Four Traits Your Next CEO Must Have For Your Organization to Thrive
Four Traits
CEOs come and CEOs go. Some – like Steve Jobs at Apple, Jeff Bezos at Amazon, and Richard Branson at Virgin – are excellent. They generally ‘get it’. Others – like Steve Balmer at Microsoft, Jeff Immelt at GE, and Dick Fuld at Lehman Brothers – not so much. They really ‘don't get it’.
What makes the difference between these ‘good’ CEOs and their ‘not so good’ counterparts? Based on decades of watching and studying CEOs – mostly the high–performing ones – we believe it comes down to possessing four incredibly important traits.
So – if you want to ensure that your organization will continue to thrive and grow over the decades yet to come, not to mention be relevant enough and resilient enough to weather the sea of changes before us – then you will definitely want to look for these four traits in your next CEO.
Trait Number One — A Relentless Focus on the Long–Term Future
The best performing CEOs are extremely visionary. They have a clear grasp on where the organization needs to go – and what it needs to achieve – for an indefinite future. Their vision – which is always grounded in purpose – extends well beyond the next quarter or two – to something more on the order of the next 25 – 50 years. For any organization that's a long ways out to be looking, particularly given the volatility and uncertainty of the world we now live in. But nevertheless that is where their focus is set – all the while never losing sight of the realities and necessities of the present day (that comes next).
This is why Founders can make excellent CEOs (if they have the rest of these traits) – because their visions tend be very long–term – indelible if you will, and usually transformative in some way. That often carries the organization for decades at a time, so long as other things are done properly.
As part and parcel to this, these individuals are constantly attuned to the trends happening all around them – because they have to constantly be able to establish strategies that harmonize with, and build off of, those trends. Leaders out of tune with the trends of their day tend to take their organizations down a lot of wrong paths. For evidence of that, look no further than Bob Allen of AT&T, Eddie Lampert of Sears Holding, or John Akers of IBM – all of whom failed to grasp the trends of their day in their respective industries and subsequently led their organizations down a path toward bankruptcy. Those who are attuned to the trends of their day know the right turns to make, as so well evidenced in Satya Nadella’s leadership of Microsoft now. The bottom line is this… without fully understanding the trends unfolding around you, one simply cannot navigate a viable path into the future, as those trends all make up the landscape of that future. Out of touch equals eventual failure.
Finally – and just as importantly – CEOs in the know understand that we cannot afford to be passive observers of the future, but rather must become the active builders of it. And so they don't simply sit around waiting to see what the future will bring them. Instead they act proactively and preemptively to shape – and ideally ‘own’ – that future, so that they can steer it into the direction they desire for it to go.
So when you're interviewing your next CEO candidate, ask them about their vision for the future of the organization (including how far out it looks and how it relates to emerging trends), and how they will lead the organization to make that a reality. If their answers don't align with this mindset, find someone else.
Trait Number Two — Inherently Entrepreneurial
Great CEOs are extremely entrepreneurial. Period. What this means is they understand that the way we poke and prod our way into shaping our future is to try lots of different experiments – quite often small, future–focused experiments aimed at learning as much as possible about emerging market needs and market reactions to different concepts – all run in very lean and intelligent ways through validated learning cycles, as so well prescribed in Eric Ries' The Lean Startup.
In this regard, they operate one or more parts of the organization like a startup studio – trying out all sorts of new ideas live, in market, to see which ones the market is ready for, which it will never be ready for, and which need more time yet. This is precisely what companies like Amazon and Starbucks do. They are constantly trying out new experiments to figure out what will work and what won't – experiments at Amazon like Amazon Go, Amazon Dot, Amazon Web Services, drone delivery, sidewalk drone delivery, and next–day order fulfillment, and experiments at Starbucks like Starbucks Reserve, Starbucks Nitro Cold Brew, Starbucks VIA®, Verismo Pods, K–Cup Pods, Vivanno Smoothie, Bottled Frappuccino, and Holiday Lattes, amongst others.
It is precisely this sort of experimentation that allows organizations to poke and prod at the future and from that figure out which lines of business will gain traction, and which will not (or will not yet).
It also allows the organization to experiment in a lean and agile manner. The organization never has to ‘bet the farm’ on any one experiment succeeding. Most can afford to fail, and the world will still be okay; the organization will be all the wiser because it will have learned what doesn't work and why so. In fact, most thought–leaders in the innovation world would agree that if you're not failing at a lot of these experiments, then you're probably not running enough of them, and your results may never find the really big winners the organization needs to move its needle to the next level, which means you're ultimately leaving money on the table. Big successes require lots of experiments, and that inherently means a lot of little failures for the sake of the few big winners.
But, in order for an organization to be able to successfully set up and operate such an organized and systemic program of experimentation, their CEO must inherently be entrepreneurial in nature, for it is only the entrepreneurial who have the appetite for this type of work and investment – an archetype, by the way, that is very antithetical to the traditional executive leadership model, which wants to camp out on things like core competencies (because becoming good at something usually lets you do it cheaper) and supply chain optimization (because this, again, tends to take costs out of the supply side of the equation).
In fact, another way to see this is that the traditional CEO archetype likes to focus far more on the supply side of the equation – an internal focus on costs, efficiencies, and short–term profit maximization – while the truly growth–minded CEO archetype much prefers to focus on the demand side of the equation – an external focus on finding new lines of business that will grow, scale, and thrive far beyond the current business. While the traditional model was well suited to the Industrial Era of the 20th Century, it is not well suited to the exponential era of the 21st Century.
So… which of these do you think will make for a better long–term outcome for an organization? Indeed… the latter one will. This has been well proven time and again by the stellar growth of entrepreneurial organizations like Amazon, Starbucks, and Virgin over the past twenty–five years. Even Apple, as cloistered as it is in its innovation efforts, is equally experimental; it just does so well inside a more tightly controlled sandbox; but it is still an organization that is very much attuned to learning through experimentation. In fact, of all organizations, it is the absolute master of learning from others' experiments – especially their failed ones.
So, if you want to ensure your organization will still be here 30 years from now – and relevant to a future market at that time – then hire an entrepreneurial CEO. You will not regret it ten years from now.
This is where, by the way, serial entrepreneurs quite often shine… they live for ‘the new’… for breaking open new sources of value that grow and scale organically to ultimately dominate one or more markets. This is why some of them – like Elon Musk for example – have successfully chained together an entire line of successes… in his case companies like Zip2, Neuralink, Tesla, SpaceX, and The Boring Company. They aren't afraid to experiment – in fact, they live for it.
Trait Number Three — Solidly Grounded In Reality and the Fundamentals of Business
Good CEOs are driven by facts and data about what is happening around them. And while they may try any number of strategies, they use ongoing analytics to tell them how well those strategies are or are not working, and then they act accordingly.
Indeed, a good CEO cannot exhibit Trait No. 2 without also exhibiting this trait. The two traits go hand-in-hand, otherwise the magic simply doesn't work.
This requires two things.
The first is pure, unabashed objectivity, and consequently a lack of bias. Organizations cannot afford to prop up ‘pet businesses’ that don't live up to muster – either those businesses have to perform and else show a path to future performance. Objective CEOs understand this, and work hard to remain completely unbiased. They don't nurse ailing businesses for too long before they take alternative actions. Just look at how many different Virgin businesses Richard Branson has had to cut loose over the years (like the Virgin Megastores for example), or the ones that Jeff Bezos has had to cut loose (like the Fire Phone) because the data clearly showed they weren't going to succeed. These CEOs are totally unbiased and objective about those decisions (although admittedly sometimes slow at them).
Which brings us to the second thing this requires… honesty. CEOs have to be completely honest with both themselves and everyone else around them. CEOs who live in fantasylands dreaming that they are succeeding when the facts are telling them otherwise do not make for good CEOs. The longer they are in the saddle, the deeper the organization will go down this rabbit hole toward eventual irrelevance and extinction.
So if you have a CEO who is not objective, unbiased, and honest about the business realities surrounding the organization, then get them out as fast as you can. Do not let them do more damage than they already have from living in such a fantasyland.
Ironically, as good as Founders can be as CEOs at times, they of all people tend to fall into this trap of believing their lies and fantasies. Just ask Adam Neumann of WeWork about the lie he spun and believed – and convinced many investors to believe, or George Shaheen of Webvan.com who lived in the fantasy that his business was built on a viable business model.
Trait Number Four — A Consummate Diplomat
If you find a prospective CEO who has all of the above traits, but yet cannot find it in themselves to be diplomatic to the world around them, then keep looking.
For all the great results the above traits may bring, an inability to be diplomatic can sink the ship far faster than any of those traits can ever raise it. For evidence of this, look no further than John Schnatter of Papa John's, Martin Shkreli of Turing Pharmaceuticals, or James Johnston of R.J. Reynolds Tobacco Company (who outright lied to Congress) – all of whom exhibited tremendous hubris and contempt for customers, employees, regulators, and/or investors. In the end, many of these leaders' arrogance and lack of diplomacy cost their organizations incredible value – which in some cases has never been recovered. It also got them shown the door, and in the case of Shkreli, jail time.
So your next CEO must be all of the above – and a consummate diplomat – the way that Satya Nadella (Microsoft), Marc Benioff (Salesforce), and Sir Richard Branson (Virgin) are. They must always treat all parties – employees, investors, customers, regulators, and the public at large – with the utmost of respect and dignity. If they can do this, then the rest of the magic will work too.
This inherently means, of course, that they will set the right culture in the organization and put the right leaders in place, so that both autonomy and accountability work as intended for the benefit of the organization – with the ultimate goal creating a ‘human’ workplace that delivers on long-term results.
Conclusion
If your organization aspires to remain relevant, resilient, prosperous, and growing long down the road – then these are the four traits that you must look for in your next CEO:
- A Relentless Focus on the Long-Term Future
- Inherently Entrepreneurial
- Solidly Grounded In Reality and the Fundamentals of Business
- A Consummate Diplomat.
When you find someone with these four traits – and who otherwise meets your criteria – then you can sleep better at night knowing that the organization you've invested so heavily in will still be here – growing and thriving – years and most likely decades from now.
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