What makes an exceptional CEO?

In Human Resources, there is a temptation to think about standard performance models and then group top performers in percentages relative to the ‘average’ performer.  I can understand why big companies take this approach; they need a set formula to deal with large employee numbers.  But, it can be a sledgehammer approach to crack a proverbial nut.  Why?  Because it doesn’t take into account the personality of brilliance and thus can be a barrier to identifying and nurturing ‘rockstars’; I learnt early on that the best software developers are 10x as productive as the average, backed up by McKinsey evidence!  The same goes for CEOs.  It is not a standard distribution world. So, a question for anyone in business, be they a CEO themselves, an employee or an investor; what differentiatesan exceptional CEO from an average one?

As always, there are lots of opinions on effective Leadership - books, case studies, academic research etc.  But I want to explore here some of the aspects not covered in the mainstream narrative. CEO leadership qualities include the ability to attract & motivate a top team; set and communicate a clear compelling vision; set strategies and execute flawlessly; develop a strong culture; obsess about customers. In addition, leaders of today ooze humility, authenticity, and compassionate capitalism giving back to communities.  Recent research on successful Leaders identify three characteristics - Decisiveness; Prioritization and the ability to bring people with you.  This creates the following and movement.  All well and good but what are the subtleties that create 10x performance?

If you are an investor, the good news when assessing a CEO is that typically, you will know in just 5 minutes of facetime. It helps if the CEO has done it before and also, understood and learnt from the failures of their past.  Experience is always helpful as long as the CEO maintains the 'Beginner's Mind'.

All the best CEOs simplify complexity to create refreshing clarity and bring the business back to its basics. Simply put, there are two sides of the perfect coin – customers and colleagues (employees). If your CEO obsesses about customers & colleagues, then the foundation for success is in place. Great CEOs are insurgents for customers and build the culture to breathe customer obsession every day. Outstanding CEOs are never satisfied nor complacent and always want more growth and success for the team.  Rockstar CEOs havea compelling, clear vision of how their product or service will address the customer need and possibly change a little bit of the world.They have clarity of thought starting with the customer/user need and then the end-to-end plan to deliver. I like to see CEOs spending 30-50% of their time directly with customers, prospects/partners and colleagues validating strategy execution and resulting course correction supported with data-driven analysis.  Through this energy, passion and personal commitment, they develop a powerful following and empower the team to step up, feel confident and deliver.  They drive coherent communication programs, including a powerful social media presence, to bring all stakeholders (employees, customers, partners, board, investors, community, sponsors) along the journey with them. Most outstanding CEOs that I know have great values with little ego and that strong sense of humility, openness and trust in the team. Role modelling is in the DNA of exceptional CEOs.

Humbly, I would suggest that those who have not been a CEO would struggle to understand how hard it is to be the CEO.  The weight of responsibility on the CEO shoulders is palpable and the ‘buck stops with you’. You take it very personally.  Being a CEO is a relentless pursuit of progress and growth. There is rarely an end-point.  I remember when we IPO’d Chordiant successfully on the NASDAQ, that some colleagues thought of this as ‘the end’, with their personal stock liquid and tradable within 6 months.  I had to remind colleagues that the IPO was the very start of a new journey where we had greater responsibility for success – to shareholders, fund managers, and analysts as well as all the other stakeholders.

Clarity of vision is vital for the CEO to nurture and never waive or resort to short-termism. Sometimes, execs get confused and create ambiguity. For example, I see some CEOs, when times are tough, who hide or who gravitate to process, an internal program or business model as the answer to their challenges.  For example, in software, a subscription relationship is purely the business model for a service normally cloud-based. Some CEOs think subscription is ‘the end’ and if they achieve 100% subscription, then the business looks after itself. In this example, subscription is a means and a excellent platform to manage transactions that support the whole customer LTV.  The ‘real deal’ though is a culture throughout the company of Customer obsession – for all functions of sales, marketing, customer success, engineering, product and all the back-office teams to breathe Customer Obsession in all activities, processes, systems - embedded deeply in the culture. From the CEO to every member of the company, you are insurgents and advocates for customers.  Great CEOs are wonderful storytellers where customers are always ‘present’ in the narrative and they bring the customers to life through stories they tell.  

A more subtle point is that being a CEO is relentless with hopefully, more good days than bad but not everything goes to plan or as well as you would like. I used to say on some days, ‘3 steps forward, 2 steps back’. Sometimes, it can feel like a daily roller-coaster ride. An outstanding CEO has a skill to handle this ambiguity and create clarity for followers. As a CEO, you sometimes need to ‘roll with the punches’.   For example, I remember when my Engineering VP who was on the critical path for product delivery, called me minutes before a major Investor presentation to offer his resignation – it could not have been worse timing! As a CEO, you can’t ‘sugar-coat’ or fantasy speculate about the future but on the other hand, you don’t want to ‘scare the horses’.  You need a balanced perspective whilst bringing your optimism and energy to motivate the team. Call it attitude and desire with dexterity! Ultimately, you worry about what you can change and sometimes have to accept that which you can’t change, make the best of it and look for growth opportunities.

Finally, CEOs who think life is about binary choices are generally misguided – way back as a sales manager role when a salesperson said to me, “Do you want me to hit the quarter or build the pipeline for next year”.  There is only one answer “Both”.  CEOs need to hold themselves to account for delivering progress and results – both short term and long term.  The short-term results are waypoints for the long-term realisation of the vision.  Exceptional CEOs have clarity over their mission, live their values, communicate well, listen hard, have emotional intelligence, know their numbers, and when required, work like dogs! Good luck finding the 10x CEO as the search is worthwhile.