Test #1: Can You Develop a Simple Plan for Your Strategy?
Simplifying complexity is a leader’s superpower.
Focus on outcomes, rather than priorities. Rather than framing the discussion around the question “What are we going to work on?” ask yourself, “What do we need to accomplish? What are the three or four things that, if we accomplish them over the next twelve months, will make this a good year?” This is the approach that John Donahoe, the CEO of Nike, uses with his leadership teams. “Priorities for priorities’ sake are dangerous,” he said. “Priorities have to be geared to a specific outcome in mind. And they have to be measurable, but they don’t always have to be quantitative. I might write statements that I want to be able to say yes to at the end of the year. It might be about launching one or two new products for the next year. There might not be metrics for everything, but the question is, have we achieved that outcome, and can we identify the specifics that we need to tackle to achieve it?”
Edit ruthlessly. The simple plan is not an exercise in giving space to everyone’s hobby horse. The goal is a succinct summary of the actions that the top team will own. What are the areas that are going to get new or greater focus to achieve the outcome? Check the verbs in your document. Prune out flowery adjectives and jargon, too, applying the test that Susan Salka, the CEO of AMN Healthcare, a staffing company, learned from her father. She said: “Can you create a vision that the frontline person can understand, and see how they fit into it?”
Beware of “Expert-itis”. People can get so deeply immersed in their field, with a keen appreciation of subtle nuances, that they find it hard to pull themselves back to a distance from which they can see the forest for the trees. What seems obvious to them is not obvious to everyone else, so they dismiss the elements of a simple plan as truisms that everyone knows and believes in.
Test It. How do you know when you have it right? After you and your leadership team have developed a simple plan, then it’s time to start pressure-testing it with key focus groups, including employees and, if you’re the CEO, perhaps key directors, since the board ultimately will need to agree to the approach. What’s clear? What’s not clear? What’s missing? Do employees understand how their jobs fit into the plan? Do they understand what they should focus on day to day and why it’s important
Test #2: Can You Make the Culture Real—and Matter?
It’s about walking the talk.
To be clear, there is no “right” company culture, in the same way that there is no “right” culture among all the countries in the world. A startup’s culture is going to be different from the culture of a Fortune 100 company that’s been around for 150 years. Creative firms are going to have more freewheeling cultures than companies in, say, health care, where people’s lives are at stake. That said, there are some practices that come up time and again among leaders who are thoughtful about ensuring that the culture of their company matters. The practices include providing clarity around the behaviors leaders expect of employees based on the stated values, and reinforcing them at every opportunity, including quarterly and annual awards, in decisions to hire, promote, and fire people.
Marcus Ryu, cofounder and Chairman, Guidewiresaid shared the story of a memo that he wrote to his employees, prompted by some feedback he read about the company on Glassdoor, a website where current and former employees can post anonymous reviews of their employers. Guidewire gets high marks overall, but Ryu found himself annoyed by some of the posts—not because he was thin-skinned, but because he had a philosophical problem with the notion of employees critiquing their own company’s culture for all the world to see. In his words, “You write reviews when you are a consumer. If you stay at a hotel and you had a good or bad experience, then you can go to Tripadvisor and write a review. If you buy a product and you don’t like it, you write a review on Amazon. But if you’re an employee, you don’t write a review of the company, just like you don’t write a review of being an American. You are a citizen of this country. You can be critical of it, but your responsibilities as a citizen are not discharged by writing a review. That’s completely the wrong paradigm. You don’t consume your citizenship. You are a citizen. And what a citizen says is, “I want to belong to this collectivity because I believe in its principles. I want it to succeed, and therefore I have a duty.” Citizenship has certain duties, and one of those duties is that this organization continues to thrive.”
If you agree with Ryu’s logic, then the test for all leaders is this: Can you create, and contribute to building, a culture that people will want to own as citizens? That will require a commitment to these foundational principles:
- Culture is the responsibility of the CEO and senior leaders to define, model, enforce and assess. They must continually talk about the culture and celebrate heroes who embody the values. Leaders must be evaluated on the degree to which they model the culture.
- Culture should be articulated through values and expected behaviors, and reviewed on occasion to ensure they remain appropriate to the times and current business circumstances of the company.
- Unrepentant “culture felons” who consistently behave in ways that directly contradict the stated values must be ushered out, regardless of their business performance, to send a clear signal that the company is serious about living the values.
- Perceptions of the culture among employees must be measured through periodic all-staff anonymous surveys to ensure that the day-to-day reality matches the aspiration. Anecdotes and assertions to describe the culture are inadequate and often misleading. Board directors must closely monitor those measurements of cultural health to ensure they are getting an accurate picture.
Test #3: Can You Build Teams That Are True Teams?
They are the key to driving the strategy.
“Even in really good companies, you’ll find you only have 75 percent of the right people. In really bad ones, it’s probably only 25 percent.” said, Greg Brenneman, Executive Chairman, CCMP Capital. The trickiest calls about talent are the people who are on the bubble. They check many boxes, but as the leader, you have some concerns. What’s the framework for making decisions about whether to keep them on the team? One way is to ask yourself this quick gut-check question: Who on your team would you rehire if all the positions on your team suddenly were open again? Or consider using the following leaders’ approaches for gauging the strength of talent on a team:
Ron Williams, the former CEO of Aetna, assessed members of his team on the quality of their “forward radar,” meaning their understanding of how they needed to evolve to help the company drive its growth strategy. “Is everyone on your team scaling at the pace they need to scale? Is everyone getting 15 percent better? People can start thinking, ‘If I just keep doing what I’m doing, that’s OK,’” Williams said. “But the world has become dramatically more challenging. Your business is bigger. It’s more complex technologically. You’ve got to master those shifts. You are never done. What you see is that some people aren’t evolving with the complexity of the business, and their ‘forward radar’ is diminished and keeps getting diminished.”
David Politis, the CEO of BetterCloud, a software company, looks for three signs that somebody is not ready for the next growth stage: “One of the big tells is when I’m repeatedly seeing things in their part of the business that they’re not seeing themselves. If I’m consistently the one to call out a fire happening in their part of the business that they were not aware of, that has always been one of the red flags for me. That’s happened a number of times. It’s also happened a number of times where people, because they weren’t confident in their own abilities, didn’t want to bring in a team that essentially could replace them. You always want to hire people who are better than you. But with some people, they worry about putting themselves and their own job at risk by bringing in strong people because they’re not sure what they’re doing. Another tell is when you’re planning for the next year, and some people are asking to double the size of their team while someone else is asking to add just one more person. They can’t visualize that next phase of growth, and of what’s possible.”
“The top three keys to success are the team you build, the team you build, and the team you build,” said Shellye Archambeau, the former CEO of MetricStream, a provider of governance, risk and compliance software. “And I mean build in an active sense, because as the company grows and develops and evolves, the same needs to be true for the team. That can be hard, because you work closely with these people, but you have to bring the team forward. It’s about always thinking about the team that you need three years from now.”
Test #4: Can You Lead Transformation?
The status quo is enormously powerful, and it is the enemy of change.
Transformation is not a onetime event. It is an ongoing challenge that requires leaders to balance refining how the company operates today while also recognizing the need for constant disruption. It is, in many ways, a mindset to be able to question everything you’re doing even as you’re making decisions about short- and long-term strategies. That may sound like a recipe for paralysis, but it is also a worthwhile goal to which every leader should aspire—to keep reinventing themselves so that they can reinvent their companies. There can be no status quo, for the leaders themselves or the businesses they are leading.
Bracken Darrell, the CEO of Logitech, said: “As you go forward, the more successful you are, the more you have to break things or create this sense of urgency, because people tend to not want to change things when they’re working. So, I am much more focused on changing things on a regular basis now, much more ambiguous than probably the people who work for me like, and much more intuitive about what I really dig into. I’m very explicit about it. I’ve shared a story from 2018, after I’d been on the job for five years. One Sunday night, I asked myself, “Am I the right person for the next five years?” I had made tons of change, and the stock was up about 500 percent. I knew that, on paper, I probably was the right person for the next five years, and that it’s risky to change if you don’t have to. On the other hand, I had been involved in every single personnel and strategic decision. My disadvantage was that I knew too much, and that I was too embedded in every thing we were doing..
So I decided that I was going to fire myself, and that I would sleep on the decision. I didn’t share it with anybody, including my wife or kids. I just thought to myself that I might be done. I woke up the next morning and felt that I knew exactly what I needed to do: I have to rehire myself but have no sacred cows. It was super exciting and fun, and I started changing things that I had put in place. Fortunately, I didn’t have to change things radically, but I felt new again. Then I realized that the real opportunity is to compress that time frame from five years to a year and then to a month and then into every day. And if you can get yourself to the point where you can really come in unbiased every day, then you’re there. That’s my ultimate goal, which I think is impossible, but that’s the goal.”
Test #5: Can You Really Listen?
Danger signals can be faint, and bad news travels slowly.
The challenge that gets tougher and tougher as you get higher in the organization to get people to be honest with you. So how do leaders break through the bubble? Here are some examples of how leaders set the tone and expectation for their employees to share unvarnished truths with them.
- When Bracken Darrell joined Logitech, the technology accessories company, in 2012, he encountered a culture where people were too nice, and they stood by as the company’s performance suffered. So he articulated several values early on in his tenure, including what he considered the most important one: speaking up. “When people go through a tough time, as Logitech had for about four years, everybody’s talking about problems,” Darrell said. “But if nobody listens to them, they stop talking about problems, so you don’t know what they are. The most dangerous thing is to be sitting in an office and nobody’s telling you what’s wrong. So I immediately started talking about speaking up and moving fast. I don’t like being around people who are jerks, but I do want everybody to challenge everybody else.”
- Kelly Grier of Ernst & Young told people they had a responsibility to keep her informed about what she needed to know. “If you haven’t created a culture or an environment where people feel free to challenge you as the leader, you are in a very perilous and dangerous place, because you will have blind spots,” she said. As she’s moved into her past five leadership roles, she’s said to everyone on her team, as well as to her board of directors, “You have a responsibility to help me actively work the blind spot. You’ve got to bring the truth forward. You’ve got to speak with candor. We have to have that level of trust.”
- Anand Chandrasekher, the CEO of Aira Technologies, a wireless systems company, asks his team to follow a simple rule: if they have bad news, they should text him. If it’s good news, they should wait to share it with him in person. “The toughest thing in any organization is getting people to absolutely speak the truth,” he said. “It’s a human tendency to want to share only good news and to receive good news. If you can get a team and an organization not to be afraid of bad news, either receiving it or delivering it, then you can build an early-warning system. If you get bad news early, you can react faster, and that reaction time is precious.”
Test #6: Can You Handle a Crisis?
Avoid the predictable mistakes that trip up so many leaders.
Leading through a crisis is a kind of final exam of all the tests that we’ve described. There are so many unknowns about the coronavirus crisis—how many lives will be lost, how much damage will the economy ultimately suffer, how will the world be different on the other side. The path forward will almost certainly not be smooth or uniform, and it will be different for every organization and every industry.
Yet, for all the uncertainty and breadth and depth of the pain that the pandemic has caused, there are aspects of this pandemic that present a more straightforward leadership challenge than a crisis that is unique to your organization. They will serve as important reminders when the next once-in-a-lifetime event arrives, probably within the next decade.
- Understand the facts. In some cases, determining the precise cause of the crisis can be difficult. The facts may be hard to get and even harder to understand. Talk to those closest to the action, not their managers. Develop a hypothesis early on, with input from your team, about what has happened and why, and then modify as more facts emerge. Fight the powerful emotions of denial and wishful thinking and focus on what is known and not known.
- Act fast. Who is affected by the crisis in the short term and possibly in the long term? What immediate steps can you take to mitigate the effects of the crisis or take care of those affected? Who needs to be briefed immediately? Is your presence at the scene of the crisis helpful or necessary? Understand the narrative emerging on social media and other platforms about your crisis.
- Communicate widely. Accuracy is paramount; never say something you do not know to be true. Be humble and open about what you know at the moment, with a commitment to learn more and share new facts as they emerge. Build a shared understanding of the crisis with your team, the broader company, and the board. Reach out to key stakeholders, including shareholders, regulators, and customers.
- Fix the root cause of the problem. Once you’ve managed any immediate fallout of the crisis, then it’s time to focus on the underlying problem that led to the crisis. Often it is not a single event or mistake, but rather a series of lapses or consequences of subtle cultural signals about what matters. Examine the management processes in place so that you are clear on what is encouraged, tolerated, and not tolerated in your organization, and make any necessary changes so that you can sleep well at night, knowing that there is unlikely to be a replay of the same crisis.
- Stay calm and project confidence. Your crisis may well feel like a direct assault on your reputation and a dismissal of all the good work you’ve done before the crisis hit. You will feel as if you’ve been hauled into a small, windowless room, with bosses and key stakeholders demanding answers and doubting every word you say. You may reach out for help and then hear conflicting advice, exacerbating the feeling of being alone. But you have to stay calm, focus on the facts, and move forward with confidence and humility.
Test #7: Can You Master the Inner Game of Leadership?
The conflicting demands and challenges must be managed.
Here are six paradoxes that are hallmarks of a leader’s life and must be mastered to improve your chances of making good decisions and effectively leading the people who are relying on you.
- Be Confident and Humble. onfidence, in its healthiest manifestation of being authentic and credible, stems from a track record of demonstrating good judgment and engendering confidence in others. However, confidence cannot morph into arrogance, and the best safeguard is humility—acknowledging to your team that any ambitious effort is going to be difficult and will carry risks and the possibility of failure.
- Be Urgent and Patient. It requires continuous fine-tuning of speed and being able to live with the fact that you will get it right one day and wrong the next. It means recognizing the need to slow down, bring people along by sharing context and rationales, and make sure there are proper processes and resources in place, even if you as the leader are feeling the weight of the world to achieve some target quickly. Move too slowly, however, and a competitor will blow past you.
- Be Compassionate and Demanding. Leaders set a high bar for expectations. But those demands for exceptional performance have to be balanced with a sense of compassion and understanding that their team is made up of human beings. People do their best work when they are treated more like volunteers than mercenaries. Compassion isn’t about being soft; it’s about acknowledging that we are all human. The tricky balance for leaders is to know when to push and when to be empathic.
- Be Optimistic and Realistic. Leaders are expected to be optimistic and to build energy, enthusiasm, and passion for the ambitious goals that they’ve laid out for the organization. The balancing act for leaders is to share the risks, build contingency plans, and put everyone on high alert that the plan may not play out as expected, yet also create a wide landing zone for success.
- Read the Weather and Set the Weather. CEOs need to be able to sense the mood—to, in effect, “read the weather”—in meetings or as they walk the hallways or visit stores and factory floors. Yet leaders must also recognize that they play an outsized role in setting the weather, because they set the tone through their body language and energy.
- Create Freedom and Structure. In some areas, such as running nuclear power plants and performing surgery, the margin for error is incredibly low, and the culture is necessarily less about freedom and more about structure, more about safety and compliance than creativity and improvisation. In others, like advertising or television, there is much greater need for new ideas, which require a certain amount of chaos to emerge. Big companies may have a mix of both, with more of a process-driven manufacturing arm and a marketing department that demands fresh thinking. For leaders, that means allowing for a certain amount of work that may appear unproductive, with side trips down blind alleys and seemingly unproductive brainstorming.
This is the final CEO test, the one that will determine whether you succeed, on the terms that only you can set for yourself, in becoming the leader you want to be.