Sunday, April 3, 2011

Raising CEO Longevity

In my youth, CEOs hung around till they retired. Today, the tenure of CEOs continues to drop to a point where their longevity is less than an NFL coach. Show me a company or even a country in trouble, and I'll show you a CEO who is about to be fired. Strategy, vision and mission statements are dependent on the simple premise that you must know where you're going. No one can follow you if you don't know where you’re headed. Many years ago, in a book called The Peter Principle, authors Lawrence Peter and Raymond Hull made this observation: "Most hierarchies are nowadays so cumbered with rules and traditions, and so bound in by public laws, that even high employees do not have to lead anyone anywhere, in the sense of pointing out the direction and setting the pace. They simply follow precedents, obey regulations and move at the head of the crowd. Such employees lead only in the sense that the carved wooden figurehead leads the ship." Perhaps this pessimistic view of leadership skills has led to the explosion of hundreds of books dealing with leadership, most of them being downright silly. There's advice on whom to emulate (Attila the Hun), what to achieve (inner peace), what to study (failure), what to strive for (charisma), whether to delegate (sometimes), whether to collaborate (maybe), Americas secret leaders (women), the personal qualities of leadership (having integrity), how to achieve credibility (be credible), how to be an authentic leader (find the leader within) and the nine natural laws of leadership (don't even ask). In fact, there are 3,098 books in print with the word "leader" in the title. To me, how to be an effective leader isn't worth a whole book. Peter Drucker gets it into a few sentences. "The foundation of effective leadership is thinking through the organization's mission, defining it and establishing it, clearly and visibly. The leader sets the goals, sets the priorities, and sets and maintains the standards."
First, how do you find the proper direction? To become a great strategist, you have to put your mind in the mud of the marketplace. You have to find your inspiration down at the front, in the ebb and flow of the great marketing battles taking place in the mind of the prospect. It's no secret that most of the world’s greatest military strategists started at the bottom. And they maintained their edge by never losing touch with the realities of war. Karl von Clausewitz did not attend the best military schools, did not serve in the field under the best military minds and did not learn his profession from his superiors. Clausewitz learned his military strategy the best way and the hardest way--by serving in the front line at some of the bloodiest and most famous battles of military history. The unpretentious Sam Walton traveled to the front lines of every one of his Wal-Mart stores throughout his life. He even spent time in the middle of the night on the loading docks, talking with the crews. Unlike "Mister Sam," many chief executives tend to lose touch. The bigger the company, the more likely the chief executive has lost touch with the front lines. This might be the single most important factor limiting the growth of a corporation. All other factors favor size. Marketing is war, and the first principle of warfare is the principle of force. The larger army, the larger company, has the advantage. But the larger company gives up some of that advantage if it cannot keep itself focused on the marketing battle that takes place in the mind of the customer. If you're a busy CEO, how do you gather objective information on what is really happening? How do you get around the propensity of middle management to tell you what they think you want to hear? How do you get the bad news as well as the good? If you don’t get the bad news directly, bad ideas can flourish instead of being killed. One possibility of finding out what's really going on is "going in disguise" or poking around announced. This would be especially useful at the distributor or retailer level. In many ways this is analogous to the king who dresses up as a commoner and mingles with his subjects. The reason: to get honest opinions of what's happening. Like kings, chief executives rarely get honest opinions from their ministers. There's just too much intrigue going on at the court. The members of the sales force, if you have one, are a critical element in the equation. The trick is how to get a good, honest evaluation of the competition out of them. The best thing you can do is to praise honest information. Once the word gets around that a CEO prizes honesty and reality, a lot of good information will be forthcoming. Another aspect of the problem is the allocation of your time. Quite often it is taken up with too many activities that keep you from visiting the front. Too many boards, too many committees, too many testimonial dinners. According to one survey, the average CEO spends 30% of his or her time on outside activities--and spends 17 hours a week preparing for meetings. Since the typical top executive works 61 hours a week, that leaves only 20 hours for everything else, including managing the operation and going down to the front. No wonder chief executives delegate the marketing function. But that's a mistake. Marketing is too important to be turned over to an underling. If you delegate anything, you should delegate the chairmanship of the next fund raising drive. David Packard of HP fame once said, "Marketing is too important to be left to the marketing people." Long ago, Drucker advised that since the purpose of a business is to generate customers, only two functions do this: marketing and innovation. All other functions are an expense. He was absolutely correct. If you're a CEO, keeping your job will depend on how good you are at marketing and innovation. - (Branding Strategy, 19 Sep 07)


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