UK: So Now You’re The CEO!

Last Updated: 28 November 2012

You are now the CEO of your organisation and unfortunately it's underperforming. Worse yet, your organisation has low employee morale, possibly high labour turnover, declining market share, falling profits, competitors that are under-pricing you, and possibly constant criticism from your chairman, board of directors, investors and investment analysts. Sound like a fun job? What are you going to do? You start building. 

How different would this challenge be from accepting a head coaching position for a sports team that has been winless for the last four years? You begin looking for the athletes who want to win. But that is not enough. You need to grow talent and lead them to work with each other. Being a CEO is not too different. 

Starting the rebuilding journey

Where do you begin? There is no roadmap, no step sequence, and many things need to get fixed. When you are alone you need to consider the right vision and mission for the organisation from which to formulate your strategy. That is your primary job – to set direction. Everyone will want to know your answer to the question: "Where do we want to go?" 

You don't have to decide on your own. That is what your executive team is there for – to bounce your ideas off. They may not all want to get on the bus with you. Choose quickly who should stay with you – and who should not. It is not going to be an easy journey.

You have many secondary jobs besides direction setting and strategy formulation. And there is little time for delay. Of course, there are dozens of best-selling books on leadership; perhaps one will provide you with a winning formula. If it were our decision, we would create a culture for metrics. You cannot manage what you cannot measure.

Manager and employee involvement

We suggest you also create a culture of manager and employee involvement. Our favourite methodology for this is constructing a strategy map and quickly delegating to your managers the task of identifying a few manageable projects, as well as the core processes, to implement and improve.

Also, ask them to propose the key performance indicators (KPIs) that can be monitored to assess the progress of achieving the strategic objectives in your strategy map. The KPIs will monitor those same projects and core processes.

The benefit of this approach is that your managers and employees will have ownership of the actions and will more easily accept accountability for their responsibilities.

You cannot get there without customers

Are you done? No. What about your customers? You can try to make them all happy. However, our suggestion is to first identify which types of customers to retain, to grow, to win back and to acquire, as well as which types not to.

You are not a charity organisation; you have stakeholders expecting financial returns from your business. You do not want to just grow sales; you want to grow profitable sales. This will require measuring, reporting and analysing customer profitability and their future potential value.

Treat customers as investments in a portfolio. The ones with the highest financial return will translate into increasing the rate of shareholder wealth creation. This can silence the criticism of your board of directors and the investment community. 

Innovation? Today it is an entry ticket to compete, no different from high quality in the 1990s. Business process improvement? Same answer. It's better, faster and cheaper, regardless of what product you make or service you deliver. But good business processes will never trump a poor strategy or poor execution of a good one. You need managers and employees who hold strategy execution as a high priority.

Creating an environment for good decision-making

What is critical for strategy execution? Research on this topic was described in a Harvard Business Review article entitled "The secrets to successful strategy execution". The authors noted that executives are routinely tempted to address improved strategy execution by reshaping the boxes and lines of the organisational chart and instituting better reward and recognition systems, which has relatively lower impact. These are secondary and address symptoms, not root causes. 

It's more critical to understand that good execution is the consequence of thousands of daily decisions made by employees, based on the limited information they have and their own self-interest. What does this mean in terms of what you as the CEO should do?

The researchers revealed that the two most powerful levers for strategy execution are clarifying decision rights and designing effective information flows. 

Clarifying decision rights

As organisations grow in size, the approval process gets complex and foggy. Employees become unsure about where one person's accountability begins and another's ends. Workarounds then subvert formal hierarchical reporting relationships.

Clarifying who has what decision-making authority and empowering decentralised decisions lower into the organisation brings mission-critical agility – as long as trust is given by the executives and second-guessing by supervisors is minimised. 

Designing effective information flows

Decisions are based on information. Too often, information flows are blocked by organisational silos. Information does not sufficiently flow horizontally, thus hindering the spread of best practices. Collaboration is important.

To complicate matters, logical and judicious decisions are constrained by the type and quality of information available to employees. Some organisations simply have inconsistent and poor-quality data.

Even with a new transactional business system, such as an enterprise resource planning or customer relationship management system, organisations drown in oceans of data but starve for information in a form that can be quickly interpreted in the context of a problem or needed decision.

What to do as the CEO

Team building and strategy execution are challenges for all CEOs. Now you are faced with the tasks of a turnaround. Do not immediately redraw the organisational chart. Find employees who are winners and team players. Give them your vision and inspire them. Grow them. Set the direction.

Communicate the executive team's strategy to everyone and develop cascaded – as well as causally related – performance measures with reasonable targets to align everyone's behaviour with the strategy. Ensure that managers and employees unambiguously understand what they are responsible for and who has authority for decisions – lower down is good. Increase accountability.

Finally, give employees the information they need to fulfil their responsibilities. Accomplish this by providing employees with the power to convert large volumes of data into a much smaller amount of information and insight. Business analytics amplifies the value of data.

You may not have wanted to be the CEO, but now you are. Can you do the job? New coaches of sports teams have successfully turned around teams with losing records. You can too.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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