well.
Building and leading the senior executive team
Team-building is the CEO’s #3 duty. The CEO hires, fires, and leads the senior management team. They, in turn, hire, fire, and lead the rest of the organization.
The CEO must be able to hire and fire non-performers. She must resolve differences between senior team members, and keep them working together in a common direction. She sets direction by communicating the strategy and vision of where the company is going. Strategy sets the direction for the senior team, who in turn set it for the rest of the company. With clear direction that everyone understands, the team can rally together and make it happen.
Don’t underestimate the power of setting direction. In 1991, at Intuit’s new employee orientation, CEO Scott Cook presented his vision of Intuit as the center of computerized personal finance. Intuit had just 120 employees and one product. Ten years later, it’s a billion-dollar company with thousands of employees and dozens of products. Worldwide, it is the winner in personal finance, bar none. The success is due in no small part to every Intuit employee knowing and sharing the company’s vision and strategy.
Allocating capital to the company’s priorities
Capital allocation is the CEO’s #4 duty. The CEO sets budgets within the firm. She funds projects which support the strategy, and ramps down projects which lose money or don’t support the strategy. She considers carefully the company’s major expenditures, and manages the firm’s capital. If the company can’t use each dollar raised from investors to produce at least $1 of shareholder value, she decides when to return money to the investors. Some CEOs don’t consider themselves financial people, but at the end of the day, it is their decisions that determine the company’s financial fate.
Footnotes for Part 1
 Pay no attention to the math background peeking from behind the curtain… back
Measuring Success as a CEO.
Knowing the job description is a good first step for a CEO, but to know how she’s doing, she needs to design her own measurement system.
Unlike inconvenient lower-level jobs, no one tells the Chief Executive how she’s doing. Do managers let her know she’s undermining their authority, making poor decisions, or communicating poorly? Not likely. Even when a CEO asks for honest feedback, the fear is there: non-flattering feedback may stall a promising career. Even when a company uses 360-degree feedback, no one penalizes the CEO if she doesn’t act on the feedback.
The Board of Directors supposedly oversees the CEO, but they are far removed from day-to-day actions. Over time, they can evaluate performance, but they look mainly at share price and company strategy. They are rarely interested in—(or qualified to comment on!)—the CEO’s daily behavior.
But the CEO’s daily behavior will make or break the company! The CEO’s duties don’t change because they are unmeasured. Indeed, lax measurement makes it easy for the CEO to feel confident, even when she shouldn’t. Good feedback is the only way to know what’s working, but share price simply doesn’t do it. External measures measure the company, not the link between the CEO’s actions. A low share price tells her something’s wrong, but it doesn’t help her figure out what.
By measuring her performance based on her duties, a CEO can learn to do her job better. As explained in part 1, the CEO’s job is setting strategy and vision, building culture, leading the senior team, and allocating capital. The last of these is easy to measure. The first three are more of a challenge.
How does a CEO know she’s doing the vision thing? It’s hard. Having vision isn’t enough—that just takes a handful of mushrooms and a vision quest. Communicating the vision is the key. When people “get it,” they know how their daily job supports the vision. If they can’t link their job to the vision, that tells a CEO that her communication is faulty, or she hasn’t helped her managers turn the vision into actual tasks. Either way, a CEO can monitor her success as a visionary by questioning and listening for employees to link their jobs with the company vision.
Culture building is subtle, the culture a CEO sees may be very different from the culture of the rank-and-file. One company had a facilities policy that all equipment within 450 feet of the senior management offices was kept in top working order. Senior managers saw a smoothly running company, while everyone else saw neglect and carelessness.
Surveys about openness, values, and morale can be used to develop a measure of culture. The questions to ask aren’t rocket science. The book First, Break all the Rules gives a great questionnaire for measuring overall culture. Also, check turnover. When 95% of your workforce says they can’t wait to get to work, something is going right. If people rarely leave, and if it’s easy to attract top talent at below-market prices, you can be sure the culture plays a large role. If people leave (especially your top performers), again—look to culture. And don’t underestimate the power of walking around and counting smiles. If people are having fun, it will show.
The CEO’s success at team-building can often be measured through the team. Teams usually know when they’re effective. They can also rate their team using assessments that measure specific behaviors. For example, “I can trust my teammates.” “My teammates deliver their part of the project on time.” “Every member knows what is expected of them.” Regular team self-assessments can help the CEO track the team’s progress and hone her abilities to keep the team running smoothly.
Easiest to measure is a CEO’s capital allocation skill. In fact, financial measures are the ones made public: earnings and share price. But how can a CEO link those to her actual decisions? Working with her CFO, a CEO can devise financial measures appropriate to her business. Sometimes traditional measures are most appropriate, such as economic value added or return on assets (for a capital-intensive company). Other times, the CEO may want to invent business-specific measures, such as return on training dollars, for a company which values state-of-the-art training for employees. By monitoring several such measures, a CEO learns to link her budget decisions with company outcomes. Ultimately, the CEO’s should be creating more than a dollar of value for every dollar invested in the company. Otherwise, her best bet is to return cash to the shareholders for them to invest in more productive vehicles.
In startups, earnings begin low to nonexistent, and share price is more about salesmanship and vision than earnings. So the CEO gets almost no useful feedback about her capital allocation wisdom. She doesn’t know whether a dollar spent on a slightly nicer-than-necessary copy machine is wasted or is a wise investment in a long-term. Careful attention to the design and tracking of financial measures can help her prepare for the transition to an earnings-driven company.
 The CEOs don’t help the problem. Many of my CEO clients highlight the value of honest feedback from their coach. Yet they complain about employees who disagree with them, just don’t “get it” or don’t have enough information “to understand the real issues.” In a coaching call, they can hear feedback and consider it. At work, they treat disagreement as dissension, and then wonder why everyone’s a “Yes man.” back
 There are dozens of team effectiveness surveys. You can start by checking out http://www.cambriaconsulting.com,http://www.ccl.org, and http://www.pfeiffer.com.back
Pitfalls and Solutions for the CEO
A CEO can tank a company by not understanding their duties, or failing to set up good measurement systems. But it’s also true that the job itself can screw up the person, as well. It’s said that power corrupts, and few positions are more powerful than CEO. While the USA may be a democracy, our companies are legal dictatorships with the CEO calling the shots(1). While she may be having a great time playing Boss, the position may be taking a very human toll.
It’s all too easy for the CEO to become a …; jerk(2) …; without realizing it. They can forget—if they ever knew—what it was like to have a boss. They are free to ignore feedback that they don’t want to hear, and no one will call them to task for it. They can bypass the chain of command when they want to meddle. They can give themselves raises and genuinely believe they deserve it. And most dreadfully, they can forget what it is like to be “one of the little people”:
I have to leave early today.
To pick up my kids from daycare.
Oh… (looks genuinely perplexed) Why don’t you have your nanny do that?
I don’t have a nanny.
Oh…; wanders away with a mildly confused expression
The worker was an incredibly productive person. She worked harder than the CEO, got more done, yet couldn’t have afforded a nanny if her life depended on it. The CEO didn’t intend to be a jerk, but his lack of empathy didn’t win many supporters.
A CEO can become arrogant by externalizing blame
Having no day-to-day accountability for her actions can also turn a CEO sour. When things go wrong, she can blame everyone around her without facing her own shortcomings. “My employees just don’t get it,” proclaims the CEO, never thinking for a moment that she is the one who hired them. Did she hire incompetents? Or has she failed to communicate goals consistently and clearly? “Market conditions have changed.” she declares. A nice excuse, but isn’t it the CEO’s job to anticipate the market and position the company for success under a variety of scenarios? Without someone to keep her honest, she can gradually absolve herself of all responsibility.
Believing in a title can lead to overconfidence
Arrogance also threatens a CEO. “Because I am CEO, I must know the business better than anyone else.” It has been said, but it just isn’t true. No CEO can be an expert in all functional areas. A CEO who is doing her job is spending time with the big picture. If she knows the details better than her employees, she’s either hiring the wrong people or spending her time at the wrong levels of the organization. It’s appropriate for a CEO to manage operations if absolutely necessary, but she should quickly hire good operational managers and return to leading the whole business.
If she also comes to believe that the CEO title grants infallibility, watch out. Even the Pope is only infallible a couple of times each century. But CEOs can reinforce their delusions of grandeur by giving themselves higher salaries (surely she deserves it! After all, salary benchmarks show how underpaid she is) and more perks. Then when layoffs come, the CEO wants applause for having the moral strength to make “hard choices,” quietly overlooking how her own poor decision making led to the need for layoffs.
CEOs can stop learning well
Of course, once infallible, there’s no more to learn, and a CEO may quietly stop learning. Without daily oversight and high quality feedback on how she does her job, she can mistakenly believe her actions lead to success. In reality, she may be doing the wrong thing, but her staff may be working around the clock to cover for her.
Furthermore, sins of omission aren’t penalized. A CEO who does an adequate job, but far less than she could/should have done—goes unnoticed. In hindsight, XYZ Software(3) could have had a $1 billion market niche, and gone public with a valuation of tens of billions. Instead, it stuck to one product, had little understanding of its markets, and ignored competition. Yet it still went public in a $300-million IPO. Was management penalized for a lack of vision and market responsiveness? Hardly! The top managers walked off with $60 million apiece, reinforcing the notion that they had done a great job. Yet with a slightly grander vision, the company might have been 10 or 100 times its size.
Setting vision is the CEO’s job, but nothing tells her if her sights are too low. She isn’t penalized for missing the grander vision. Such sins of omissions are a CEO’s worst enemy. She can be lulled into mediocrity by not knowing what would have been possible. The four-minute mile was considered impossible…until Roger Bannister ran it. Now, it’s commonplace. Likewise, a CEO may limit herself by not realizing she can do her job better.
Though salary benchmarks are common, performance benchmarks are surprisingly rare. Quality learning demands a CEO benchmark herself against other superb CEO’s. Her central learning question is not “are you doing a good job?” but “are other CEOs doing a better job and if so, how can you learn to measure up?(4)“
Footnotes for part 3
(1) Ok, ok. Technically the Board of Directors has hire/fire authority over the CEO, but the Board can’t control day-to-day operations. And while there are certainly boards that replace inept CEOs, it takes sustained incompetence over a long time to move a board to action. So for practical purposes, the buck stops with the CEO. back
(2) Her employees may use less diplomatic terms. back
(3) Names are changed to protect the innocent. back
Coaching tips to stay sane and skillful at the top of the heap.
These coaching assignments will help an executive avoid some of the pitfalls of the CEO job. They are simple, easy, and won’t take much time. They’ll help a CEO stay connected with workers, keep herself humble, and increase her learning while becoming more successful. The suggestions strive to be quick and easy to do, while still producing real results.
Make Space to Practice These Assignments
Set aside 5 to 10 minutes, daily, to developing as a leader and human being. This will be the time you think about the below topics and set your mind for the day. Schedule the time if necessary. Just make sure that you do what’s right for your growth.
Pace yourself. Life is long. Adopt these suggestions one or two at a time, and practice until you make them your own. Then move on. Forcing won’t help; this is about developing at your own natural rhythm. Do one assignment for a few weeks, then move on to another. Keep the ones that work for you and drop those that don’t.
Staying connected with “the little people”
Cultivate an attitude of respect—your respect for them. The “little people” are the ones turning your vision into reality. Meditate on this for a few minutes and ask yourself whether you can their jobs as well as they can. If you can, then you’re not hiring the right people—go change that! Otherwise, once a day, go talk to one of your low-level employees—someone more capable than you in their area of expertise—and learn from them. Choose a different person each day. Get as close to the front line workers as possible.
Listen with an open mind and learn. Learn about their job. Ask what works for them and what doesn’t. Above all, listen to their comments without judgment. Your goal is to connect with their experience of the world, not impose your own. Learn about their life. Find out what motivates them. Why did they come work for you instead of somewhere else? Simply by spending a few minutes understanding their life, you can greatly increase your appreciation of how they’re different (and similar!).
Share your vision and job with them, from a position of service. Pretend that your job is to make this person a success. Ask them how their job fits into the work the company does. If they don’t know, take on the responsibility of helping them understand how their job links to the vision. Clarify any confusion they may have about where the company is going. And ask them what you can do to help them succeed at doing their best. Then do it.
Acknowledge, often! Without your employees, your dreams and plans wouldn’t amount to much. Take every available opportunity to acknowledge the contribution of those around you and give them credit, especially in public. Feedback is rare in most companies, and positive feedback is rarest of all(1).
“Get” that it’s all your responsibility. When things don’t go the way you want, take responsibility—whether or not it’s your fault. The mindset of responsibility will put you in a much more powerful place than the mindset of blame. Regularly review circumstances asking, “What could I do differently (or stop doing) to make a positive difference?” Identify the action and then take it. You’ll be surprised how much more power you have over externalities, operating from responsibility rather than blame.
Gather honest advisors to hold you accountable for your behavior. Sometimes a Board of Directors will give honest feedback, but they are removed from your day-to-day behavior. Actively solicit feedback from third parties: friends, peers, associates. Share your issues and how you’re handling them, and ask for an honest assessment. Everyone in a company is accountable to someone for their behavior, except the CEO. Make yourself accountable as best you can.
Identify your limits. Ask, “can someone else in the world do my job better than I am currently doing it?” If the answer is Yes, seek out that person and ask for their guidance in getting better. If the answer is No, validate that answer by asking your advisors, competitors, suppliers, customers, and employees. Many companies have crashed and burn because they believe they were the best, for no good reason but pride and ego.
Create measurable performance criteria for your executive team, including yourself. Make sure people within the organization know your goals, and know what you can be counted on to do. Hold yourselves accountable. If you don’t meet your goals, withhold your bonus, take no raise, and treat yourself exactly as you would treat an employee who missed their targets. It sends a powerful message to the company that you’re serious about performance.
Ask your direct reports, your Board of Directors, and anyone else you work with for feedback a couple of times a year. You can use a 360-degree feedback process or simply ask in an e-mail. It’s a lot easier to hear feedback on your performance if you’ve explicitly asked for it.
Videotape yourself receiving bad news. Watch the videotape and decide whether or not you would want to work for that person. If the answer is No, learn to chill when you hear bad news.
Study excellent CEOs. Call a CEO you admire and invite them to lunch. Exchange tips and adopt tactics that others have found useful. Read books like First, Break All the Rules, which are broad-based studies of habits of top-performers. Adopt at least one new habit a month.
Create systems for gathering feedback. Interview customers, competitors, analysts, and others in your industry to know how your company and products are perceived. Make sure you’re gathering feedback that will disconfirm your beliefs about the world, as much as confirms it. For example, if you think you’re #1 in your market, don’t just ask customers why they like your products. Ask what other products they use, and how your products fall short.
Spend time learning about the fundamentals of a CEO’s job:
Setting strategy. The strategy and vision for the company determine where everyone will focus their efforts. Find a vision and strategy and use it to align your entire company.
Creating the corporate culture. Your culture will determine what people do and don’t try, who will stay, who will leave, and how business will get done. Culture starts with you. Decide how you want people to act and start modeling the behavior publicly.
Capital allocation. Every dollar you raise and spend should produce more than $1 of return for the company, or it’s a waste of money. Learn how to make these judgements.
Hiring and Firing. The job of executives is primarily team and culture building. Hiring and firing are must-have skills. Read, take classes, and review past hiring successes and mistakes. Do whatever you can to hone your abilities.
Raise the Bar
Hold yourself to higher standards next year than you did this year. Challenge yourself to learn to get more done with fewer hours and fewer resources while creating a more balanced life for yourself.
These are just a few of the things you can do to increase your chances for success as a senior executive. I also believe in working with a coach to identify and overcome (or compensate for) blocks in your performance. Success can be had with many different skill sets. The more you learn about yourself and your capabilities, the better you will be able to shape a job that works for you. The more you learn about the capabilities of those around you, the better you will be able to build teams that produce spectacular results.
Do Great Things!
Footnotes for Part 4
(1) Social psychology has shown that rewarding desired behavior is far more effective than punishing bad behavior or non-performance. For reasons that aren’t entirely clear, our culture has evolved around using punishment as the main way of controlling behavior. Unfortunately, punishment doesn’t work very well. Interestingly, animal trainers have known this for years. For an excellent book on the subject, check out Don’t Shoot the Dog by Karen Pryor. back
Things are very tight right now. Our outlook is uncertain and people are afraid for their jobs. Under these circumstances I’d expect people to get more done, but somehow, we aren’t more productive than before. Any hints?
It’s funny, being a human being. You would think that when the pressure is on, we would flip into resourceful, productive mindsets and valiantly overcome whatever obstacles block the path to our goals. Alas, it doesn’t happen that way. When we feel scared and uncertain, our forebrain shuts down and our hindbrain screams, “Run!” That worked great when spotting the saber-tooth tiger grinning at us through the grass. But in the modern world, that’s often the opposite of what we need to do to survive.
Fear motivates immediacy
Creating urgency is a first step in mobilizing organizations. But an important truth about humans is that urgency easily slips into fear. Fear mobilizes, and it mobilizes away from the perceived danger. Which way is “away from?” Whichever direction someone is pointed when that hindbrain screams “Run!” Everyone around will also move quickly—in whatever direction they happen to be facing. Fear gets people moving now, but it won’t move them in the same direction.
Fear does more harm than just scatter effort; it produces stress. Under stress, creativity vanishes, problem-solving abilities diminish, and people stop learning. They react from impulse, they don’t think through consequences of their actions, and they become less able to spot patterns and interconnections. This is fine for a five-minute burst of jungle adrenaline, but it won’t lead to a workforce that can navigate a tricky economy.
Any workforce living in stress will have problems over the long term. When morale is bad for months at a time, people disengage. They stop thinking about taking the company to new heights and start groaning when the alarm clock goes off—and groans rarely bring out peak performance.
Leadership motivates coordinated action
Fear’s companion is, oddly, leadership. Fear motivates people strongly, but in random directions. Leadership aligns them in the same direction. Call it what you will: inspiration, vision, mission—setting direction gives people something to move towards. By sharing a vision, everyone in an organization can orient themselves around the same set of high-level goals.
Working towards a larger purpose also mobilizes people, but it mobilizes them in a way that unlocks their creativity, problem-solving, and resourceful mental states. When working towards a large goal they perceive as achievable but challenging, people create eustress, a positive stress that gives them the energy and resources to make progress on the goal.
It’s a big improvement when everyone is moving in the same direction, but one more piece is needed: coordination. The balance between good stress and bad stress is delicate. Once people agree on a goal and are psyched to go there, coordination becomes ever more important. If two groups become blocked by a lack of coordination, bad stress can re-emerge and begin shutting down morale again. So once people are mobilized, the ongoing challenge is making sure they’re supporting each other, and not getting in each other’s way.
Reconnect leadership at the top
The first step to getting the work force back into a powerful, productive mental state is to start with yourself. You’ve probably got the “Run!” response down cold. Now it’s time to reconnect with your “towards” vision. People take emotional cues from their leaders, and if you’ve been stressed about the economy, you’ll be radiating it throughout your organization, so get yourself and your leadership team into a powerful, positive place.
Leave the daily triggers that pull you back into stress. Turn on the voicemail, turn off the e-mail, smash the cell phone, and head off for a weekend in a mountain cabin. Get enough sleep, enough food, and enough physical relaxation so your brain starts working again. Reconnect to your vision. Write, daydream, and brainstorm where you want your group in five years, a year, six months, and three months. Factor in your personal goals as well so you really tap your own intrinsic motivation.
You’ll know you’ve done enough when you feel a strong pull towards your goals. Uncertainty about the economy may still be in the background, but once you’ve regained your equilibrium, you will also feel a strong sense of where you’re going.
Spread that feeling to the rest of your leadership team. Invite them for an off-site, and together, clarify the vision of where you’re headed until it’s at least as clear as perceptions about current problems. Take the time to make sure everyone understands the direction. Bring in their goals, wishes, and aspirations for the organization. While you work, watch their faces. Notice the energy level. When they start getting excited, you’ve tapped their motivation and gotten them back on a powerful path.
Back to the business, decrease stress
Once you return to daily business, you’ll have to decrease stress as you align people. Stress from specific causes (“My kids are sick.”) can be addressed on an ad hoc basis. Stress from vague sources like “the economy” is general anxiety. Often, you can help people by just letting people talk. Listen empathetically and don’t rush into solving or analyzing problems (for most of us type-As, this is much, much harder than it sounds). Feeling listened to can be enough to help someone regain equilibrium.
If the anxiety is about Things We Don’t Really Like to Talk About—like the fear of layoffs—talking can help defuse them. There’s no better way to nurture a fear than to let it remain the stuff of speculation. When left to their imaginations, people deal with uncertainty by imagining the worst and then reacting as if it had already happened. Truth is a great antidote for uncertainty. It is, after all, a form of certainty. Discuss what’s happening, even if all you can say is, “No one knows what will happen, but we’ll keep forging ahead toward our goals.”
Oh, yes. Keeping people healthy is also essential to soothing their nerves. Make sure people are sleeping enough. Sixteen-hour days are probably as productive as ten-hour days with enough sleep and an after-work life. Unless you run an assembly line, productivity is probably tied only loosely—if at all—to hours worked (but that’s another column).
Connect people to forward motivation
As you decrease stress, have the leadership team bring the sense of direction into all interactions. Remind people about the direction. Rally them. Excite them. But don’t overdo it; this isn’t about creating a huge one-time pep rally high. You’re setting a direction for the organization that you want to pervade decision making and keep people steady over the long term.
You build the strongest connections when decisions are made. Have your teams ask continually, “Will this decision move us further in the direction we wish to go?” Once everyone unifies around this question, coordination becomes possible and it will be much easier for people to move forward, which is what productivity is all about.
Your job becomes keeping your leadership team tied to the company vision, and helping them propagate the vision to their teams in turn. People are more productive when they know where they’re going and feel like they stand a chance of getting there. By reducing their stress and fear, addressing their uncertainty, and linking everyday activities to a future direction, people will be able to concentrate on producing results, rather than just running in circles from their anxiety’s imaginary monsters.
Why do companies fail to learn from their mistakes?
With so much riding on success, you would think that companies would be better at learning. Amazingly, it seems as if they fight tooth and nail against learning, often with disastrous results. The reasons, however, make a lot of sense. And once you understand the reasons, you just might be able to make a difference. If not, at least you can feel self-righteous when the insanity starts.
Few of us think much about learning when not in school or in a training environment. But learning doesn’t just happen; it takes reflection and thought. Reflection time used to be built into the world. It took three weeks for a head-office communication to arrive via Pony Express, allowing ample time to ponder and rethink decisions. Now we have overnight letters, junk mail, e-mail, voice mail, fax, cell phones, 30-second-delayed stock quotes, and the expectation that responding immediately is far more important than responding thoughtfully.
Organizations rarely build in time to do thoughtful learning, and when they do, that time is the first to go when emergencies beckon. When we built the original Quicken VISA card, we scheduled a learning debrief and documentation time. But long before the project’s end, other demands squeezed all the slack out of the schedule. The learning review was the first to go. If you don’t do it deliberately, learning won’t happen.
Implementing insights from a learning review is tough. Learning means behavior change. Organizationally, behavior change is daunting.
Think about what organizational change is: It’s changing structure and processes. At the very least, a lot of people must change how they work. Responsibilities, roles, and reporting relationships change. And that’s just in the easy case; learning that your phone system is the bottleneck in your customer service department may demand reworking physical plant and equipment in several locations. Getting the affected people together to coordinate can take weeks. Then new systems must be designed, built, and documented, and everyone must be taught how their jobs have changed. Then there’s still a learning curve for the new procedures. People get up to speed at the new ways of doing things, and only then has the business “learned.” And, oh yes, this all happens in spare time, because the normal workload is still present and has to be carried for the business to survive.
Part of changing the systems and structure is changing the people. A reorg can be done on paper in an afternoon. But changing just one person is hard, even when he or she understands the need for change (Yes, my doctor said to lower my intake of saturated fats, but those cookies at lunch yesterday were so good I just had to eat … six … of them). Ultimately, organizational learning is doomed to failure unless people can learn.
For starters, a lot of learning breaks down because it’s never communicated. Telling someone “Now you report to Sally and your department is no longer sales, it’s account relationships.” still leaves them to figure out how their day-to-day job has changed. They weren’t necessarily privy to the learning discussions, and can’t do anything meaningful without more information about the changes and the context.
Context answers the question “Why is this happening?” It’s especially important when motivating people. People like things to stay the same. But when we find out why the request was made, it suddenly makes sense. Without knowing the “Why?” most change just makes life difficult with no obvious payoff … thus, resistance.
Even if people understand the changes, they may not have the skills for the new job. When Microsoft learned that security matters to customers, Bill Gates proclaimed that all programmers would spend two months just fixing security problems. A great goal, to be sure, but the programmers had spent their careers building systems without regard to security. How can we expect them to suddenly develop the expertise to find—much less fix—any but the simplest security flaws?
And as with any change effort, Microsoft is starting with workers who uniformly lack the skills being developed. Over time, organizational priorities shape the work force. Security-conscious engineers never had a chance to develop their skills at Microsoft, so if they really cared they left years ago for companies more aligned with their style. Those who stayed are the ones who thrive in the “get it out the door and capture the market” mentality. So the change is starting with the employees least likely to intuit how the changes should happen.
Money can come to the rescue by training people. For a simple skill, it can be quick and easy. But training for large skills must be developed, delivered, and practiced. No matter how much we “thrive on chaos” and jump “into the vortex,” new habits take time to develop. Humans only change at a certain rate and we’ve never figured out how to speed that up. The world may change faster than ever, but people just don’t.
The ones who most need to change, however, are the managers. As the organization reshapes itself, resources will shift. That means money and people. Budgets will get slashed. Empires will topple. Even if everyone else is willing, one recalcitrant manager with the right budget authority can halt a learning effort in its tracks. Managers must let go and support the learning for it to happen. Being human, they can have as much difficulty changing their behavior as everyone else.
By now, I’ve probably convinced you that organizational learning is hopeless. But take heart: now that you know why learning is hard, you can deliberately make it easier.
Organizational learning isn’t easy. There’s no perfect solution. Despite the many reasons why learning is hard for individuals and even harder for organizations, it’s just a behavior that can become a habit. Develop the learning habit. Practice moving learning into individual action. Help people change and grow. Over time, the very forces that make change hard will come to your aid: those who don’t like learning will gradually leave, and you’ll attract a culture of people committed to learning. Even when an organization fights it, strong, dedicated action can at least produce pockets of smart business savvy.
Any ideas about how to capture lessons learned for a knowledge base—i.e. getting colleagues to NOT fear repercussions of admitting ‘mistakes’ and/or admitting what they did not know?
First, the Truth: most of us are afraid to admit mistakes or ignorance for good reason. Culturally, we don’t tolerate mistakes. Since first grade, we’ve been scolded, punished, given poor grades, passed over for promotion, ostracized, and belittled for our mistakes. 2003’s most popular TV series is “American Idol II.” The first several episodes were a countrywide mockery of talentless pop-star wannabes who at least had the courage to take a risk in front of 250 million people. Their reward? Public ridicule.
Sometimes we get the message that mistakes are OK. A well meaning, understanding person—usually from the Human Potential movement—says in a soft, caring voice, “It’s not a mistake, it’s a learning opportunity.” Two days later, the team member who didn’t make the mistake is promoted to team leader. It was a learning opportunity, all right. The learning was, “Don’t screw up, follow the rules, and we won’t punish you. You’ll take home your weekly paycheck, get your gold watch at retirement, and all will be well.”
Society’s message is, “Don’t admit mistakes or bad things will happen.” Before people will embrace their not-knowing, you have to make it safe, even desirable, to take risks.
The organization must support risk taking
Look first to your reward systems. Most organizations reward outcomes: sell the most, get promoted; meet your ship date, get a bonus; meet your earnings projections, get an analyst’s stamp of approval. The rewards come from reaching an outcome, no matter how it was reached. Imagine Laurie, a shoe salesperson for OutcomeCo. Laurie’s sales tactics work on just 1 percent of the customers. Fortunately, the territory is flush with that 1 percent, so meeting quarterly targets is a breeze. Laurie is motivated to milk the 1 percent, rather than take risks to capture the other 99 percent.
And why should Laurie take risks? Risk taking by its nature produces missed targets much of the time. The solution is to reward the learning process as well as the targets. Imagine LearningCo, where the bonus is based on helping the company move faster toward its goals by gathering useful information, developing better ways of doing things, or identifying what not to do again (mistakes). In LearningCo, Laurie is rewarded for capturing the 1 percent, but is also rewarded for noticing market trends, trying cool new sales tactics that don’t work—no doubt involving unicycles, French horns, and a powdered wig—and inventing cool new products that may someday take over the market.
People do what you pay them for, so pay them to learn. Add personal risk-taking plans to your yearly reviews. Ask, “Are you taking enough risks? How can I help you take more?” Applaud in public (and in private!) when someone fails at something wildly, audaciously new. Celebrate whoever has the wackiest new ideas. Otherwise, time spent thinking outside the box is also time spent thinking outside-the-bonus-structure. Given the choice between outside-the-box poverty and inside-the-BMW business-as-usual, don’t be surprised when people choose the BMW.
It’s hard to reward learning in an outcome-based culture; it takes real strength of conviction. Are you willing to pad your schedule with time for failures and experimentation? Will you step up to the plate and give a larger bonus to someone who learned and failed than to someone who reached an important outcome through sheer luck?
A software company rewarded their flagship product’s manager with a Hawaiian vacation when the product shipped. Since the flagship product accounted for 70 percent of the company’s revenue, the manager was given whatever budget and staff he requested to insure success. He had no need to learn; he could just commandeer more resources. Other managers—whose projects were cannibalized without notice for the flagship project—learned to streamline their development and ship on time with limited resources. Taken at face value, it sounds reasonable to reward the flagship manager more than the other managers, yet he contributed much less to the organization’s ongoing strength and capability. By not rewarding the other managers for their learning in a difficult situation, they eventually lost many of their good performers.
Support risk taking one-on-one
Once the organization structures support risk taking, support the behaviors one-on-one. When you see or hear someone pushing the edge of their thinking, step up and ask questions to push further. Brainstorm with them, and walk the example of encouraging people to push their (and the organization’s) edge. When someone has an idea that could lead to great learning, help her pursue it by giving her time and resources.
Also watch how others treat risk taking and mistakes. If you overhear someone making fun of someone else’s mistake or missed targets, ask them, “I wonder if the mistake was because they were trying something new?” Start exploring in conversation whether those present are taking enough risks. If you’re greeted with cynicism and incredulity, “If we did that, we’d just get fired and lose our bonuses,” celebrate! People are handing you their specific objections to risk taking. You can then ask simply, “What would have to happen for you to feel safe enough go out on a limb and try?”
Start learning reviews with facts
Even with one-on-one support for your people, it’s safest to structure project reviews as a review of facts. In fact, there’s no need to make a retrospective personal. Limit analysis to an examination of what did and didn’t happen. Keep personal responsibility out of it, and bring in personal commitment only when the team begins exploring the future. Once learning becomes commonplace, people will become comfortable owning their part in what happens.
At project reviews, the team will assume that its own behavior was flawless. The ubiquitous “they” was the source of all problems. “They” delivered materials late. “They” passed restrictive legislation. “They” didn’t provide the needed direction or focus. A team must get “they” out of its system before considering its own part in what happened.
Have everyone gather together facing a whiteboard (so it’s “us” vs. the whiteboard), and make a big list of everything that went wrong, no matter whose fault. List facts without judgment. If specific people are mentioned, remove the blame and just describe circumstances. “Bob handed in the report late” would become “Report handed in late.”
Then make a second list of all the good things that happened. Be specific. “We supported each other” is too vague. “We stayed late and took on each other’s work in order to meet a tight deadline” is just about right. At the end of this exercise, you’ll have a list of specific actions that can serve as a jumping-off point.
For each “bad” action, ask the team:
What choices could we have made to avoid the bad action?
What choices did we make that should have been avoided?
What misinterpretations of events, motivations, and actions did we make that led to the bad action?
What were the correct interpretations?
What do all these imply about what we should and shouldn’t do going forward?
For each “good” action, ask:
What did we do to cause this?
Is there anything we refrained from doing that allowed this to happen?
Did our interpretation of events, motivations, and actions help this action come to pass?
What do all these imply about what we should do and shouldn’t do going forward?
What you’re after is team learning. If Bob handed in a report three weeks late, the only question that mentions Bob is the question, “How can the team help Bob get the report done on time?” By discussing facts and framing the team’s involvement as one of future joint responsibility, you are shifting from a frame of “Who did what right/wrong?” to “What happened, and how can we help it happen better next time?”
Cultures—learning or not—become self-fulfilling prophecies. If your company has a conservative culture, it’s probably full of people who self-selected not to take risks and not to admit mistakes. Shifting that culture means addressing fears with substance: make sure your organization supports risk-taking in its rewards and performance measures. Model that support in your daily interactions. And even then, you’ll get the best learning when you carefully separate judgments from facts, and keep people engaged in finding solutions rather than rehashing blame. Our society does a great job of squelching learning instincts, but with patience, care, and precise communication, you can make it safe for a group to re-create a culture of learning and exploration.
I am a projects and operations manager at a multinational oil giant based in Cape Town, South Africa. I have seven people reporting to me. I am twenty-four years old and the youngest member of my team—the ages range from thirty to forty-three. What strategies/tactics can I use to gain genuine respect and trust of my direct reports? We have been working as a team for the past seven months.
As you’re finding out, positional authority is only vaguely useful for getting things done in an organization. The right job title will certainly get people to follow directions thanks to social psychology’s “obedience to authority” principle (see “Harnessing the Science of Persuasion”) but it won’t engage or align them unless they respect and trust you. Respect and trust don’t come from an organizational position; they come from building a strong relationship. Trust and respect are intertwined, but distinct; you can give respect without trusting, and you can trust without giving respect.
You’re six years younger than the youngest member of your team, so don’t count on gray hair or decades of industry experience to contribute to building respect. You’ll have to earn it from scratch.
Let’s build respect the old-fashioned way: by showing you’re really good at what you do. Being the youngest on your team, don’t even try to demonstrate the highest technical expertise. Even if you are the best technically, people won’t feel great about being out-performed at their own game by someone half their age. They will feel great, however, at having their own strengths magnified by someone who’s becoming a really good leader. Build respect by demonstrating excellence at leading.
Ask for help
First things first. Address what no one’s talking about: your age. People trust you when they believe you understand them. When you say what everyone is thinking but afraid to say, you’ll build trust rapidly. Done well, admitting when you’re in over your head can be the foundation for strong relationships. “I’m younger than the rest of the team, yet I’m the manager. We have a job to do as a group. I don’t have your industry experience, and I’m counting on you for our success. My job is doing what I can to help you create that success. If we all do our part, we’ll make a superb team.”
You’re laying the issue on the table and using it to frame a mutual working relationship. Yes, you’re young. And that’s just a fact. The team can either get over it, pull together, and get the work done, or they can turn it into a problem and stonewall. Either way, once you’ve had this conversation, you can talk about the choice they’ve made, rather than silently accepting their implicit reaction.
Now, start helping your team shine. If you make your team members successful as individuals and as a group, you’ll earn not only trust and respect, but also that most coveted leadership quality: loyalty.
Set a mission
Teams that shine use each person’s strengths to get the greatest results. But before you delve into strengths, you need a team mission to set the direction.
Make sure everyone knows and buys into the mission. The mission is why the group was formed in the first place. If you don’t have one, ask the group to help develop the exact wording based on the team’s original charter. Have them choose words that are meaningful and emotionally charged to them. What’s important is that the mission be more than just nice words. It will be how people know they’re doing the right thing. If your team will “develop processes that make existing production more effective” and everyone knows it, they know not to spend time brainstorming new product development. Since a mission is a definition of success, make sure it aligns with your boss’s idea of what success means for the team.
Missions and goals may be vague or may become obsolete over time. That’s fine. Notice when they aren’t adequate and fix them as needed. Just make sure everyone shares an understanding of the team’s current direction. Unless goals are clear, communicated, and agreed upon, you’ve already lost the battle.
A big part of your job is keeping people aware of the mission. Many new leaders assume that once the team knows what it’s supposed to do, all will be well. Nope. Daily work sucks people in and they gradually lose sight of the goal. Remind them often. Use the mission to introduce weekly status meetings, and ask the team to relate their status reports to the team’s larger objective.
Figuring out team dynamics
Once you have a common goal, you’re ready to enlist the team in crafting their working relationship. Take the time to understand each person’s unique strengths and blind spots. For each person, challenge the group to ask:
What are that person’s strengths?
How can that person’s strengths contribute to the group?
What support will that person need from the group to use his strengths most effectively and to compensate for weaker areas?
Include yourself in the discussion. You’ll be contributing direction, facilitation, and management. You’ve already said that your strengths don’t include decades of industry experience, so the team can expect you to bring them questions only experience can answer. Likewise, invite them to tell you when their experience contradicts your plans or decisions. With a roadmap of skills and needs, the team provides mutual support towards a common end.
Your job description as a leader is simple: Support your team in whatever they need to meet their goals. Your goal—telling the truth, framing the relationship as mutual support, setting direction, and aligning team members’ strengths—builds culture and working relationships. In the day-to-day, your team’s need for additional support will change. You’ll find yourself acquiring resources, scheduling projects, and shielding people from organizational politics. By occasionally asking, “How can I help you do your job better?” you’ll quickly learn how you can help your people succeed.
The more you demonstrate true commitment and honesty, the more people will trust you. The better you do your job, the more the team will respect you. You’re doing your job well by honestly addressing the status quo and having the group design working relationships that bring out their best. You may be the only manager in your team members’ careers who has taken this approach. They’ll respect and trust you for doing what it takes to make them successful, and won’t care for a moment that you’re twenty years their junior.
As the author of this column, I receive a number of questions each month on the topic of leadership. Manu asks how young men and women in India can be taught to think about leadership. A pharmacy director in the U.S. is having difficulty firing up a small number of workers who are not engaged in their work. Linda wants tips on being more decisive. An executive leading a crossfunctional team asks: “How can I motivate them to stay committed to the team and focused on our goals when they have their day-to-day work responsibilities?”
The answers to these questions begin with the very basics. What is the definition of leadership?
In my experience, “business leadership” is often associated with a CEO of a company who made a lot of money and got rich in the process. Yet when clients tell me their company needs leadership, impressive job titles and large salaries aren’t what they’re after.
We say, “So-and-so is a born leader.” No such thing. Leadership is a relationship between a person and a group plus the skills to guide the group to success. As with any relationship, success depends on both parties. One group’s stellar leader may fail utterly when leading another group. The lack of competent leadership is the number one complaint I hear from non-CEOs.
Rather than just study leaders (thousands of books on leadership cover that ground), I’ve asked hundreds of people who they follow and why. They say leadership is emotional; it’s about inspiration, motivation, and connection. Unlike management, it doesn’t lend itself to systems, structure, and traditional classroom teaching. What inspires people to follow is surprisingly consistent, and surprisingly simple. But be forewarned: Simple doesn’t mean easy!
Establishing the leadership relationship
Call it “vision,” or “mission,” but it all boils down to one thing: First and foremost, people look to leaders for direction. Only by knowing their organization’s direction can people apply themselves to achieve their goals. It needn’t be formally stated; the leader’s actions and decisions convey the direction to the company. The direction needs to pervade every decision and conversation within the company, and it’s the leader who makes that happen. Providing direction for others is a key to creating a leadership relationship.
Even with direction, people must trust a leader. Trust is built on honesty and integrity. People want the truth from their leaders. Outrage from Watergate, the Monica Lewinsky affair, Enron, and many other public scandals were fueled less by the events than by the accused parties’ cover-ups and lies. When Salomon Brothers covered up improper trading in an early-1990s scandal, it fueled the flight of a billion-dollars’ worth of customers as people lost trust in the organization. Warren Buffett rescued the company by using complete and total candor with Wall Street and regulators as a way of restoring trust. Far from being a disaster, telling the truth proved astonishingly effective in quickly restoring the company’s integrity, with a minimum of fines.
Leaders must have integrity, establishing clear values and living those values. One of my clients worked for a newly public company whose CEO urged employees to hold their shares to keep investor confidence high. He then sold several million-dollars’ worth of his own shares. He responded to his employees’ feelings of betrayal saying, “It was just a small percentage of my holdings.” But that didn’t matter! He contradicted himself by selling shares while exhorting his employees to hold theirs. It killed his leadership.
Interestingly, the key is having actions match values, more so than what those values are. If one leader values quality and another values speed-to-market, they will simply attract different people to their organizations. But in either case, they must live their values consistently.
Consistency is another vital leadership element. When a leader changes direction with the market fad-of-the-day, or when his or her values shift according to the latest public opinion polls, people stop following. People want dependable leaders who provide a touchstone in times of change. You may ask: In a world of constant change, don’t we need to shift and adapt? Of course. But you must choose a direction and values that stay stable even while adapting your tactics.
A software company once had a company vision, “We will produce the best ABC widget for DOS the world has every seen.” It was a great vision statement, until Windows squashed the company out of existence. The software maker’s vision was so narrow it couldn’t adapt to change. A mission of, “We will solve the ABC problem for computers worldwide” would have been flexible enough to keep the vision while adapting to technological evolution.
Lastly, followers need to feel connected to their leaders. Leaders almost always connect through shared values; that’s one reason followers leave when a leader doesn’t live his or her values. Helping people feel they are part of something much greater—giving them a personal vision—is another strong tactic. For instance a leader in the healthcare industry may say, “You’re not just joining our company, you’re becoming part of transforming the world of healthcare.” Recognizing and rewarding employee achievement helps cement the connection. On the other hand, taking credit for others’ work is a powerful connection destroyer.
I was surprised by this framework’s simplicity—direction, integrity, consistency, and connection. But its simplicity hides how difficult it is to pull off. It’s difficult because these qualities can’t be faked for long. Creating a direction is easy. Integrating it into every breath and decision is not. Choosing values is easy. Aligning behavior, decision making, policies, and organization around those values is not. Consistency is easy … until things don’t go quite as planned. And connection is easy until things get busy and instinct tells us to stop all this fluffy foolishness and just get down to work.
Building the organization
Direction, integrity, consistency, and connection create the leadership relationship. That’s a first step in building an organization, but it doesn’t address the issue of how leaders make their organizations successful. History is littered with great leaders who didn’t have a clue how to turn their leadership into an enduring business. Let me share some of the highlights:
Focus, focus, focus. Know what the organization should be doing and ruthlessly say “no” to anything that would be a distraction.
Play to individual strengths. Understand the abilities of everyone you hire and make sure their job plays to their strengths. Don’t spend too much time developing weak areas. If someone can go from good-to-great in their strength, that’s more valuable to the organization than taking someone from poor-to-acceptable. Build organizational competence by teaming up complementary skill sets. Ditto for yourself; know what you’re good at and can do well, and spend most of your time doing that.
Play to organizational strengths. Stick to what you’re good at as a company, and get very good at it. If you’re a great software company, opening a chain of high-end fashion clothing stores won’t build a strong organization.
You can train people for skills, but it’s much harder to hire attitude. Most companies hire for specific job history or resume keywords, which is precisely the wrong way to go about it.
Bring out the best in your people. Hire the best, give them a common direction, and let them do their job. You’ll have a much stronger organization than if you make yourself too important. Remember: Every time you hire someone who isn’t as smart as you, you lower the average IQ of the company.
Most of this column has concentrated on the “soft” skills. When it comes to leadership, I remember what the COO of a multibillion-dollar company once told me: “At the end of the day the financial and strategic issues are there but they are reducible largely by analytics…the people and process issues are not.” If your goal is to become a successful business leader, your route will be smoother if you spend some time working on relationship skills and “softer” aspects of leading. Because at its heart, leadership is nothing more and nothing less than inspiring others to follow your dream and doing what it takes to make possible their success.
I asked Stever for help with a difficult decision involving conflicting personal, financial, and career goals. He helped me analyze the tradeoffs, leading me to a different direction than I was headed. And he helped me execute the plan, navigating complex organizational dynamics. In the end, I met my most important goals and learned a lot from the journey.