What CEOs must do to Succeed

Life at the Top: Walking the Razor’s Edge

by Dr. Thomas J. Saporito

To succeed, CEOs must:

• Take action; don’t hesitate or hedge your bets.
• Cultivate trusted advisors and accept their feedback.
• Seek clarity and alignment with the board on strategic issues.

The business environment in which CEOs operate today is unlike anything experienced in past corporate life. Each decade following World War II has brought greater competition, regulation, scrutiny, and complexity—making the CEO’s role as leader, strategist and visionary incredibly demanding. Business has evolved from a simple game of checkers to one of three-dimensional chess.

In the face of this transformation, certain leadership experiences transcend time and circumstance. Regardless of company size, industry, country or culture; CEOs confront four undeniable realities: a high degree of risk, intense loneliness, lack of feedback and difficulty letting go. These certainties are unique to the CEO role.

The following insights can help leaders reflect on their roles as CEOs and realize that they are not alone in what they experience. These realities have been endured by essentially every CEO who served before them, are encountered by each of their peers today and, without question, will be experienced by their successors tomorrow.

“You have to take action; you can’t hesitate or hedge your bets. Anything less will condemn your efforts to failure.”—Andy Grove, Intel

A High-Wire Act

Virtually all CEOs with whom I have worked compare their leadership experience to that of a high-wire act. Much like aerialists, CEOs are engaged in a risky profession that requires a great deal of steadiness, care and composure. 

High above the ground, they struggle to maintain their balance. All the while, an attentive audience watches; many hope for success—while some await the slightest misstep. 

Conditions that can cause CEOs to lose their footing include lack of confidence, shortened tenures and failure to align with the board.

At these heights, self-confidence is mandatory for survival. As Andrew Grove, the former CEO of Intel, said, “You have to pretend you’re 100 percent sure. You have to take action; you can’t hesitate or hedge your bets. Anything less will condemn your efforts to failure.

Even with self-assurance, the balancing act can be perilous if rushed. A study by Booz & Co. reported that the tenure of CEOs during the past decade has decreased from an average of eight years to six, leaving far less time within which to accomplish considerably more. This pressure can cause rash action in the pursuit of success.

Recent headlines show that the lack of board alignment increases the chance of a fatal misstep. In the first quarter of 2011, the CEOs of Acer, Advanced Micro Devices (AMD) and Vodafone—just to name a few—left their posts, reportedly due, in part, to disagreements with their boards.

To an outsider, CEO Dirk Meyer had been an asset for AMD: In less than two years, he spun off the firm’s manufacturing arm, returned AMD to profitability and launched three different computer processor series. However, the board wanted more focus on newer mobile devices. Concerned he wasn’t doing enough in that area, the board eventually forced his departure.

Without question, today’s leaders walk a razor’s edge. This CEO reality is one of high risk and high visibility—balancing time, resources and results across a chasm of complexity, uncertainty and skepticism.

Lonely Doesn’t Begin to Describe It

William Mitchell, former CEO of Arrow Electronics, once said, “You can watch CEOs. You can be next to CEOs. You can report to CEOs. You can study CEOs. But, until you actually sit in that chair, you do not know what it’s like.”

Each CEO I know who stepped into the position was hit with the realization of how much bigger, lonelier and more complex it was—compared to anything else they have done. All CEOs soon realize they have much less control than they originally thought. Many experience a sense of insecurity and detachment not readily apparent, for they have learned to conceal those feelings so well.

John Hanson, former chairman, president and CEO of mining company Joy Global (formerly Harnischfeger Corporation), is widely considered to be extraordinarily strong and resilient, yet he has reflected on the isolation he felt during a particularly rough time shortly after joining Harnischfeger as president. He was forced to take Harnischfeger through Chapter 11 bankruptcy and he described the experience as one of the toughest, emotional times in his 30 plus-year career. However, thanks to John’s focus on what was best for the organization and his ability to make hard decisions, the company remained intact.

What intensifies these feelings of aloneness is the fact that there are few people in whom the CEO can genuinely confide. Who else has the contextual perspective, vision and responsibility equal to that of the CEO at a particular moment in time?

Feedback is Hard to Find—and to Accept

Solid feedback is rarely available to the top leader and even more difficult to accept. It has been widely reported that former Merrill Lynch CEO Stanley O’Neal ignored critical feedback, confirming that he didn’t tolerate dissenting opinions. Rajat Gupta, the former managing director of McKinsey & Company, now under investigation for insider trading, also struggled to accept feedback. Friends warned him about the questionable background of Galleon Group’s Raj Rajaratnam, but he waved them off.

Whether from internal or external sources, CEOs find it challenging to accept information and advice at face value, let alone trust what they hear. They are in constant fear that they may be exposing themselves to agenda-rich, instead of insight-rich, information.

Complicating matters further is the concern that CEOs can fear appearing weak for even seeking feedback. Thus, many don’t ask for it at all.

“When you are a CEO you’ve got to realize in the end that you have to share the burden.”—Roger Deromedi, formerly of Kraft Foods

The challenge is two-pronged: CEOs must first find people to whom they can truly trust to open up and, then, they need to make themselves psychologically open to the feedback offered. As Roger Deromedi, the former CEO of Kraft Foods, told me, “When you are a CEO, you’ve got to realize in the end that you have to share the burden. And if you try to carry the entire burden yourself, it can take a significant toll.”

Letting Go May be Harder Than You Think

On the eve of her departure from Xerox, then-CEO Anne Mulcahy expressed surprise at how hard it was to relinquish the post. In an interview with Bloomberg BusinessWeek, Anne reflected, “You get here and it’s very hard to let it go. So there is a part of me that is struggling…”

Many CEOs go into the role believing that they will be different—that they will have little problem stepping down. However, when the horizon comes into view at the mid-point of their tenure, their attitudes suddenly shift—especially if their vision is not yet fully realized.

The status that comes with the position of CEO also brings power and, human nature being what it is, power is the most difficult force to surrender.

Such was the case with the CEO of a Fortune 500 company. An ambitious executive who very much wanted the top job, he finally achieved his goal and proved to be an effective, much-adored leader. However, when it came to discussing plans for stepping down, his ambivalence towards his successor surfaced strongly. Consequently, the board worried these mixed messages were getting in the way of making a final decision. Like many CEOs, his intellect understood the need to move on, but his emotional readiness lagged behind. With guidance from a variety of mentors, he accepted the inevitable and actually became a very positive force in his successor’s transition.

Letting go, the CEO’s final reality, is a challenge each leader will unquestionably face when handing over governance to a successor.

Strength from Knowledge

What are the remedies to the four realities of leadership experienced by every CEO? None apply to everyone equally. Still, bearing the following in mind may help guide you on your way:

• Be aware you are walking on the razors’ edge.
• Embrace the reality of life at the top.
• Draw strength from your knowledge.
• Stay confident. You were selected for a reason.
• Seek clarity and alignment with the board on strategic issues.
• Maintain your fortitude, alignment and composure.
• Seek multiple points of support from family, friends and mentors.
• Cultivate trusted advisors and accept their feedback.
• Pass the torch with grace, style and dignity.

Fuente: Chief Executive

In Search of “Optimizationism”

by Robert Lawrence Kuhn

Key Takeaways

• Determine your primary assets and assess your vulnerabilities to a sudden decline in one or more of them.
• Challenge strategic assumptions, stress test your businesses and extend limits.
• If every idea your people have is a good one, it means you have too few ideas.

I spend my time, on the one hand, analyzing Chinese politics and economics in the media and, on the other hand, advising international companies on their strategies and tactics for doing business in China. My work has led me to view political systems founded on fundamental ideologies, particularly capitalism and socialism, as 19th century relics that wrought havoc in the 20th century and are useless in the 21st century. What all enlightened governments today do—or what they should do today—is to figure out optimum policies to deal with the hyper-complex, interconnected and ever-changing realities that characterize the global economy.

“Optimum” means achieving an ideal outcome, balancing myriad parameters and criteria. Optimum is usually not the “maximum” outcome, but it may be the “best” outcome. It’s a bit like flying a helicopter and having it hover. Just because the helicopter doesn’t move does not mean the pilot is doing nothing. In fact, the pilot must make multiple, small adjustments continuously just to keep the inherently unstable craft conditionally stable.

It’s like that with modern economies. What the government should or should not do, and what the private sector should or should not do is not codified in an ancient text nor can it be answered in the abstract. Only tightly targeted, situation-specific microanalysis can provide solutions to problems. These solutions will never be perfect and they will change frequently. Maximization is futile. Optimization is the key.

“The color of the cat, black or white, does not matter; a cat that catches mice is a good cat.”

Corporate Optimizing

How might Optimizationism impact corporations? Following are five principles for optimizing business organizations. These are not necessarily the best such principles, but they exemplify a way of thinking that can be applied in diverse situations. Appreciating ways of thinking is always superior to applying specific precepts; situations differ and adaptations are often necessary.

1. Nothing continues forever. Never assume that a current strategy, no matter how effective or a current product, no matter how strong, will go on in the future the same way it has in the past. To forecast the future by extrapolating the past is, in today’s volatile world, a recipe for disaster. Take IBM’s decision to sell its PC division, a wise decision in hindsight, one that Hewlett-Packard (HP) may come to envy.
2. People are neither perfect nor permanent. Never assume that you can find ideal managers or, that when you have good people, they will remain so. Situations change; people change. The Yahoo board, tasking themselves with finding a new position for the once-dominant portal in a world suddenly conquered by Google, Facebook and Apple, certainly must have thought about this when they fired CEO Carol Bartz.
3. Challenge strategic assumptions. Every corporate strategy is based on a series of assumptions regarding market, product, pricing, competition and the like—and the longer such assumptions have guided strategy, the more you should challenge them. One approach is to create so-called Blue and Red teams to challenge each other with each assigned to defend contrasting assumptions. Such scenario testing is commonly used in war games. To pick on HP again, they were forced to discontinue their TouchPad tablet within weeks of launch—a crisis that might have been avoided through better internal vetting.
4. Stress test your company. “Stress Testing” came to prominence in the aftermath of the recent financial crisis, when banks were analyzed to assess how much erosion of their assets, primarily mortgages, they could withstand before collapsing. Companies should do the same type of assessment. Determine your primary asset—assets in the broadest sense including products, personnel, customers, foreign markets, whatever—and then assess your vulnerabilities to a sudden decline in one or more of them. What are the weak links and how can you strengthen those weak links and, thus, mitigate risks? It may sound obvious, but this type of risk management is very often neglected—witness Enron and Lehman Brothers.
5. Extend limits. Force your managers to think beyond current boundaries. Play simulation games that develop new markets, products and concepts—whole new ways of doing business. If every idea your people have is a good one, don’t be so proud—it means you have too few ideas. Never get comfortable. IBM’s conversion from hardware to software is one of the great transformations in business history.

What is the core commonality linking these five principles? They all seek to improve corporate strategy by making changes to the status quo; and, as such, they are all optimizing processes.

On the Color of Cats

Deng Xiaoping, China’s great architect of reform and the “paramount leader” of China’s economic resurgence put it best. After the death of Mao Zedong (1976), the visionary Deng, who had been purged by Mao three times, saw that the only way that China could ever develop its economy was to put aside all the heated theoretical debates about what was or what was not socialism. (To hire three workers was socialism, some had argued, but to hire four was capitalism—and must be forbidden. To own five chickens is socialism; to own six is capitalism…. You get the absurdity.)

Accordingly, Deng, a man of diminutive body but giant spirit, figured out Optimizationism—meaning that it is not the label on the policy that counts, but only the effectiveness of its output. Of course, Deng was sufficiently savvy not to coin such an obtuse-sounding neologism as my “optimizationism.” He hit pay dirt by applying an earthy aphorism from his native Sichuan province; and, because almost everyone in China got the point, it shall come to pass in the not-too-distant future that China, in only its fourth decade of reform, will become the largest economy on earth.

Deng famously said: “The color of the cat, black or white, does not matter; a cat that catches mice is a good cat.”

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• Copyright © 2012 Chief Executive Group, LLC. All rights reserved.

    Best Student Cities in the World 2012

QS is proud to announce the first ever QS Best Student Cities ranking. Based on a complex set of measures taken from public information, surveys and data submitted as part of the QS World University Rankings, the results provide a new way of comparing the best cities around the world in which to be a student.

Click the city name in the table below in order to view the full details and profile for that city, including a list of all of the qualifying educational institutions, population size, quality of living, affordability and student mix.

RANK	CITY	COUNTRY	STUDENT MIX	QUALITY OF LIVING	EMPLOYER ACTIVITY	AFFORDABILITY	OVERALL
1	Paris	France	85	91	96	54	421
2	London	United Kingdom	87	88	89	41	405
3	Boston	United States	85	89	83	44	399
4	Melbourne	Australia	100	94.5	84	28	398
5	Vienna	Austria	99	99.5	81	62	389
6	Sydney	Australia	94	97	81	25	384
7	Zurich	Switzerland	84	99	81	51	381
8	Berlin	Germany	81	95	57	71	376
8	Dublin	Ireland	92	91.5	70	43	376
10	Montreal	Canada	85	93	68	46	372
11	Barcelona	Spain	76	87	71	61	370
12	Singapore	Singapore	78	92	100	35	369
13	Munich	Germany	79	98.5	63	69	368
14	Lyon	France	88	87.5	43	81	367
15	Chicago	United States	62	85.5	72	44	357
16	Madrid	Spain	73	85.5	64	66	356
17	San Francisco	United States	67	91	72	43	353
18	New York	United States	63	83.5	73	35	352
19	Tokyo	Japan	43	84	83	46	351
19	Hong Kong	Hong Kong	74	50	92	42	351
21	Milan	Italy	63	86	89	54	350
22	Brisbane	Australia	94	88.5	63	30	349
23	Seoul	Korea, South	67	50	82	53	345
24	Buenos Aires	Argentina	54	50	93	75	339
25	Perth	Australia	95	93.5	53	28	337
26	Toronto	Canada	70	95.5	75	35	336
27	Stockholm	Sweden	66	94	79	34	335
28	Beijing	China	48	50	87	62	329
29	Adelaide	Australia	88	91	45	34	327
30	Washington DC	United States	60	85.5	55	45	325
31	Vancouver	Canada	78	98	54	37	322
31	Mexico City	Mexico	38	50	68	95	322
33	Helsinki	Finland	58	89.5	53	69	321
34	Taipei	Taiwan	49	50	59	78	320
35	Manchester	United Kingdom	82	50	66	64	317
36	Amsterdam	Netherlands	62	96.5	57	44	316
37	Moscow	Russia	57	50	78	52	314
38	Brussels	Belgium	71	93	40	60	308
39	Shanghai	China	43	50	70	68	306
39	Copenhagen	Denmark	64	97.5	56	31	306
41	Santiago	Chile	33	50	89	63	302
42	Philadelphia	United States	56	50	64	52	301
43	Kyoto	Japan	60	83	44	47	298
44	Kuala Lumpur	Malaysia	58	50	45	86	295
45	Sao Paulo	Brazil	27	50	79	58	292
46	Toulouse	France	86	50	26	81	286
47	Birmingham	United Kingdom	64	50	55	64	284
48	Cairo	Egypt	47	50	55	96	282
49	Bangkok	Thailand	27	50	63	68	279
50	Glasgow	United Kingdom	68	50	43	63	278

© QS Quacquarelli Symonds Limited 1994-2011. All rights reserved.