Brandt On Leadership -- Five Things Good CEOs Do

Dec. 21, 2004
This crucial role needs a clearer definition.

It's a tough time to be a CEO of any kind, much less a good one. As once-mighty corporate titans fall -- from Enron's Ken Lay to Adelphia's John Rigas to Tyco's Dennis Kozlowski -- their brethren find their own powers increasingly limited, and not just by legislative fiat and regulatory scrutiny. Societal skepticism about the integrity, greed and motives of corporate leaders has prompted a crisis of confidence among CEOs. Chief executives who reveled in their celebrity and status throughout the '90s are learning too late that fame has a downside. The same envious investors and reporters whose adulation put chief executives on pedestals of shareholder value now delight in toppling those same CEOs. Yet the current CEO crisis has less to do with CEO celebrity and more with the fact that the role of the CEO remains remarkably ill defined. Despite hundreds of management books and thousands of pinstriped consultants, the CEO's role -- not only what a CEO should do, but how the CEO should conceive of him- or herself -- has remained a mystery. We celebrate the best leaders and excoriate the worst without ever truly understanding what we expect in the first place. Even the lexicon we use to describe the CEO function reveals how little we actually understand: A CEO leads, but to where? A CEO is accountable, but to whom? A CEO balances the competing needs of stakeholders, but to what end? So what do Good CEOs do? Five things:

  • Create a vision: Forget all the semantic arguments about what constitutes a vision or a mission statement. The Good CEO paints a picture of a future that is fundamentally different than what currently exists -- one in which a significant human problem is solved or ameliorated. With that goal as a context, the CEO creates a detailed picture of how each group of stakeholders -- customers, employees, investors and community -- will participate and benefit, both financially and psychologically, in achieving that solution.
  • Design the structure: The Good CEO outlines what this company will look like, not just now but in five, 10 or even 20 years. He or she will have plenty of help in implementing that structure, but the CEO is vital in asking the right questions at the start:
    • What value will our customers need?
    • How will we find and retain great talent to deliver that value?
    • How will we deploy that talent to its greatest effect?
    • What tools do we need to provide to that talent?
  • Define success: The Good CEO communicates a clear understanding of what will constitute acceptable results in three dimensions:
    • Financial: What returns must we generate to satisfy investors?
    • Human: What kind of impact must we have, now and later, on individual customers, employees and partners?
    • Societal: What will our company have achieved, in what time frame, for the broader public good?
  • Establish the parameters of proper behavior: This is the area where most of the recently failed CEOs have faltered. The Good CEO must establish through example, policy and culture what is acceptable in achieving success. The best do this by asking themselves two questions:
    • What do we aspire to be in the minds of our stakeholders?
    • What behaviors, methods and products are consistent with those aspirations?
  • Create accountability: The Good CEO doesn't shrink from evaluating the performance of every stakeholder, including him- or herself. The best establish reporting and review requirements for the roles -- financial, human and societal -- that a company exists to serve. Using these criteria, the Good CEO outlines how the performance of each stakeholder is rewarded or remedied. How good a CEO are you? John R. Brandt, formerly editor-in-chief of IndustryWeek, is president and editorial director of the Chief Executive Group, publisher of Chief Executive magazine.
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