Started this book with despair and an acknowledgement that I would never become a CEO — given the big gap between where I am and feeling stuck in a dead end organisation which practised the opposite of the best practices cited in the book. Anyway, don’t you love a book when they promise to give you a manual of how the best CEOs function, only to conclude from their research of top CEOs that each CEO approaches the same problem differently, and their methods each end up being effective?
There is value in writing this book, the best insights were the CEO’s quotes and less of the McKinsey consultants wrapping these quotes up into a readable structure. However I did think no one like McKinsey gets access to these top CEOs, and I enjoyed some of the comparisons to Greek mythology and literature.
Good to reflect on my personal experiences while reading the book and thinking about the kind of manager I want to be, and how to harness discomfort into comfort.
Excerpt dump of things that stood out to me
So what gets in the way of lining up resources behind the vision and strategy? Internally, it has to do with the political challenges of taking away from A and giving to B. "Resource allocation is one of the most important things," says Adidas's Kasper Rested. "Most people don't want to give up resources, so very often the CEO has to intervene."
The regional president argued: "We've been here forever. We can't leave the market. But if we don't invest in this product, we won't have anything to sell." As she heard this, Mary Barra recalled something one of her board members once told her: "There's nothing strategic about losing money."
As Galderma's Flemming Ornskov shares, "Any CEO who thinks there's something casual about a board has misunderstood the situation. I would recommend always being prepared and not throwing around a lot of casual remarks."
“The first time we did this, the consultant had all these suggestions for how the board could improve. My first reaction was, as a recovering arrogant leader, Who are these people? The company was performing great, we should be saying thank you and congratulations to each other.' It took me one or two weeks to make peace with that, and realize that what I was getting wasn't feedback but ‘feedforward' —things we can work on to be even better in the future.
It takes enormous courage to listen to the criticism and say, yes, of course we can do better. In the end, however, it's a very energizing process."
CEO of automotive parts maker Delphi, Rod O'Neal. "One cause of our success was the things we didn't do. We didn't go big in India or South America or Russia. We avoided all the pitfalls of what a lot of companies were trying to do.”
American writer Charlton Ogburn Jr. described it well: "We tend to meet any new situation by reorganizing; and what a wonderful method for creating the illusion of progress while producing confusion, inefficiency, and demoralization." The facts suggest that there are many leaders who choose this path. A full 70 percent of executives report they've undergone a significant reorganization in the past two years, and the vast majority believe they'll experience another in the next two. Meanwhile, only 23 percent of organization redesigns are reported to have met their objectives and improved performance. Most others are never completed or simply don't meet their objectives, and 10 percent actually have a significant negative impact on performance.”
The best CEOs know that building a great organization doesn't start with people but, instead, with roles. They first ask themselves what the most important jobs are and define the knowledge, skills, attributes, and experiences needed to get those jobs done.
Flemming Ornskov systematically determines what roles are most important with a keen eye to uncovering the less-obvious left tackles who are key to the company's success.
Without a data-driven approach to talent, it's easy to see how personnel conversations get bogged down. Myriad social considerations become barriers to action. What about those employees loyal to the executive in question, will they leave? What about the customers who they interact with, how will they respond? Does the board share the same view of their performance? Given their loyalty for many years, will it be seen as heartless to let them go? Do we have a viable successor? And so on. By clearly defining the talent requirements for the most important value-creating, protecting, and enabling roles (matching them with people with the right skills and attributes), and by building a deep bench of leaders, the politics that otherwise surround personnel issues largely disappear.
What Piyush Gupta identified surprised him. He had some A players but most of his team was made up of Band C players. The coach bluntly told him that he was already halfway through his tenure and he didn't have an A team. When he was transferred in a year or so, he'd leave his successor with at best a B team.
Westpac's Gail Kelly reinforces the point from a different perspective: "I've seen it so often where a person has potential and you want them to succeed, but they just aren't getting there. It very rarely gets better if you've put the conditions in place for their success and they aren’t succeeding.”
"You also must recognize that you are their boss. While there's a level of collegiality and familiarity, at the end of the day, your first responsibility is to the institution and making a functional top team." DBS's Piyush Gupta agrees: "If you get too close to everybody, then you wind up not making tough choices and compromising for mediocrity. People need to respect that, finally, you are the boss."
Ecolab's Doug Baker explains, "Especially over time, as people start to perceive you as a successful CEO, your views are given too much weight. What you suggest as a thought-starter, they can take as a directive."
A common analogy is that managers are thermometers, and leaders are thermostats. Managers react to their environment, deal with the here and now, and measure and report results. Leaders influence their environment. They alter people's beliefs and expectations.
“There are commonalities to good leaders. It starts with a very basic thing, which is the discipline of analytics. I see people who just don't do the basics right, who don't understand the details on pricing, products, distribution, variable cost, and fixed cost. It's like flying an airplane without all the equipment. The first job is to look at the facts. Circulate one set of numbers. And it's not just financials. I have to remind people, 'They're not just financial reviews, they’re business reviews.'" Dimon continues, "No matter the issue, I'm going to expect that you will have already looked at our peers: what Goldman Sachs does, what Morgan Stanley does, and what Bank of America does. I shouldn't have to ask whether you've looked at what our peers are doing, what the best practices are, and anything like that.“
JPMC's Jamie Dimon has been known to take such sessions to the extreme when circumstances demand it. During the financial crisis, he entered a board meeting feeling that any discussion would e a distraction from what he really needed to be doing at that noment. He feared that "like the Titanic-we'd be talking about the and while the ship is sinking." Instead of spending the hour sharing vhat was on his mind, Dimon said to the board, "I have to go to work. We have some real issues we have to deal with urgently. Why don't you ome with me?" The board proceeded to get a front-row view of trading desks reporting risk exposures and making recommendations on what to sell and what to hedge.
Where do humans find meaning at work? Research shows that employees draw on at least five sources of purpose and motivation, The first is themselves-their development, their financial and nonfinancial rewards, and their freedom to act. The second is fellow employees-feeling a sense of belonging, caring for one another, and doing the right thing for the group. The third is the company-achieving industry leadership through creating best practices and beating the competition. The fourth is impact on the customer-making life easier and better for them by providing a superior service or product. The fifth and final is their impact on society-making the world a better place.
Greg Case did the same at Aon. "About ten years ago we said, 'We're not particularly happy with our investors. They were highly biased to the short term, so we started changing them." He shares: "We did the analysis, Who should own us based on our strategy?' We talked to the ones we had, we identified those we didn't, and we went after those.”
Reed Hastings reveals how he thinks about some of Netflix's stakeholders. "Take the press, for example. My general view on the press is they want to be truth tellers, but they're forced to be entertainers. If you can understand that conflict, you can help them be entertaining and also get some truth through. With politicians, the thing is keeping the majority of people in a society supportive. That's an enormously difficult challenge, and once you understand that you can forgive them when they do things that don't seem rational in your little world, because you have high respect for their unique skills in channeling the public mood.”
Dupont's Ed Breen does the same with activist investors. "I engage with the activists. If you listen, they often have good ideas. I agreed with eighty percent of what they wrote in their white papers, and what I didn't agree with was how to go about fixing the problem that they were worried about. Their view is, 'If Ed has a better way to fix it, good, go do it. They just want it fixed. With that approach, I've found they often become your ally."
The best CEOs approach every contact outside the company as an opportunity to harvest new ideas to take back to make their businesses better.
Adidas's Kasper Rorsted expands on the idea: "I know it's commonplace to say never waste a good crisis, but it's actually the best time to make radical change in a company. This is when you can be more dogmatic and say, 'We're not going to do this anymore?
Whether it's cutting unnecessary travel, leveraging digital channels, or anything else—it's the time to move two or three years ahead of where you would have been otherwise."
In their book Leadership on the Line, authors Ron Heifetz and Marty insky advise leaders to periodically get off the dance floor and up on the balcony. A crisis will by definition draw a CEO onto the dance floor so they can face reality, solve pressing problems, and push for operational change. The best CEOs also find ways to maintain a view from the balcony so they can see patterns, find hope on the horizon, and look for opportunities.
"My job is to do what only I can do."
Check Point Software's Gil Shwed sorts his to-do list into three categories. First are areas that need minor tweaks or improvement. Next are those that are bigger issues to solve that still require a lot of work. The last category comprises the big bold moves meant to get the business moving in the right direction. Explains Shwed: "If you're finding every day that everything you're doing is in the first category - trivial stuff-then either everything is wonderful, or you're probably not needed or not adding enough value to the system."
"I challenged myself to be kind to the person but tough on the issue, and everyone in the company knew it.”
"A large chair does not make a king.”
As British writer and lay theologian C. S. Lewis once wrote, “True humility is not thinking less of yourself, it's thinking of yourself less."
Microsoft's Satya Nadella displays humility by ascribing a meaningful portion of his success to his predecessor. "My dad, a civil servant in India, always used to talk about institution builders as those people whose successors do better than they did themselves," he says. […] "That's why I think too much credit is given to me and not enough to Steve [Ballmer, Nadella's predecessor] for what he set in motion. I don't think I would have been able to achieve what I've achieved if not for his work, including our transition to cloud computing."
In Journey to the East, published in 1932, Nobel Prize-winning German-Swiss novelist Hermann Hesse tells the story of a character named Leo who, while on a pilgrimage, joins the members of a sect called "The League." Leo is portrayed as a simple servant, just like all the others. The journey is fun and enlightening until one day Leo disappears, and everything changes as the group plummets into dissention and bickering, only to come to the realization later that Leo was far more than a servant—he was actually the president of The
League. Hesse's character, Leo, is cited by Robert K. Greenleaf as inspiration for the idea of "servant leadership" in his 1970 essay "The Servant as Leader."