This past week PrimeGenesis gathered a half-dozen CEOs for a day to share insights and learning. The CEOs came from agriculture, manufacturing, real-estate, commercial printing, media, and hospitality. This note lays out the frameworks discussed and insights the CEOs shared across strategic, organizational and operating leadership as well as personal leadership – influence and impact. The overriding idea is that CEOs must own purpose and results: mission (why,) vision (what,) and culture (how.)

 Strategic Leadership

Strategic leadership is about focus. The fundamental questions are where to play and how to win. How to win choices in turn all flow from the enterprise’s core focus.

As Michael Porter taught us, all enterprises design, produce, sell, deliver, and serve in one way or another. The most successful enterprises have a primary focus on either design, production, delivery or service in addition to selling – which all must do. Certainly, different parts of the same enterprise may have different areas of focus. But the overall enterprise’s culture, organization, leadership and operations best flow from the enterprise’s overarching core focus.

Culture flows from the core focus with:

  • Design-focused organizations like Apple having cultures marked by learning and enjoyment.
  • Production-focused organizations like Coca-Cola having cultures marked by results and authority.
  • Delivery-focused organizations like Amazon having cultures of order and safety.
  • Service-focused organizations like The Ritz-Carlton having cultures marked by purpose and caring.

Organizations and operations flow from the core focus and culture as:

  • Specialized designers thrive with freeing support.
  • Hierarchical producers thrive with command and control.
  • Delivery systems are inevitably matrices with shared responsibilities.
  • Service decisions are best made decentralized with guided accountability from the center.

Leaders of:

  • Design-focused organizations need to enable with principles.
  • Production-focused organizations need to enforce policies.
  • Delivery-focused organizations need to enroll players across the ecosystem with team charters.
  • Service-focused organizations need to be chief experience officers giving others guidelines.

CEO Discussion and Insights

In 2022, this topic prompted a fierce debate around whether enterprises should have one core focus or multiple areas of focus. Some CEOs thought different parts of their enterprises needed to be more or less design-, production-, delivery- or service-focused than other parts. Some were in the process of intentionally evolving their enterprise’s focus. Some weren’t sure the components all flowed from a single focus.

On the other hand, these CEOs sparked to the idea of intentionally “picking a lane” and staying focused, but with “blinders off” so they could see and adapt to changes in their environment.

This year one CEO added in the concept of clarifying “points of leverage.” His thesis was that having only one point of leverage for competitive advantage was not enough. Organizations need 2-3 distinct points.

They also recognize that the race to be the low-cost producer is a race to the bottom with inevitably shrinking margins. Instead, they try to be the highest leverage producer, adding the most value to those that use their product or output, enabling them to share in the upside by increasing prices some.

And finally, the group agreed that a shift in Strategic Focus calls for shifts in all supporting elements – and that culture is often the most difficult and can be accelerated targeted M&A as well as making it clear for thought leaders their incentives to support the change.

Organizational Leadership

The most effective organizational leadership incorporates future capability planning, talent development, clear delegation and building culture.

Future Capability Planning is about building the capabilities required to deliver the strategy.

  1. Start with the capabilities required in the future.
  2. Take a hard look at your current capabilities.
  3. Build a plan to fill the gaps by:

Developing your current people (or exiting them as appropriate)

Acquiring new people now and then developing them (exiting others here)

Acquiring new people fully formed and just in time as needed (exiting others here)

Talent Development is about building individuals’ strengths.

People either have or do not have certain innate talents. (Like basic musical talent.)

They add learned knowledge by studying, reading, training and the like. (Like studying music.)

They add practiced skills by – wait for it – practicing those skills. (Like practicing on a musical instrument.)

They add hard-won experience in projects or roles with increasing complexity. (Like rehearsing with an ensemble and actually performing in front of an audience.)

Some, not all, gain apprenticed craft-level caring and sensibilities by absorbing them from masters. (Like Stephen Sondheim spending literally years practically living with Oscar Hammerstein and his family to absorb his sensibilities.)

Delegation is about inspiring, enabling and empowering others with 1) direction, 2) resources, 3) bounded authority, and 4) accountability.

Six levels of delegation:

  1. Do well yourself – Individual contributors’ main area of focus
  2. Do yourself, but just well enough – Individual contributors
  3. Delegate and supervise – The realm of managers
  4. Delegate and trust – Senior leaders inspiring, enabling and empowering managers
  5. Do later – Senior leaders’ prioritization/deprioritization saving others time now
  6. Do never – Senior leaders’ ultimate deprioritization, saving others time and attention

In turn, the four keys to level 4 delegating and trust are:

  • Direction/objectives/desired results/intent – what and why
  • Resources: human, financial, technical or operational. Scope is a function of resources and time.
  • Authority to make tactical decisions within strategic boundaries/policies/guidelines/mindsets
  • Accountability and consequences (standards of performance, time expectations, positive and negative consequences of success and failure)

Building culture is about making intentional choices around Behaviors, Relationships, Attitudes, Values, and Environment. A model like the one below (B R A V E) can help leaders and teams identify the gaps between current and desired states and focus on changing elements that matter most in cultural evolution.

CEO Discussion and Insights

The main thrust of the CEO discussion on this topic in 2022 was moving faster on people. CEOs realized they needed to switch much of their energy from delegating and supervising to delegating and trusting. That requires moving out people that can’t be trusted to get the job done and replacing them with people that can – especially in “locksmith” roles with the highest leverage in unlocking potential value creation.

The group built on that locksmith concept this year with a recognition that one size does not fit all. Different organizations require different cultures and different parts of organizations may need their own sub-cultures – and approaches to remote work.

Additionally, especially when leading a change, it is critical to re-assess which of the locksmith roles (existing or new) are most important to driving value.  The answer may not be obvious – yet, getting top-notch players in the most critical roles is what will drive performance, particularly important in private equity environments where time matters.

One important idea was following up on what happened to those identified the previous year as poor performers to make sure either their performance had improved or they had moved on to places where they could perform well.

Experienced CEOs’ #1 regret is not moving faster on people and high-performers #1 wish is for someone to get the deadwood out of their way. “A players have choices.” Spend your time with the people you can lead, trust and have confidence in, letting others deal with those that require more managing, an no time at all with those you don’t trust.

Operational Leadership

Tactical capacity is a team’s ability to work under difficult, changing conditions and to translate strategies into tactical actions decisively, rapidly, and effectively. It is the essential bridge between strategy and execution.

In contrast to other work groups that move slowly, with lots of direction and most decision-making coming from the leader, high-performing teams with strong tactical capacity empower each member, communicate effectively with the team and leader to create critical solutions to the inevitable problems that arise on an ongoing basis and to implement them quickly.

The objective is high-quality responsiveness; it takes cohesive teamwork to make it happen. High-performing teams build on strategy and plans with strong people and practices to implement ever-evolving and acutely responsive actions that work.

“It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.” – Attributed to Charles Darwin

You probably have seen this yourself. You may have been on teams with members who operate in disconnected silos, incapable of acting without specific direction from above. They may know the strategy. They may have the resources they need, but any variation or change paralyzes them.

CEO Discussion and Insights

The most important ideas in 2022 seemed to revolve around communication and the debate between more efficient remote work – especially for individual tasks – and more effective in person work, especially for teams needing to collaborate.

A second theme was the importance of milestone management and the need for someone other than the CEO to manage the milestone process so people track tasks daily, projects weekly, programs monthly and processes plus strategic initiatives quarterly. Some of this year’s CEOs were investing in chief of staff and program management roles to drive organizational and operational matters creating time for the CEOs to spend on strategic processes and stakeholders that matter most.

This year a hot topic was tying incentives to the most important goals. Show me how they’re paid and I’ll tell you what they do. Some focus on revenue, some on EBITDA, some on free cash, some on margins. It’s not enough to get leadership to agree, or even in some cases, middle management, you need the people implementing to do what you expect them to do.

 

Personal Leadership – Influence and Impact

Bryan Smith lays out five levels of persuasion in “The Fifth Discipline”

Tell – I’m the traffic policeman on the corner telling you to detour right. Not a lot of discussion. I’m in charge. You are directed. Useful to be clear on when you are telling and directing versus telling to inform, either before or after an event.

Sell – I know I’m right and am going to persuade you to buy my idea. Useful here to take into account economic buyers who decide, user buyers who have implementation veto rights, technical buyers who have compliance veto rights, and coaches.

Test – I’ve got a trial balloon that I’d like to run by you. I’m interested in what you think. This encourages you.

Consult – I’ve got an idea that I’d like you to help me improve my best current thinking. I’m open to your input and this makes you feel valued.

Co-Create – Let’s solve this problem together, starting with a blank page as partners -within guidelines, frameworks or boundaries.

Board versus CEO roles

There is no single right way to divide responsibilities between owners, board chairs, CEOs, COOs and the rest of the executive team. Authority is delegated. That delegation is dependent upon the business context and confidence the leaders have in one another. With that in mind, boards are generally charges with governance and advice (Noses in. Hands out.) CEOs are generally charged with recommending and then implementing strategic, organizational and operational plans.

Board remits

  • Governance
  • CEO succession
  • Strategic, organizational and operational plan guidance and counsel
  • Dealing with external funding (investors and lenders)
  • Joint venture/ M&A pursuits and relations
  • Compensation practices

CEO remit

Gain board agreement and then implement strategic, operating and organizational plans to deliver expected results managing ongoing communication with and between all key stakeholders.

Board two-step

Former American Express CEO, Ken Chenault, liked to give his board of directors two looks at any major idea. This gave them time to reflect on the idea, talk amongst themselves and come back to him one-on-one before making a decision.

Putting all this together leads to the board two-step. Let’s begin by taking two approaches off the table. It’s generally not helpful for a CEO to try to TELL their board what to do. (If you don’t understand that, give me a call and we’ll talk.) It’s also not a good idea to CO-CREATE with the board. (They want you to lead and come to them with potential solutions and your best current thinking.)

So, we’re left with consult – test – sell. Here are the steps:

Before step one, prepare the board by giving them the appropriate amount of information in advance. Think Goldilocks: not too little and not too much.

Step one: CONSULT or TEST with the board. Be clear you are seeking their input, not decision. If you do your job right here, your board members relax. If they know they don’t have to make a decision, they can focus on helping you. Instead of your ideas being a proposal, they represent your current best thinking for others to build on – without having to judge you.

Then, go away. Give the board time and space to mull things over and have one-on-one conversations with you.

Step two: SELL. Lead the board through a final conversation and seek their decision. Note this is “sell,” not “railroad.” You will have gotten input along the way. Share the concerns you’ve heard so the board can discuss – and then approve your proposal.

Announcement Cascade

When an announcement has the potential to be emotionally disruptive, those emotionally impacted should find out one-on-one ahead of others and those directly impacted should find out in a small group so they can ask questions before the larger group indirectly impacted finds out in a mass communication.

CEO Discussion and Insights

In 2022, time management was top of mind with CEOs trying to find ways to delegate and trust more so they could spend less than 50% of their time internally focused – tilted away from operations and toward strategy and culture – 25% or more of their time with customers and external stakeholders and another 25% or more of their time with the board while carving out more time for their own learning, and personal development and care.

These CEOS know they can’t do the job on their own They know:

They are a cohort of 1 with no peers. Everything they say and do and don’t say and don’t do has overweighted influence. Few tell them the truth, instead telling them what they think they want to hear.

They own external reputation management – the brand.

They need a strong, collaborative team with some or all of:

  • CFO to help with cash management, governance and manage the strategic process
  • CHRO to help build and maintain culture and manage the organizational process
  • COO to drive customer-centricity and manage the operating process
  • Chief of staff to give them leverage.

CEOs this year sparked to being clear on when they were giving people input (to be considered) versus direction (to be followed).