Who's working and who's not working! Then be courageous enough to make the right adjustments. The adjustments needed could be new team members, or it could be an adjustment in your execution steps. I have been thinking and working on this question since Ram Charan's article was published.
My new book, Rhythm , is a compilation of ideas, patterns, and practices that have helped our clients execute well and succeed. As I wrote Rhythm , I was focused on answering the following questions:. Book your personalized demo. See the graph later in the article. A new academic study reaches the same conclusion - poorly performing CEOs are three timesmore likely to get booted than they were a generation ago. Even if their boards spare them, theircompanies often get taken over, like Digital Equipment under Robert Palmer and Rubbermaidunder Wolfgang Schmitt.
Bottom line: Whatever cover CEOs used to hide behind has beenblasted away. Either they deliver, soon, or they're gone So how do CEOs blow it? More than any other way, by failure to put the right people in the rightjobs - and the related failure to fix people problems in time. Specifically, failed CEOs are oftenunable to deal with a few key subordinates whose sustained poor performance deeply harms thecompany. What is striking, as many CEOs told us, is that they usually know there's a problem;their inner voice is telling them, but they suppress it.
Those around the CEO often recognize theproblem first, but he isn't seeking information from multiple sources. How's your performance--and your performance credibility?.. Of course you have to deliver results, but you're unlikely to do so if you haven't developedperformance forecasts for the next eight quarters, not just the usual four.
You should haveideas now for changes you may have to make six to eight quarters out. You should feel connected to the flow of information about your company and its markets;that includes regular, direct interaction with customers and front-line employees. Are youfollowing through on all major commitments from your direct reports? Are you listening tothe inner voice telling you whether these things are going well or badly?..
Every company, even the most successful, has bad news, usually lots of it. If you're nothearing it, are you letting the trouble build? The information you get should force you totake competitors seriously That means evaluating you and your direct reports, asking for information about yourmarkets, and demanding a succession plan - but not formulating strategy your job ortrying to manage operations The excuses and rationalizations that CEOs concoct are largely unconscious, a mechanism foravoidance.
They make an impressive list; six cover most cases The CEO may become a victim of "intellectual seduction," installing a subordinate sotalented that the CEO persuades himself failure is impossible. If the protege then fails todeliver, the CEO can't come to terms with it, especially if the protege is a successioncandidate. Often these subordinates have been promoted into line jobs from staff positionsor consulting firms, with their high-level executional abilities untested The problem of blind loyalty shows up more often than you may suspect.
The boss and thesubordinate may have worked together a long time; in some cases their families vacationedtogether. Judgment becomes blurred. Mention this to people who were around GeneralMotors in the early '90s and they tend to nod vigorously and say, "Lloyd Reuss! Stempelemphatically disagreed, often putting his arm around Reuss' shoulders and exclaiming,. When the directors took the chairman's title away from Stempel, they also demoted Reuss,and when they fired Stempel six months later, they booted Reuss too And failure as a CEO is never final.
These are strong people who can come back successfully in other roles. Nor are we saying execution is the only reason CEOs falter. Sometimes they adopt a strategy so flawed that it's doomed, or they refuse to confront reality in their markets, or they antagonize their board. And when a CEO really goes down in flames, there's almost always more than one reason.
But business people learn to focus on the main thing, the explanation that accounts for most of what they're worried about, and in the realm of CEO failures that explanation is clear. It's clear, as well, that getting execution right will only become more crucial.
The worldwide revolution of free markets, open economies, and lowered trade barriers and the advent of e-commerce has made virtually every business far more brutally competitive. The frantic spread of information through technology is making customers everywhere more powerful and pushing toward the commoditization of everything. Institutional investors now own more than half the equities in U. Indeed two of the nation's preeminent headhunters, Tom Neff and Dayton Ogden of Spencer Stuart, calculated recently that while average CEO tenure in the biggest companies has remained fairly steady at seven to eight years, those who don't deliver are getting pushed out quicker.
See the graph later in the article. A new academic study reaches the same conclusion - poorly performing CEOs are three times more likely to get booted than they were a generation ago. Even if their boards spare them, their companies often get taken over, like Digital Equipment under Robert Palmer and Rubbermaid under Wolfgang Schmitt. Bottom line: Whatever cover CEOs used to hide behind has been blasted away.
Either they deliver, soon, or they're gone. So how do CEOs blow it? More than any other way, by failure to put the right people in the right jobs - and the related failure to fix people problems in time.
Specifically, failed CEOs are often unable to deal with a few key subordinates whose sustained poor performance deeply harms the company.
What is striking, as many CEOs told us, is that they usually know there's a problem; their inner voice is telling them, but they suppress it.
Those around the CEO often recognize the problem first, but he isn't seeking information from multiple sources. Of course you have to deliver results, but you're unlikely to do so if you haven't developed performance forecasts for the next eight quarters, not just the usual four. You should have ideas now for changes you may have to make six to eight quarters out.
Are you focused on the basics of execution? You should feel connected to the flow of information about your company and its markets; that includes regular, direct interaction with customers and front-line employees. Are you following through on all major commitments from your direct reports? Are you listening to the inner voice telling you whether these things are going well or badly?
Is bad news coming to you regularly? Every company, even the most successful, has bad news, usually lots of it. If you're not hearing it, are you letting the trouble build?
The information you get should force you to take competitors seriously. Is your board doing what it should? That means evaluating you and your direct reports, asking for information about your markets, and demanding a succession plan - but not formulating strategy your job or trying to manage operations.
Is your own team discontented? Top subordinates often start bailing out before a CEO goes down. The excuses and rationalizations that CEOs concoct are largely unconscious, a mechanism for avoidance.
They make an impressive list; six cover most cases If the protege then fails to deliver, the CEO can't come to terms with it, especially if the protege is a succession candidate. Often these subordinates have been promoted into line jobs from staff positions or consulting firms, with their high-level executional abilities untested. The boss and the subordinate may have worked together a long time; in some cases their families vacationed together.
J udgment becomes blurred. Mention this to people who were around General Motors in the early '90s and they tend to nod vigorously and say, "Lloyd Reuss! Stempel emphatically disagreed, often putting his arm around Reuss' shoulders and exclaiming, ; Fortune; p. When the directors took the chairman's title away from Stempel, they also demoted Reuss, and when they fired Stempel six months later, they booted Reuss too. The executive missed his commitment the first year, then missed it again the second, causing the whole company to fall short of its publicly stated promises to Wall Street.
The CEO decided he wasn't giving the subordinate enough coaching and resolved to help more. He was human. But was this response humane? It wasn't. Results continued to decline, the stock collapsed, and the company was taken over.
Both executives are gone, later joined by several thousand employees deemed unneeded by the new owner. It isn't uncommon for a strong CEO, otherwise decisive, to be blind to this fatal flaw.
Poor performance hurts the company's results, but taking out the subordinate may hurt its image. Typically the CEO doesn't act until the problem is acute, and by then it's sometimes too late.
The board won't like it if I sack another. But if the subordinate is failing, delaying action just makes the problem worse. The CEO may be insecure about his ability to hire an outsider, especially someone from outside the industry. If the company has a strong, insular culture, he may rationalize that the culture wouldn't accept an outsider. We've heard all these statements and they're virtually always a sign of trouble ahead.
Quick action on problems in the top team is simply imperative. He recruited four candidates - most notably President J ohn Walter - but none worked out. When Walter got fired, the board seized control of the process, and the company took considerable heat from Wall Street and the press.
Ron Allen's willingness to swing the ax so antagonized Delta's work force that the board asked him to leave. When Lou Gerstner parachuted in to fix the shambles J ohn Akers had left of IBM, famously declaring that "the last thing IBM needs right now is a vision," he focused on execution, decisiveness, simplifying the organization for speed, and breaking the gridlock.
Many expected heads to roll, yet initially Gerstner changed only the CFO, the HR chief, and three key line executives - and he has multiplied the stock's value tenfold. The best CEOs never hesitate to fire when they must, but the larger point is that they're deeply interested in people - far more so than failed CEOs are.
GE's J ack Welch loves to spot people early, follow them, grow them, and stretch them in jobs of increasing complexity. His written feedback to subordinates is legendary: specific, constructive, to the point.
Of course some come up short. When Welch committed the company to achieving six-sigma quality a few years ago, he evaluated how the beliefs of high-level executives aligned with six-sigma values. He confronted those who weren't on board and told them GE was not the place for them.
This continual pruning and nurturing gives GE a powerful competitive advantage few companies understand and even fewer achieve - extraordinary longevity in top executives. Because Welch has the right people in the right jobs, he can leave them there and things tend to get better, not worse. The motto of the successful CEO, worthy of inscription on his or her office wall, is "People first, strategy second. Regular review of subordinates is a vital process, but every process carries a mortal danger - that the CEO will forget its purpose and begin to think that the process itself is what matters.
It happens all the time. A CEO becomes committed to an organizational model. Middle managers resort to informal networks to get things done. Cliques form. Indecisiveness takes over, and a fast-moving competitor grabs the advantage.
Decision gridlock can happen to anyone, but it happens most often to CEOs who've spent a career with one company, especially a successful one. The processes have worked, they're part of the company's day-to-day life - so it takes real courage to blow them up. Listen to Elmer J ohnson, a top GM executive, describe this problem to the executive committee: "The meetings of our many committees and policy groups have become little more than time-consuming formalities.
The outcomes are almost never in doubt There is a dearth of discussion, and almost never anything amounting to lively consideration It is a system that results in lengthy delays and faulty decisions by paralyzing the operating people Neither man could break the process machine, and both must be considered failed CEOs.
0コメント