What makes a CEO great? The CEO’s Agenda to act as a Leader

A short and, hopefully, comprehensive guide to answer the CEO's key questions: What, How and Why.

The CEO, along with the other executive directors, plays a critical role in guiding the company toward its mission and goals, ensuring its financial health, long-term management sustainability (ESG) and building strong relationships with stakeholders.

It seems the same as the usual task, but being a successful CEO has become more challenging in recent years.

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In the last couple of decades, roughly a third of Fortune 500 CEOs lost their jobs after less than three years on the job. Two out of five new CEOs don’t last 18 months.

From 2000 through 2019, the average CEO tenure in the United States decreased from 10 years to less than seven.

Great CEOs make the difference. Top-level CEOs generate nearly three times more total return to stakeholders than less-effective CEOs. A $1,000 investment in a typical S&P 500 index fund produces roughly $1,600 in gains in the course of 10 years. Investing in companies led by the highest-ranked CEOs will earn around $10,000 during that time span (McKinsey source).

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What makes a CEO great (or at least good)? I believe it depends on how much he/she can be a leader, answering the following questions of What, How and Why:

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WHAT are the tasks of a CEO?

1. Set the Direction: This involves defining the organization's vision, mission, and goals. It requires strategic thinking to determine where the organization wants to go and how it plans to get there. Setting the direction involves analyzing the current state of the organization, understanding market trends, and identifying opportunities for growth and innovation.
2. Align Your Organization in That Direction: Once the direction is set, it is essential to ensure that all members of the organization are aligned and working towards the same goals. This involves effective communication of the vision and goals, creating a shared understanding of the direction, and ensuring that individual and team objectives are in line with the overall strategic direction.
3. Mobilize Your Leaders to Deliver on That Direction: Leaders play a crucial role in driving organizational change and achieving strategic objectives. Mobilizing leaders involves empowering them with the necessary resources, support, and authority to make decisions aligned with the direction set for the organization. It also involves fostering a culture of accountability and continuous improvement among leaders.
4. Work with Your Board: Boards of directors provide oversight and guidance to organizations. Working effectively with the board involves regular communication, transparency in decision-making, and seeking input and feedback from board members on strategic initiatives. Boards can offer valuable insights and help ensure that the organization stays on track towards its goals.
5. Connect with the Stakeholders: Engaging with stakeholders is essential for building relationships, gaining support, and gathering feedback on organizational initiatives. Stakeholders can include employees, customers, investors, partners, and the community at large. Effective stakeholder management involves understanding their needs and expectations, communicating openly and transparently, and incorporating their feedback into decision-making processes.
6. Manage Your Personal Effectiveness: As a leader, managing personal effectiveness is crucial for driving organizational success. This involves setting priorities, managing time efficiently, developing key skills and competencies, and maintaining a healthy work-life balance. Personal effectiveness also includes self-awareness, emotional intelligence, and the ability to adapt to changing circumstances and challenges. By continuously improving personal effectiveness, leaders can better lead their organizations toward the set direction.

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HOW should a CEO act?

The answer is to act as a true Leader.

Behind most of the top managers' failures, there is poor leadership, which causes the designing and/or implementation of a wrong strategy.

Leadership is not just a skill set, but mostly a right attitude. It isn't related to company (top) position, power, or seniority (even if experience helps).

Leadership in one sentence(s) is: "Serving others for a just cause", to make a positive impact on individuals, organizations, and communities.

The essence of leadership lies in the ability to inspire, influence, and empower others to achieve a common goal or vision. It encompasses a range of qualities, behaviors, and skills that enable individuals to guide, motivate, and guide others toward positive outcomes.

Here are some key aspects that capture the essence of leadership:

• Vision and Direction: Effective leaders have a clear vision of the future and articulate it in a way that inspires others. They set goals, define objectives, and chart a course of action to realize that vision.
• Communication: Leadership involves effective communication skills, including active listening, clear articulation of ideas, and the ability to convey messages in a way that resonates with others. Leaders communicate goals, expectations, and feedback openly and transparently.
• Empathy and Emotional Intelligence: Great leaders understand the emotions and perspectives of those they lead. They demonstrate empathy, compassion, and respect for others' feelings and experiences. Emotional intelligence enables leaders to build trust, foster collaboration, and navigate interpersonal relationships effectively.
• Integrity and Ethics: Integrity is fundamental to leadership. Leaders uphold ethical principles, act with honesty and transparency, and demonstrate consistency between their words and actions. Trustworthiness is essential for maintaining credibility and fostering loyalty among followers.
• Decision-Making and Problem-Solving: Leaders are adept at making tough decisions and solving complex problems. They gather information, analyze alternatives, and consider the potential impact of their choices on stakeholders. Effective decision-making involves weighing risks and uncertainties while remaining decisive and action-oriented.
• Inspiration and Motivation: Leadership involves motivating and inspiring others to perform at their best. Leaders cultivate a positive organizational culture, celebrate achievements, and provide encouragement and support to help individuals reach their full potential.
• Adaptability and Resilience: Leaders navigate change and uncertainty with resilience and flexibility. They adapt to evolving circumstances, learn from setbacks, and demonstrate a growth mindset that encourages innovation and continuous improvement.
• Empowerment and Delegation: Successful leaders empower their teams by delegating authority, fostering autonomy, and creating opportunities for growth and development. They trust their team members to take ownership of their work and contribute meaningfully to the organization's success.
• Collaboration and Team Building: Leadership involves building cohesive teams and fostering collaboration among diverse individuals. Leaders leverage the strengths and talents of team members, promote inclusivity, and create an environment where everyone feels valued and respected.
• Servant Leadership: At its core, leadership is about serving others and putting the needs of the team or organization above personal interests. Servant leaders prioritize the well-being and development of their followers, working selflessly to support their success and fulfillment.

In essence, leadership is about inspiring and empowering others to achieve collective goals, fostering trust and collaboration, and making a positive impact on individuals, organizations, and communities.

The challenge of Leadership is the need to evolve mindset and attitude, not easy for most of us.

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WHY do business?

The CEO needs a superior Why

The "why" represents the purpose, cause, or belief that drives the company. The "why" is the reason the company exists beyond just making a profit, and it serves as the guiding principle for all decision-making and actions.

Profits cannot be the first goal of a business. Profits are the reward for a good job. Profits are certainly important to shareholders, and staff reworded by business results, but they are not relevant to your customers, employees, business partners and other stakeholders.

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People buy because of Why

In business, the what is the idea you’re selling. The how is what differentiates your idea. The why is the cause, purpose, and beliefs that originated your idea.

The best and most loyal customers buy what you do because they approve why you do it. In other words, customers don't buy what you do; they buy why you do it.

Your goal is to look for and sell to everyone who believes what you believe, proving you are authentic and careful in executing your mission, which matters to your customers.

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The why makes your strategy effective

The leading company chooses its customers, as well as the other stakeholders (yes, also shareholders, investors, partners, etc.), who share the same vision on how and why to do business. The company with a why has a unique and clear positioning in the market, which lets it build and maintain a competitive advantage.

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Apple success example

Apple doesn’t say, “We make computers.” Apple says, “We believe in challenging the status quo. We believe in thinking differently. The way we challenge the status quo is by making our products beautifully designed, simple to use, and user-friendly. We just happen to make great computers.”

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The WHY for your staff

Most of your staff doesn't follow you just because employed, but because they feel relevant, they share with you the same beliefs and just cause, all that makes them proud to work with you.

Start from the Why

The way a CEO should operate is by starting with the "why" before moving on to the "how" and "what" because the “why” is the priority and determines both the "how" and "what".

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FROM GREAT CEO TO GREAT COMPANY

Pay attention: to have a great company a great CEO is just the starting point. You need your staff to be, fair, leaders. How? Hire looking for the leading attitude and train them to become great in what they have to do.

A few (never enough) brave and inspired Leaders do it:

“We've turned waiters and waitresses into great mortgage bankers. We've hired soap opera actors and electricians. We can teach people about finance. We can't teach passion, urgency and a willingness to go the extra mile." — Michael Homula, Director of Talent Acquisition, Quicken (US financial company).

“Don't hire [bankers]… I'd rather hire a jazz musician, a dancer, or a captain in a foreign army. They can learn about banking. It's much harder for bankers to unlearn their bad habits." — Arkadi Kuhlmann, Founder, ING Direct USA.

"Hire for attitude, train for skill” — Herb Kelleher, Chairman, Southwest Airlines.

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So, if you want to build a great company: hire people for “who they are” first, “what they know” second, and ask why they are important to you.

Unfortunately, most of the recruiting processes start the other way around, because most recruiters don't know how to asses Leadership.

Even great Leaders do not have all the answers, but they must have all the questions, starting with the key ones: What, How and Why.

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