CEOs' Global Role

Dec. 21, 2004
Vision, team building, and a personal touch are among the key management responsibilities for the CEOs of today's companies.

Build a strong executive team. Set and communicate the global vision. Establish the right structure. That's what CEOs say are their three most important responsibilities when it comes to global competitiveness. Three-quarters or more of those who responded to the 1999 IndustryWeek senior-executive survey said that it was either very important or important for each of those three issues to have their attention. The survey was sponsored by the Dallas-based global management-consulting firm Thomas Group Inc. Evaluating the competitive climate and contact with global accounts also received significant note. "The most important thing for me is the strategy" -- which includes building a strong executive team, says Paul J. Curlander, chairman, president, and CEO of Lexmark International Group Inc., a $3 billion Lexington, Ky.-based company with seven manufacturing centers on three continents. It sells printers in 150 countries. "I spend a lot of time making sure that the business units understand our global management strategy, that they have a plan for implementing, and that they are putting the resources behind it." "The CEO has to paint the picture of how the organization can fit into the increasingly competitive global world," says Fred Keller, chairman and CEO of Cascade Engineering, Grand Rapids, Mich. "You have to work with senior leaders so that they understand the opportunities and competitive pressures. That is the only way you can have a viable plan that will work in the face of immense competition." In follow-up interviews CEOs told IndustryWeek that their personal involvement often is equally split between setting strategy and taking a hands-on role in making things happen or opening doors. For some CEOs that means choosing acquisition targets or new partners for strategic alliances. Others say that they have found that they can have the most impact on global competitiveness when they meet personally with customers, business units, and local governments. The reason: Personal CEO contact with customers, employees, and potential partners adds credibility to the global initiatives and, at the same time, enables CEOs to obtain first-hand information that helps them make better decisions. "With 65,000 people, some 200 plants, and doing business in 25 countries, the last thing you want to do is get too grandiose about how much you personally [can impact],"says Stephen R. Hardis, chairman and CEO of Eaton Corp., Cleveland. "I would have a very tough time inventing everything, negotiating everything, selling everything. But you use [the CEO] office and the title . . . where you think it would help. A friend of mine calls that the hood-ornament role." But at the same time, adds Hardis, "I think the heart of my job, my key responsibility, is to try to be sure that we don't get so preoccupied with . . . the short term . . . that we lose focus on the really fundamental strategic questions." Adds Gerald B. Johanneson, president and CEO of Holland, Mich.-based Haworth Inc., "The CEO's presence gives a different emphasis [to global business opportunities]. It helps open the doors and attract the decision-makers." Still, says Johanneson, "It is most important for me to be personally involved in setting the vision and direction of the company and then being able to communicate it so our people buy into it. My second most important role is the development and placement of the key people in the global management team and then my personal involvement in our investments, our growth, and our acquisitions." With expanding global reach and increasing global sales a top strategic priority at many companies, it's not surprising that many CEOs say they spend a lot of their time with customers and other business contacts. "The CEO has to play a personal role in strategic planning, but my No. 1 personal priority is to have personal contacts with our customers," says William J. Avery, chairman and CEO of Crown, Cork & Seal Co. Inc., Philadelphia, an $8.3 billion packaging firm. "We're in 46 countries, and when I travel I make a point to talk to customers and ask them what they see in their business and whether we are serving their needs. When you make a visit to the customer, you are showing concern and interest from the highest position in the company because the buck stops with you." Lexmark's Curlander agrees. "My presence at meetings tells the customer that they will have access to all the resources of the company and that they can count on us. So my role very often is spending time directly with the customer, to provide solutions to their needs." In addition, says Curlander, it's imperative that he meet frequently with Lexmark people who work outside the corporation's home country. "It shows them that they are an important enough part of Lexmark for me to stop in and help them solve problems." Robert Ayotte, president and CEO of Saint-Gobain Industrial Ceramics Inc., Louisville, has had much the same experience since his U.S. company was acquired 12 years ago by the French company, the Saint-Gobain Group. "I spend quite a bit of my time conveying what I expect, our goals, and where we want to be -- even on plant visits," says Ayotte, because corporate management in France wants all Gobain units to grow globally. "I let our people know that our objective is to get to a certain position and translate what they need to do at a local level to achieve that." In addition, the CEO's presence often adds an invaluable personal touch -- with potential business partners, customers, and employees. "Just that the CEO is coming in [to visit a group of employees] is a form of flattery and recognition," says Ayotte, because the CEO is two to three management levels above whomever the leader of that unit might report to. "It also underscores to them that they are not stuck out there 8,000 miles away [without any help]. That personal touch makes them feel [that they are] part of the team." In much the same way, that CEO presence is often critical to forming global alliances or opening new markets. For example, in pursuing acquisitions for Haworth -- the global issue that Johanesson says requires his greatest personal involvement -- "it is the CEO's role to make the first contact at the top of the house so they know how serious you are and so you can get right to the heart of things. The CEO has to open the door and make the plans known so others can work out the details." Crown Cork's Avery agrees. "It is extremely important for the CEO to meet personally with any potential major business partner so that he or she can assess their values, how they operate, and whether your company will get along with them -- because if it's going to be a marriage, you have to have a date." Likewise, when the CEO gets personally involved in global expansions or mergers, things move along faster -- particularly in countries where the local government is involved in such activity. "When government representatives see that the CEO is willing to come in and talk and share strategy, they see it as a definite interest, not just a fishing trip," says Johanneson. These personal contacts -- whether they are with customers, employees, or prospective partners -- also help CEOs make better decisions on global matters, say IW survey respondents. "It is first-hand information [from other parts of the world] that is not filtered," says Avery. "It lets you make better decisions about expansions . . . in other countries." "I spend a lot of time talking to customers, finding out what their global requirements are, where we need manufacturing or distribution centers to meet [their] needs, where to implement repair capabilities," says Michael Marks, chairman and CEO of Singapore-based Flextronics International Ltd. "You have to understand where your customers are driving their business and then translate that into the things we have to do." Johanneson agrees. "One of the biggest aspects of my job is the allocation of resources and setting business plans. So when you meet with customers, it helps you keep a pulse on the markets and enables you to set better goals and put resources in the right place." But that customer contact is just one part of the critical personal role that the CEO must take in understanding global markets to make the right investment decisions. "My role is to identify where the opportunities are and to grow our businesses on a worldwide basis," says Saint-Gobain's Ayotte. "I have to identify where we have holes and gaps and decide whether we should build plants ourselves or look at alliances. So it is important for me to stay on top of what's happening [in the world] so I know how it affects our customers and how that affects us and know how to react to that." Cascade's Keller agrees. "I don't know if the CEO should be trying to make that final strategic decision on global expansions by himself. But I know that I feel responsible for understanding the economy and markets of different regions of the world because I have to translate how well our strategic vision will play [in other countries] so I can know where to target our resources and if there is a need [for us] to be in other parts of the world." See Survey

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