CEO Excellence

The Six mindsets that distinguish the best leaders from the rest
Carolyn Dewar, Scott Keller, Vikram Malhotra
McKinsey
The extent to which a CEO is a significant
predictor of a company’s performance has
more than doubled since the mid twentieth
century.
The CEO role is getting tougher. Today CEOs
have to navigate far more than the traditional
running of the business.
From our interviews, six key CEO
responsibilities emerged:
1.setting the direction
2.aligning the organization
3.mobilizing through leaders
4.engaging the board
5.connecting with stakeholders
6.managing personal effectiveness
How the CEOs prioritize each of the six
responsibilities depends on a complex
interplay between the specific business
situation and the CEOs unique capabilities and
preferences.
“The CEO role is the intersection of all
contradictions”
The best CEOs embrace uncertainty with a
view that fortune favors the bold. They’re less
a ‘taker’ of their fate and more a ‘shaper’ -
constantly looking for and acting on
opportunities that bend the curve of history.
The most successful CEOs didn’t just raise the
aspiration level, they changed the definition of
success.
5 strategic moves that matter for CEOs
• Buy and sell
• Invest
• Improve productivity
• Differentiate
• allocate
When top CEOs are faced with making a big,
bold decision, they say that the best way to
arrive at the right answer is to think like an
owner.
The average lifetime of an organization in 1935
was 90 years, in 2015 it was 18.
83 % of CEOs identify capital allocation as a
key lever of growth – ahead of operational
excellence and M and A.
We think of ‘stagility’- stability and agility
aren’t a trade off to be made, both should be
present.
The origins of the matrix organization go back
to the 1960s and the ‘man on the moon goal’.
Project managers were responsible for costs
and timelines and engineering managers were
responsible for technology development. Both
reported to the general managers. This
success led to wider adoption of matrix in the
corporate world.
Employees working in a matrix experience
confusion and frustration as to who makes the
decisions.
Of the 50 most valuable roles in an
organization, we found that only 10 % of the
positions report directly to the CEO, 60 % exist
at the next level down and 20 % are at the
level below that.
CEOs feel that all leaders must have :
enthusiasm, smarts, flexibility, results
orientation and alignment with company
values.
More than half of senior executives report that
their company’s top team is underperforming.
CEOs are out of touch with reality. On average
less than a third of CEOs have problems with
their teams.
Teams often consist of opinionated leaders
who represent different perspectives, vie for
influence, fight over allocation of scarce
resources and in some cases compete with
each other.
For meetings, CEOs often start with two
questions ; ‘How often should we meet?” and
“what should be on the agenda?”
The first responsibility of a CEO is to the
institution and making the team work not to
be build collegiate relationships with
subordinates.
The best CEOs create a sense of teamwork
with a larger leadership coalition and not just
their direct reports or team.
Some CEOs have one to one conversations
with the top 80 people twice a year.
Top team effectiveness rating usually is at a 5
on 10.
In meetings the law of triviality applies, where
people give disproportionate time to irrelevant
issues.
The job of a top team is to focus on what can
make the company successful and what can kill
us. All the rest is e mail.
Dialogue in a team works, if the team is free of
bias.
Discipline is a must to get the most out of
team meetings.
Managers react to their environment, leaders
influence the environment.
Most weekly CEO meetings in a company are
simply on what’s working and what’s not
working.
Apart from connecting the dots, the best CEOs
play the role of an orchestra conductor.
There are many commonalities to good
leaders – it starts with the discipline of
analytics, knowing the details of pricing,
products, distribution, variable costs, fixed
cost, working capital. The first job is to get the
facts and look at the facts.
The best CEOs demand discipline in the way
meetings are conducted.
Boards rarely add value to the organizations
they govern. Only 30 % of Board members
report that they serve on boards whose
processes are effective.
Practicing radical transparency isn’t a burden
for the best CEOs, it come naturally to them
and is a force for good.
“Trust is not about charisma or friendship, it is
about delivery”
Board members spend less than 10 % of their
time working together.
Research shows that employees draw on five
sources of purpose and motivation:
the first is themselves
the second is colleagues
the third is the company
the fourth is the customer
the fifth is impact on society
82 % of companies affirm the importance of
purpose, but only 42 % report that the
company’s purpose has much effect.
The best CEOs do not confuse their personal
passions for their company’s principles.
For CEOs, you have to be comfortable having
an uncomfortable conversation.
In every organization, the CEO is the link
between the inside and the outside, inside
there are costs, outside there are results, the
best CEOs travel to meet customers and do
what is necessary to support the business by
meeting people.
The best CEOs are looking for examples from
other industries , to harvest new ideas to make
their business better.
By thinking long term, the best CEOs avoid
short term solutions that will be damaging in
the long run.
“Leading yourself is the most daunting, the
most difficult and needs the most courage”
People lead successfully in very different ways,
the one thing common to the best CEOs is
that they all display discipline.
A challenging aspect of a CEOs job is to move
from meeting to meeting without letting what
happened in the previous meeting impact the
next meeting.
Managing energy levels is as important as
managing time.
CEOs reach down and talk to people in the
organization for continuous feedback.
The role of a leader is to define reality and give
hope.
The best CEOs of the future will be
ethically responsible
diverse
resilient
impactful