By Mubarak Sooltangos
Achief executive officer (CEO) is, by definition the topmost officer in a business organisation, responsible for the proper execution of all operations. But this definition is restrictive because more importantly, he has a primordial task, requiring intelligence and foresight, which is the formulation of a strategy and obtaining the approval of his Board of Directors. This involves issues relating to the future, i.e. a continuation of the growth of the business and very often departures from previous strategies if circumstances demand, and this may involve costly investments.
The CEO is not expected to execute operational processes personally, but he must have an insight into various operational issues like production, marketing, sales, human resource management, accounting, logistics and finance management. On top of this, for his strategic decisions, he needs to be aware of major happenings in the world, in his sector of activity and in competing businesses, and must have the required judgment to sieve important information from peripheral issues.
Being an all-rounder
The span of a CEO’s responsibility is wide, and he must have an understanding of all operational issues, albeit with limited depth, to be able to have a “helicopter view” of the whole business, and avoid being misled by mid-managers, who are, by nature, specialists in their respective fields. This determines the first and foremost quality which a CEO must have, namely that of being an all-rounder and endowed with maturity and judgment to be able to make a decision which takes into account all the implications, even peripheral ones, which specialist managers often neglect, through a lack of comprehensiveness in their analyses and an excess of focus on their own tasks. A helicopter view has the advantage of allowing a CEO to have a holistic view of his business, and move away from the “firefighting syndrome” which takes up valuable top management time, which should ideally be dedicated to thinking strategically rather than dealing with operational matters on a hands-on basis.
Being an inspirer
Everybody believes in the cliché that the foremost quality of a CEO is to be a leader. There are a lot of flaws in this reasoning, if at all it is a reasoned assumption. A poor leader enforces his way of thinking and his methods by force and is often ruthless in man management. A good leader gently instils his vision and his way of thinking into the minds of his subordinates through convincing, and this seems to work most of the time. But isn’t there a more intelligent approach which decision makers have not researched?
A good leader will have his work done by his team, but his subordinates will be executing tasks and implementing processes which are the fruit of somebody else’s thinking. This is where a higher category of CEOs, who “inspire” rather than “lead” have an edge. The inspirer is one who favours thinking among his senior staff over blind following and the execution of tasks. If a CEO forces admiration for his own higher thinking and inculcates in his immediate subordinates his habit of thinking and his thinking methods, with a view to doing smart business and innovating, he has a better recipe for success.
No individual has the monopoly of thinking, and if a CEO inculcates the thinking habit in his subordinates, the “think tank” that he creates automatically adds value and the flow of ideas is likely to have a better balance of “top-down” and “bottom-up” processes and be more inclusive and interactive. However intelligent a CEO is, he will rarely dissect and analyse his own ideas clinically as he would for suggestions coming from others, because all good CEOs have a degree of impulsiveness in them, which makes them trigger processes after a quick decision-making process. When a mid-manager has an innovative idea, submits it to his CEO who refines it, adds value to it and takes steps to eliminate its inherent risks, and he gets back around 80% of his original idea to put into action, he would be implementing a plan of his own thinking, as opposed to one of a leader, however good he may be. This is a process which is likely to create “ownership” of ideas and processes and total dedication to ensuring their success.
An inspiring CEO needs not have exceptional leadership qualities.
This is what an inspiring CEO is made of, namely provoking thought and rewarding ideas that turn into successes for the business. Such a CEO is at the same time grooming people to constantly come up with new ideas, ensuring a succession planning in his company, and he would be wise to pay tribute to what his subordinates achieve as a result of their smart thinking, rather than taking all the credit for himself, as leaders normally do. An inspiring CEO needs not have exceptional leadership qualities. His immediate subordinates will lead the rest of the staff by themselves, if they love what they are doing.
Being a strategy catalyser
Business gurus will say that consultation in strategy formulation is crucial. In this exercise, it is not rare to see CEOs holding plenary meetings with large groups of employees of different capabilities and of differing levels of intelligence at the same time. In such endeavours, which deciders call “communication” or “consultation”, the most likely outcome is that the talking is restricted to a few individuals and the majority remains silent, either for lack of understanding of the important, strategic issues being addressed or by fear of being ridiculous. The exercise finally boils down to a one-way traffic, where the CEO cascades down the strategy which he has already determined in his own mind. The exercise, at its very best, tells him if his ideas are acceptable or if there is opposition to them among his staff.
In the inspiring CEO’s domain, strategic thinking is a permanent process, because his managers are trained to think, as a second nature, and to communicate their thinking to their boss, without inhibition. In actual fact, the consultation, communication of new ideas and their objective and interactive analysis becomes a permanent feature, and strategic thinking almost a way of life.
Not allowing himself to be taken to ransom
We are living in an era where excessive regulation and blind compliance to rules have taken a toll on common sense, pragmatism and productive thinking. All big companies have an armada of in-house legal officers, compliance officers, anti-money laundering specialists, finance managers with an accounting background and good governance specialists. These people actually forget that they are working in a business company where the end objective is to make the business grow, to be profitable and to create shareholder value. Besides this, they have little concern about how the money which pays their salary is earned, and with what difficulty.
It is also a widespread feature that decisions are increasingly being taken in committees where all these academics have a sustained presence. The forward-looking CEO is faced with opposition of all sorts. Either his ideas are found to be too risky, or to be in infringement of rules, however marginally or having in them the possibilities of being perverted and producing negative results. These academics seldom have solutions to the problems that they themselves flag out, and they finally turn out to be brakes to business rather than facilitators.
The last thing to do for a CEO is to ask a legal officer to draft a contract concerning a business deal.
As an example, the last thing to do for a CEO is to ask a legal officer to draft a contract concerning a business deal or a commercial partnership. The legal mind will include so many safeguards for the company in the document that it will finally lose the business opportunity, because the contract would be overly one-sided, to the detriment of the potential partner.
Finally, most decisions are taken by consensus in committees, and no wonder these decisions turn out to be impossible to implement to suit the real needs of the business and very unlikely to materialise into a profitable breakthrough of an exclusive nature. The worst that can happen is when these academics are promoted to holding seats on Boards of Directors, and they literally hold the CEO to ransom with their restrictive and over-cautious thinking. None of them will ever admit that such a failure is a result of a collective decision, and the CEO will be alone to take ownership of the failure.
Company owners must realise that a CEO is a star, one who makes things happen with his superior thinking, often round the clock, and he must be allowed to overrule any advice given by his host of desk professionals. Consultation is a virtue, but the end decision should be left to the CEO, not acting under any compulsion from his subordinates, because at the end of the day, he will be alone to face the music. He should have the paternity of all successes, because he will be held solely responsible for any failure, without anyone who imposed his point of view to coerce him ever coming forward to make it a collective responsibility and take his fair share of blame in the failure.
Delegating and monitoring
Weak CEOs are those who take on themselves the responsibility of the implementation of operational tasks, however glorifying and self-satisfying some of these tasks may be. The more they engage in operations, the lesser time they have at their disposal to think globally about strategic and management issues. Delegation of responsibilities is a must in any business concern. True, a CEO is likely to perform most of the operational tasks better than anybody else, but delegation is a risk worth taking. If a subordinate manager comes up with ideas and performs tasks delegated to him by higher management, a success rate of 7 out of 10 tasks would be acceptable. Delegation allows mid-managers to cut their teeth at learning and progressing within the organisation, and their overall effectiveness will improve over time. By and large, the effectiveness of the whole organisation will also be enhanced.
Delegation, however, comes with the necessary discipline of monitoring and asking for progress reports, otherwise it is abdication and the absence of accountability. The necessity of monitoring and asking for feed-backs is all the more important because a CEO is responsible for all shortcomings within his company, whether he has a direct involvement in any of them or not. A CEO who does not delegate will never allow his company to grow, because he will bog himself down to doing operational tasks and, in this scenario, there is no time available for him to think forward, this being synonymous with more tasks for him to perform and a perpetual race against time.
All the essential qualities of an exceptional CEO turn out to be subjective qualities.
Being alert to human psychology
All businesses have human involvement in their processes. The human element is present in staff, suppliers, customers, bankers, regulators, chairmen, boards of directors and shareholders. Wherever there is human intervention, there is a strong element of subjective behaviour which comes into play, and this is immutable.
A company may be the customer of the biggest bank in the country, but its CEO or finance director are intrinsically dealing with a single relationship manager, with his human limitations, ego, emotions and reflexes. It would suffice for a relationship manager to think that he has gone a bit too far in financing a company, and that this can impact negatively on him that he may suddenly develop the reflex of trying to claw back his financing. Consequences of such unpredictable human reflexes can be devastating for a company, and it may find itself suddenly out of its comfort zone, forced to find funds to reduce its borrowings and to review its investments programme.
A knowledge of psychology is crucial for any CEO.
A knowledge of psychology is crucial for any CEO because the mindsets of different people are different, as well as their aspirations. For example, a business plan can never be of a standard format for all purposes, and there can never be a template to produce such a plan. A business plan written for the intention of a banker, a board of directors, a government licensing authority or a potential business partner has to address the expectations of the party to whom it is addressed. In its formulation, it has to reply to questions which the interface may be asking himself, even before such questions are raised.
This is where psychology comes into play. In certain circumstances, where a business discussion or negotiation is taking place, the proposer has little time to assess what is in the mind of his vis-à-vis. He must train himself to read into the minds of people instantly and decipher what they may be thinking about, and whether these thoughts are likely to affect the outcome of the discussion. A CEO who has this proficiency to read into the minds of his business co-stakeholders literally has the capacity of buying and selling them many times over, as he wishes.
My readers will have realised that all the essential qualities of an exceptional CEO turn out to be subjective qualities, which have nothing to do with objective things like production, buying, selling and managing finance. These are all common trades which can be learnt from books. Subjective approach in business and harnessing the subjectivity of people to achieve profitable ends is an art, rather than a science, and it goes a long way into shaping an ordinary CEO into an exceptional one.