Welsh Consultants publishes- This article aims at setting out which mindsets and practices are proven to make CEOs most effective. The article is based on a study of performance data on thousands of CEOs and the efforts at helping them enhance their leadership approaches. The article provides a set of empirical, broadly applicable insights on how excellent CEOs think and act. It could help CEOs (and CEO watchers, such as boards of directors) determine how closely they adhere to the mindsets and practices that are closely associated with superior CEO performance. All CEOs, new or long-tenured, can use these tools to better apply their scarce time and energy.To answer the question, “What are the mindsets and practices of excellent CEOs?,” let’s first reflect upon the six main elements of the CEO’s job—elements touched on in virtually all literature about the role:
1. Setting the Hierarchy of Goals & the Strategy
2. Aligning the Organization
3. Leading the Top Team
4. Working with the Board
5. Being the Face of the Company to its External Stakeholders
6. Managing one’s own Time and Energy.
This article explores the subject in detail. Author, Founder- Manish P
Introduction to LPC - Facility Design And Re-Engineering
The CEO Excellence Model
1. THE CEO EXCELLENCE MODEL
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THE CHIEF EXECUTIVE OFFICER- CEO
A Chief Executive Officer (CEO) is the highest-ranking executive in a company, whose primary responsibilities include
making major corporate decisions, managing the overall operations and resources of a company, acting as the main
point of communication between the board of directors (the board) and corporate operations and being the public face
of the company. A CEO is elected by the board and its shareholders. CEOs find roles in a range of organizations,
including public and private corporations, non-profit organizations and even some government organizations (notably
Crown corporations). The CEO of a corporation or company typically reports to the board of directors and is charged
with maximizing the value of the business, which may include maximizing the share price, market share, revenues or
another element. What the CEO controls—the company’s biggest moves—accounts for 45 percent of a company’s
performance. Despite the lustre of the role, serving as a CEO can be all-consuming, lonely, and stressful. Just three in
five newly appointed CEOs live up to performance expectations in their first 18 months on the job. The high standards
and broad expectations of directors, shareholders, customers, and employees create an environment of relentless
scrutiny in which one move can dramatically make or derail an accomplished career. For all the scrutiny of the CEO’s
role, though, little is solidly understood about what CEOs really do to excel. The CEO’s job is so specialized that
executives could prepare for the post only by holding it. Many CEOs have expressed similar views. In their experience,
even asking other CEOs how to approach the job doesn’t help, because suggestions vary greatly once they go beyond
high-level advice such as “set the strategy,” “shape the culture,” and “get the right team.” Perhaps that’s not
surprising—industry contexts differ, as do leadership preferences—but it illustrates that fellow CEOs don’t necessarily
make reliable guides. Nor has academic and other research on the CEO’s role done much to illuminate how CEOs think
and what they do to excel. For example, recent studies that detail how CEOs spend their time don’t show the difference
between a good use of time and a bad one. Academic research also demonstrates that traits such as drive, resilience,
and risk tolerance make CEOs more successful. This insight is helpful during a search for a new CEO, but it’s hardly
one that sitting CEOs can use to improve their performance. Other research has tended to produce such findings as the
observation that leaders are effective in some situations and ineffective in others—interesting, but less than instructive.
2. THE CEO EXCELLENCE MODEL
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A MODEL FOR CEO EXCELLENCE
This article aims at setting out which mindsets and practices are proven to make CEOs most effective. The article is
based on a study of performance data on thousands of CEOs and the efforts at helping them enhance their leadership
approaches. The article provides a set of empirical, broadly applicable insights on how excellent CEOs think and act.
It could help CEOs (and CEO watchers, such as boards of directors) determine how closely they adhere to the
mindsets and practices that are closely associated with superior CEO performance. All CEOs, new or long-tenured,
can use these tools to better apply their scarce time and energy.To answer the question, “What are the mindsets and
practices of excellent CEOs?,” let’s first reflect upon the six main elements of the CEO’s job—elements touched on in
virtually all literature about the role:
• Setting the Hierarchy of Goals & the Strategy
• Aligning the Organization
• Leading the Top Team
• Working with the Board
• Being the Face of the Company to its External Stakeholders
• Managing one’s own Time and Energy.
The result of these efforts is a model for CEO excellence, which prescribes mindsets and practices that are especially
likely to help CEOs succeed at their particular duties (The Following Exhibit).
CORPORATE STRATEGY
Focus on Beating the Odds
Vision- Reframe what winning means
Strategy- Make Bold Moves Early
Resource Allocation- Stay Active
BOARD ENGAGEMENT
Help Directors Help the Business
Effectiveness- Promote a Forward Looking Agenda
Relationships- Think Beyond the Meeting
Capabilities- Seek Balance & Development
ORGANIZATIONAL
ALLIGNMENT
Manage Performance & Health
Talent- Match Talent with Value
Culture- Go Beyond Employee Engagement
Organizational Design- Combine Speed with Stability
EXTERNAL STAKEHOLDERS
Centre on Long Term Value Creation
Social Picture- Look at the Big Picture
Interactions- Prioritize & Shape
Moments of Truth- Build Resilience Ahead of Crisis
TEAM & PROCESSES
Put Dynamics Ahead of Mechanics
Teamwork- Show Resolve
Decision-making- Defend against Biases
Management Processes- Ensure Coherence
PERSONAL WORKING NORMS
Do What You Can Do
Office- Manage Time & Energy
Leadership Model- Choose Authenticity
Perspective- Guard Against Hubris
The CEO’s Approach
1 2
3 4
5 6
3. THE CEO EXCELLENCE MODEL
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CORPORATE STRATEGY
It’s incumbent on the leader to set the direction for the company—to have a plan in the face of uncertainty. One way
that CEOs try to reduce strategic uncertainty is to focus on options with the firmest business cases. Research shows,
however, that this approach delivers another sort of outcome: the dreaded “hockey stick” effect, consisting of a
projected dip in next year’s budget, followed by a promise of success, which never occurs. A more realistic approach
recognizes that 10 percent of companies create 90 percent of the total economic profit (profit after subtracting the cost
of capital), and that only one in 12 companies moves from being an average performer to a top-quintile performer
over a ten-year period. The odds of making the jump from average to outstanding might be long, but CEOs can
greatly increase the probability of beating those odds by adhering to these practices: The CEO is the ultimate decision
maker when it comes to setting a company’s vision (where do we want to be in five, ten, or 15 years?). Good CEOs do
this by considering their mandate and expectations (from the board, investors, employees, and other stakeholders),
the relative strengths and purpose of their company, a clear understanding of what enables the business to generate
value, opportunities and trends in the marketplace, and their personal aspirations and values. The best go one step
further and reframe the reference point for success. For example, instead of a manufacturer aspiring to be number
one in the industry, the CEO can broaden the objective to be in the top quartile among all industrials. Such a
reframing acknowledges that companies compete for talent, capital, and influence on a bigger stage than their
industry. It casts key performance measures such as margin, cash flow, and organizational health in a different light,
thereby cutting through the biases and social dynamics that can lead to complacency. According to research, five
bold strategic moves best correlate with success: Resource reallocation; Programmatic Mergers, Acquisitions, and
Divestitures; Capital Expenditure; Productivity Improvements; Differentiation Improvements
4. THE CEO EXCELLENCE MODEL
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ORGANIZATIONAL ALLIGNMENT
Ask successful investors what they look for in portfolio companies, and many will tell you they’d rather put money
on an average strategy in the hands of great talent than on a great strategy in the hands of average talent. The best
CEOs put equal rigor and discipline into achieving greatness on both strategy and talent. And when it comes to
putting great talent in place, almost half of senior leaders say that their biggest regret is taking too long to move
lesser performers out of important roles, or out of the organization altogether. The reasons for this are both practical
(good leaders provide the CEO with important leverage) and symbolic (CEOs who tolerate poor performance or bad
behaviour diminish their own influence). Many CEOs also say they regret leaving adequate performers in key
positions and failing to realize the full potential of their roles. The best CEOs think systematically about their people:
which roles they play, what they can achieve, and how the company should operate to increase people’s impact.
TEAM & PROCESSES
The dynamics of a top team can strongly influence a company’s success. Yet more than half of senior executives
report that the top team is underperforming. The CEO is often out of touch with this reality: on average, less than
one-third of CEOs report problems with their teams. The efficiency and effectiveness of a company’s core
management processes also can change a company’s fortunes, yet less than a third of employees report that their
company’s management processes support the achievement of business objectives. Why the disconnect? The problem
is not an intellectual one, but a social one: individual and institutional biases and clunky group dynamics can
diminish with the effectiveness of the team and its processes. Excellent CEOs acknowledge this reality and counteract
it in several ways.
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BOARD ENGAGEMENT
The board’s mission on behalf of shareholders is to oversee and guide management’s efforts to create long-term
value. Research shows that sound corporate governance practices are linked with better performance, including
higher market valuations. An effective board can also repel activist investors. Despite these upsides, many CEOs
regard their companies’ boards in the way one CEO described his company’s board to us: as a “necessary evil.” The
chairperson leads the board, and even in cases where that role is held by the CEO (as is common in North American
companies), the board’s independence is essential. Nevertheless, excellent CEOs can take useful steps to boost the
quality of the board’s advice to management:
EXTERNAL STAKEHOLDERS
Every CEO should know their company’s mission and values. Good CEOs know that these statements need to
amount to more than slogans for office posters and use them to influence decision making and day-to-day
behaviours. Excellent CEOs go further: they reinforce and act on a corporate purpose (the “Why?”) that involves not
just making money but also benefiting society. This posture, along with a granular approach to prioritizing
stakeholder interactions and a sound corporate resilience plan, lets CEOs minimize the company’s exposure to
customer- and stakeholder-related risks, and capitalize on new opportunities.