What makes a great CEO?

t’s no coincidence that the biographies of successful CEOs are in high demand; clearly it is a highly demanding role to fulfill.

So what constitutes a great CEO?

Simply, they are able to do two things:

First, great CEOs find the right direction for the company to follow.

Consider this scenario: When the author’s company Opsware saw its stock price plummet to $0.35 per share, the NASDAQ stock exchange informed him that he had to get the stock price back above $1 in less than 90 days or else the company’s stock would be relegated to trading with the disparaged “penny stocks.”

Eventually, he convinced an investor to back the company and thus saved Opsware, but it turned out that the investor was only convinced by the sheer determination the author had to lead the company in the right direction.

Second, once as a CEO you’ve found the right direction, you have to articulate that direction and then get the rest of the company to follow you.

This ability has three key aspects: articulating the vision, being authentic and motivational, and getting the company to execute on your vision.

Let’s examine each aspect more closely by looking at technology company leaders who exemplify them.

When it comes to articulating one’s vision, surely no one can beat Steve Jobs. Even when Apple was just a month away from bankruptcy, he still managed to paint such a compelling future that his employees followed him.

Bill Campbell, on the other hand, has been the CEO of multiple companies, and is so compassionate, motivational and authentic in his communications that all of his employees felt that the company belonged to them too and they were invested in its success.

Finally, consider Andy Grove, the CEO of Intel. He led the company into the field of microprocessing despite the steep costs involved. Yet his decisiveness and conviction drove the company forward and into their powerful position today.

No two great leaders are exactly alike. It is, however, possible to broadly categorize them based on their approach to leadership as either Ones or Twos.

Ones are leaders whose approach is more focused on defining a path for the organization to follow than on implementing it. Typically, founding CEOs are Ones. A classic example of a One is Bill Gates, who defined a compelling long-term vision for Microsoft.

Ones enjoy researching and making important strategic decisions, and they love the intricate strategic game of chess that they play against their competitors. What they don’t enjoy as much is the actual execution: training, performance management, process design, goal setting, and so forth.

Sometimes this means that organizations run by Ones become disorganized and chaotic.

Twos, on the other hand, actually prefer the execution and performance management aspect of leadership over research and planning. They don’t like to make big decisions, for example, regarding major strategic shifts.

Sometimes this results in organizations that waver when it comes to important decisions, and this can slow them down.

Of course, truly great CEOs combine the characteristics of both Ones and Twos.

This combination is achieved by functional Ones.

Functional Ones are like Twos in the sense that when it comes to the overall corporate direction, they like to focus on execution, rather than on planning the company’s path forward.

But when it comes to their own particular area of responsibility and expertise, they act as planners, meaning as Ones.

For example, the head of sales in a company may be a One in the sense that she enjoys making major decisions relating to sales, but when it comes to the overall plan on a corporate level, she prefers to focus on execution, leaving the major decisions to others.

Obviously the implication of this is that no matter whether you’re a One or a Two, you need to continue to work on skills that lie outside your comfort zone to arrive at the perfect combination.

No doubt you’ve seen countless management books written by CEOs and business leaders. The problem is that most of these books relate to businesses where the direction to pursue is relatively clear and the business is focused on capturing market share from competitors.

But what these books forget is that many businesses find themselves in much more dire straits. The circumstances the company faces largely dictate the kind of management approach required. This means a company may need a Peacetime CEO or a Wartime CEO.

A peaceful era can be identified by the fact that the company already has an advantage over competitors in its target market. Typically, the market will also be growing, so the CEO simply focuses on enhancing this advantage further.

A good example of a peacetime strategy is the way Google is trying to provide people with faster internet service. Google’s cloud services are already popular, and faster internet connections will make them even more so.

In addition to this, Peacetime CEOs often encourage creativity among their employees. One famous example is Google’s policy of allowing employees to spend 20 percent of their time on independent projects, some of which then go on to become successful Google products.

In wartime, on the other hand, the game changes completely. Macroeconomic shifts, new competitor threats, changes in the technology landscape, and so forth can threaten the very survival of the company. This means the Wartime CEO carries a huge responsibility; the company lives or dies by her decisions.

For example, consider Andy Grove, who was the CEO of Intel in the 1980s, when over 80 percent of his company’s staff were devoted to producing memory products. The company came under attack by Japanese semiconductor companies with superior products, so Grove made the tough decision to change the company’s direction and go into microprocessing instead. This choice was later seen as hugely successful.

CEOs are mysterious creatures. When company boards or venture capitalists try to evaluate the quality of a CEO, they’re often at a total loss. They may wonder, for example, whether great CEOs are born or whether someone can grow into the role.

The truth is of course that CEOs grow into the job: to lead a company, they must develop the right characteristics and skills for that particular job. This means it’s almost impossible to tell if a CEO will be successful beforehand. Great CEOs do tend to exhibit certain general traits though, which you should also try to emulate.

For example, you should always strive to be authentic and stay true to your own personality and unique style. Take the author: part of his unique personal style is that he likes to employ profanities when communicating with employees, so he implemented a policy in his company stating that profanities are OK as long as they are not used to intimidate or harass others.

Another key skill to master is knowing how to give good feedback. A good guideline is the so-called shit sandwich: the most difficult/unpleasant topic is sandwiched between two more positive comments. Note though, that higher level executives may find this approach too rehearsed and insincere, so it works better with junior employees.

Finally and most importantly, great CEOs must learn to be comfortable doing inherently uncomfortable things. Just as boxers train themselves for initially unnatural-feeling footwork, great CEOs have to make their unnatural job feel natural.

For example, evaluating someone else’s performance can be uncomfortable, especially if you have little personal experience in the field where the person operates. But this is an absolutely essential part of running a company, so a great CEO has no choice but to get used to it.

Check out my related post: How to fail at everything and still win big?


Interesting reads:

https://book.douban.com/subject/25823036/

https://www.goodreads.com/book/show/18176747-the-hard-thing-about-hard-things

 

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