15-10 Story 1: Choosing the Boss: What makes a good CEO?

 

SYNOPSIS: A number of high-profile companies have appointed new CEOs lately. What is it that makes one candidate better than another to lead a corporation and make it innovative and profitable? We talk to two management specialists about the characteristics of a good leader, what the CEO is responsible for, and what sets great CEOs apart from other business leaders.

Host: Gary Price. Guests: Bill Pasmore, Organizational Practice Leader at the Center for Creative Leadership, and Professor of Social Organizational Psychology at Columbia University, NYC; Adam Bryant, “The Corner Office” columnist for the New York Times, and author of the book, “Quick and Nimble: Lessons from leading CEOs on how to create a culture of innovation.”

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Choosing the Boss: What makes a good CEO?

 Gary Price: Some very large and high-profile companies have chosen new chief executive officers in the past few years. General Motors, Yahoo! And Microsoft all have new faces at the helm. But what, exactly, does a CEO do? What makes one businessperson a good CEO and another one not? We talked to two management specialists about the qualities of a good CEO, and their responsibilities to the company and the public. Bill Pasmore is organizational practice leader at the Center for Creative Leadership, and professor of social organizational psychology at Columbia University. We asked him what a CEO’s responsibilities are…

Bill Pasmore: The CEO has the responsibility for both today and tomorrow in terms of the well-being of the organization. They start with the fiduciary responsibility to shareholders, which means that they must maintain the well-being of the organization from a financial perspective, but it’s much more than that. They are responsible for the well-being of clients and customers who take advantage of the organization’s products and services; they are the voice of the organization in the community and in the world, taking care of the environment around them so that there’s a place for them to do business in the future; they are the responsible person to look at talent across the organization and make sure that the right decisions are being made about what talent to bring into the organization and how to develop that; they are responsible for the public’s perception of the company and for the ethical well-being and behavior throughout the world of what the organization does.

Price:     Pasmore says that most people associate a company’s strategy with the CEO.

Pasmore: The CEO makes decisions about the future — where we invest, whether or not we acquire, how we expand, what products we invest in — the most important decisions that influence where the organization is headed is where the CEO spends, or should spend, most of their time thinking about.

Price: Strategy is important, and along with that is setting priorities. Adam Bryant is the “Corner Office” columnist for the New York Times, and author of the book, “Quick and Nimble: Lessons from leading CEOs on how to create a culture of innovation.” He says that a good CEO can articulate what the company’s priorities are so that everyone understands…

Adam Bryant: They have the ability to take a lot of complex information and distill down to the one, or two, or three things that really matter. Because if you’re going to galvanize an organization you really need to stand up and articulate in very simple terms – and simple is hard – but simple terms, this is where we’re going and this is how we’re going to get there, these are the things that we’re going to use to measure our progress. Not everybody can do that and it’s really important, particularly with large organizations. Because it’s not going to do anybody any good if you have a big company and you stand up at the beginning of the year and say, “these are our 12 priorities for the year.” I think there’s an expression that if you have more than three priorities you don’t have priorities. That’s one of those qualities that really sets people apart.

Price: Bryant says that another characteristic of the successful CEO is what he calls “passionate curiosity.” He says we expect leaders to have all the answers to a company’s challenges…

Bryant: What I’ve really come to appreciate is that they have that sort of external face, but inside the company, their most important role is to ask the right questions not to have the right answers, because they simply can’t have all the answers. But they very often ask sort of deceptively simple questions that can get an organization thinking hard about what it does and possibly moving in new directions. So “passionate curiosity” is this label that I use to describe what I’ve seen in a lot of the CEOs I’ve interviewed. And it’s a phrase where I believe that the sum is greater than the parts because we’ve all met people who were passionate but maybe not necessarily curious about the world, people who are curious aren’t necessarily passionate. But I just find it’s a good way of describing that kind of really interesting energy and turn of mind that I’ve seen in a lot of the CEOs.

Price:     Many of the best CEOs come from inside the company or at least have worked in the same industry. That helps them hit the ground running faster than an outsider. However, Pasmore says that someone from a completely different area of business is often chosen when the board thinks the company needs fresh ideas and a new perspective….

Pasmore: Back in the days that we struggled in the steel industry, for example, it was very tempting for boards to say we’ve got to get somebody who is not imbued with this steel industry mindset, because all they can see is competition based on volume and price and a desire to eliminate global competition by putting sanctions on importing steel and that’s just not going to work. We need people who are more creative and thoughtful about how we can still be competitive in a world where things have gone global. And if we don’t hear great ideas coming from inside, form internal candidates, boards can sometimes say “we’re better off trying something new than knowing for sure that the person we’re putting into the job is going to fail.”

 

Price:     We often hear the term “corporate culture,” and how the CEO sets the theme. But what is it? Bryant says it’s a fuzzy concept, but one that can have a positive or negative impact on a company. In his book he tries to identify some of the key drivers of culture, such as simplicity in articulating strategy and priorities. Without that, employees and departments tend to go off and pursue their own goals, resulting in politics and turf wars…

Bryant: Another important aspect of cultures – what I call “rules of the road” – which is really about values. When you say that word “values” in the context of corporations, it’s easy for us to all imagine a kind of episode of “The Office,” where Michael Scott comes out and you know says “okay, let’s do values,” and we can all sort of roll our eyes. But I do think values are important if they’re done well. Companies that I’ve talked to, many of them have been very deliberate about thinking about what they’re values are, articulating them. But then there’s the X-factors – whether you live by them every day, because the best companies I think not only state their values, but they use those values as criteria for hiring, they use them as criteria for firing, and they are always using them to reward employees, the people who best embody the values of the company.

Price: When a new CEO takes over, sometimes he or she wants to change the culture of the company to enhance performance or get it out of a rut. That appears to be the case for Marissa Mayer when she was chosen to head up Yahoo! Mayer decided that employees who had been working from home needed to show up at the office…

Bryant: In terms of Yahoo! I think what she was really trying to do and is trying to do is shake up the culture. We can argue at the end of the day whether it was the right call or not, but I think it’s clear that she felt that she needed to do that just to make a clear break from the past. In terms of whether it’s a good policy? It depends on the work that the people were doing. There’s some work that can be done more effectively at home because there’s fewer distractions. But again, I just think blanket policies are dangerous.

Price: Some CEOs seem to know all the right moves to make their companies a success on Wall Street and a hit with the public. CEOs such as the late Steve Jobs of Apple, Steve Case, formerly of AOL, and Jeff Bezos of Amazon, have reached iconic status. Are some CEOs born with an extra “something” that gives them the edge over the competition?

 

Pasmore: Yes, but not as much as you would think. We learn from experience. Our research says that people learn about 70% of what they know from experience. So if you put people into the job of being a CEO, most people can learn how to do it, and given the right experience and the right opportunities, most people can actually do a good job of it. But when you ask about people like Steve Case, or Steve Jobs, or Jeff Bezos there is an element of it that makes them exceptional that you can’t teach people. That is something about them, it’s something about their drive, it’s something about their confidence. Again it comes back to learning agility, a part of which requires that we’re willing to put ourselves in situations that entail risk, substantial risk in some cases, in order to learn even if we fail because we have such drive to get to our goal that we’re going to do whatever it takes.

Bryant: I think there’s something there. I think it’s a combination. There’s a balance of things they’re born with, and qualities they develop over time. I have to say the quality I see in many of the CEOs I interview is just this kind of relentless drive. If you think of their sort of brains and energy source as engines, they seem to have 12-cylinder engines and they’re firing, you know all the cylinders are firing, and they seem to have a lot of energy and stamina and just sort of constantly, not just working, but thinking and asking those good, dumb questions. Because I do believe a lot of innovation just grows out of the art of asking what I call “good, dumb questions.” It’s very often those simple, almost childlike questions of “why, why, why?” that can lead to really great insights. And I think the quality if go upstream and ask what do all these people have in common, I think it’s that just relentlessly questioning mind. They’re always sifting through ideas, and holding up problems and looking at them from different angles. And by doing that they see the solutions that turn into billion-dollar businesses and more.

Price: You can learn more about what makes great CEOs tick, in Adam Bryant’s book, “Quick and Nimble” available in stores and online. You can also visit his website at AdamBryantbooks.com. Find out about Bill Pasmore and the Center for Creative Leadership at ccl.org. For information about all of our guests, you can log onto our site at viewpointsonline.net. I’m Gary Price.

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