The #1 Reason Well-Managed Companies Fail to Thrive - and what you must do to save your company

Over the past 15 years working with CEOs and business leaders, more than anything else, one thing has become clear: leadership plays an inextricable role in achieving significant success and sustaining it. To be sure, sustainable companies also depend on competent management and solid systems and processes to ensure things run properly. But competent leadership is what drives the performance of the people who manage these things. And no matter how managed, your organization will benefit by elevating the efficacy of its leadership.

Most business leaders have the knowledge, skills, credentials, and even the talent to do a good job. But they are not competent leaders. To be competent, you not only have what it takes but that you actually accomplish whatever it is you are responsible to. Competence does not exist in the absence of significant and meaningful accomplishment. No effort, style, or finesse will replace the need to achieve the results you are responsible for.?

It is the organization that makes a CEO successful, not the other way around.

It is the organization that makes a CEO successful, not the other way around. That is the core concept of Dr. Lee Thayer. But the leader has a vital role in how the organization performs. As a leader, you have responsibility for things you cannot necessarily control and own the results of other people’s actions. You cannot manage those actions, but your leadership will determine the consequences of how the people in your organization perform to a meaningful extent. It is a combination of what you tolerate, what you cultivate, and what you initiate.

Your organization’s sustainable success requires managing certain and some very specific things well. You can universally apply some of these aspects to any business; tasks like bookkeeping, compliance, and tracking cash and profit. Others are more unique to your whatever it is your organization is designed to do. Managing things requires specific knowledge and skills. People who have a talent for management are invaluable to any organization.

Managing more complex things well requires systems. Competent systems, meaning the means to effectively make certain that the things your business needs to reliably make happen, whatever things your company exists for, are essential to long-term success. That is what management consultants and business advisors provide.

Systems alone, no matter how well designed, will not prevent the dysfunction that leads to disorganization, chaos, and failure.?

Systems alone, no matter how well designed, will not prevent the dysfunction that leads to disorganization, chaos, and failure.??The competence of the people that engage the systems will ultimately determine whether or not any system is effective. None are entirely “fool” proof. Leadership is required to guide the behaviors, and the conscientiousness needed to maintain an organization’s systems.?

A competent leader must recognize where systems are needed and put in place intelligently designed systems and competent people to work them. No level or strength of leadership can obviate the need for systems.??

Companies may run for a short while without systems or processes, like an engine running on fumes. And just as people can function on adrenaline in times of crisis, it is unsustainable in the long run. Leadership is what keeps the engine and your people from breaking down in the long run.

The primary reason seemingly successful companies struggle once they have leveled off and gained traction and some level of predictable performance is not for lack of systems; it is for lack of effective leadership.

The need to lead people who manage the things critical to how your organization performs is the “make-or-break” that determines why some companies thrive, adapt, and grow, while others sputter, hit the ceiling, or hit the wall. Leadership provides more than direction and guidance; it is the force within an organization that keeps it moving forward. Your responsibility as a leader is to ensure that your company maintains a sustainable competitive advantage. That is the only means of control you have over moving your company forward.?

I recently watched a short video by Simon Sinek, whose widely read and popular observations on situational leadership have earned him a large following. For the most part, I find his insights relevant and valuable. In this case, I strongly disagree with his point of view.?

Simon Sinek argued that when great CEOs, especially those who were initially responsible for the success of a great company, hand off the reigns to a successor, those companies typically falter or even fail. He pointed out that the reason was that the successor is generally the Chief Operating Officer or Chief Financial Officer, being someone they trust. Without whom they could not have achieved the success they realized together. His theory is that these people, being operational or financial experts, lack the proper domain skills to assume the helm of these great companies. They lack the one thing that the CEO must possess to be successful. Up to this point, I am in complete agreement with Simon.?

Where we diverge is in Sinek’s suggestion that the missing ingredient is being a visionary. His argument is that the CEO is responsible for setting the direction, and without having a firm rudder to navigate the future, the organization cannot continue to thrive. He recommended that we might retire the term Chief Executive Officer and replace it with Chief Visionary Officer. He pointed out that the executive part of?chief executive?was ambiguous at best and perhaps meaningless in a functional sense.??In his view (as a visionary thinker himself), the need for the head of the organization to be a visionary is crucial to the role.?

While I agree that vision is generally at least somewhat essential to the role of a competent leader, it is far from the most crucial aspect. Having vision may even be necessary, but it is insufficient. A powerful vision or idea without executing and putting it in motion is nothing more than a dream. Execution is the product of having both the right systems and the right to engage them. A good manager might employ the right systems, but you need a CEO who is a competent leader to cultivate and help inspire people to perform to their potential – or at least at the level necessary to accomplish what really matters.

Leadership comes down to four tasks.?

1. The first is learning to lead yourself.??That means making yourself into someone who can effectively lead others. You must learn to be a leader by first understanding what it takes and then developing the requisite competencies (knowledge, skills, and credentials) required to ensure the organization maintains a sustainable competitive advantage. Doing so is what makes you competent as a CEO or business leader.?
2. The second task is ensuring the organization itself is competent and has the resources and means to serve its intended purpose. It is a function of provisioning the capital required to operate: real capital, human capital, and reputation capital. And it requires that there are competent systems in place to ensure that the organization can capture and leverage the value created by competent people – and ideally multiply that talent by being an effective leader.
3. The third task is developing people into competent performers. The most crucial aspect of this is developing other leaders – who can develop competent workers. Effective leaders do this first and foremost by being an exemplar of effective leadership and making it necessary and possible for people to perform at their potential – and constantly raise the bar on what that potential might be.?
4. The fourth task is engaging people effectively and providing a sense of purpose that allows people to become inspired and genuinely conscientious. Having a connection to a worthy indelible purpose (WIP) informs a sense of duty. It cultivates the grit that causes people to get comfortable being uncomfortable in order to work harder, develop their abilities and live as learning beings. Being a beacon for the organization’s WIP provides the connective tissue that makes the brains, nervous system, blood flow, and muscle of your organization work together as a healthy, vital organism.?

I think Simon Sinek is correct in suggesting that the designation CEO might well be worth retiring, but not to Chief Visionary Officer. My feeling is that you need to be the CLO - or Chief Leadership Officer – and embrace all tasks competently. My apologies to Chief Learning Officers for stepping on your acronym – but part of the role for the Chief Leadership Officer is to be responsible for leading a learning organization.??There is no need for a Chief Learning Officer; a manager of the learning operations would probably suffice.?

Vision is necessary to connect the purpose that drives the organization to the actions needed to accomplish anything.

Vision is necessary to connect the purpose that drives the organization to the actions needed to accomplish anything. The leader’s job is not to cause things to be in motion but to determine what action is necessary.??Leaders must understand the organization’s “why.” This is where Simon Sinek first won my attention, demonstrating that why you do what you do is more important than what you do or how you do it. His bestselling first book, “Start with Why,” makes perfect sense on so many levels and provides valuable insight into how leaders must think and how to discern what actions to take.?

Being an effective Chief Leadership Officer requires that you are the guardian of “The Why.” And you must also ensure that there is a clear sense of purpose that permeates your organization. It is how you drive the pursuit of competence in your people. When your people are equipped and determined to accomplish what they understand to be necessary, they will design and drive the systems they need to perform at their best and keep the organization positioned to adapt to the challenges that are ever-present.?

When you determine that your principal responsibility is to develop the leaders your organization needs, your CFO, COO, or whomever else you deem suited will replace you and be fully prepared to do a better job than you could. That is the toughest and most necessary thing about being a competent leader. Knowing when to hand off the reigns is important, but knowing that you are placing them – and the organization in competent hands is crucial.

Leadership isn’t a destination; it is a journey. You must understand that the journey continues within you and without you.

When you fully believe you are serving something greater than your personal needs and interests and that the worthy, indelible purpose that guides you does not belong to you, you can, then, fully fulfill your duty to serve your organization by leaving it in capable hands that will carry it forward. That is the final act of leadership you might someday perform.

If you want to improve your company’s prospects for success well into the future, you should focus on continuously learning to be a better leader. The only way to grow as a leader is to grow as a person. The benefits are enormous: the MoJo, or moments of joy you will reap in what you accomplish, are what make every step of the arduous journey you must take worthwhile in the end.?