Why CEOs Fail
Why do some CEOs Fail?
Over the last 30 years I have begun to recognise some patterns of
why some CEOs fail.
First, there is a positive side to failure—successful people almost have to fail more frequently than others because they are making more attempts. Few of us were sent off to school by mothers who said, “Take risks!” yet successful CEO`s have to learn to do this, decisively. With this “systems view” of failure, successful CEO`s take losses in their stride, even if that stride includes an occasional kick at the cat. So—one answer to “why do some CEO`s fail” is “Because they understand that calculated risks are necessary to succeed, and such ventures will involve failure.” Most of these CEO`s recognise the status quo is not an option, and by “playing it safe” the organisation may actually be put at peril. But, most CEO`s have a golden parachute package of payment that makes them take more risks because, their pocket is safe!
Failures teach successful CEO`s, and over time the following lessons seem to account for most of the learning:
1) An inability to see the bigger picture. If you’re being eaten by a lion, it’s tough to see the lion. Some pressures are industry-wide, even global, and the successful CEO may have to divest a core business to succeed. This is difficult, and it is why so many successful CEO`s surround themselves with good `peers` and `mentors`.
2) An aversion to using solid financial practices. A CEO I know once shared with me over dinner that he did not pay enough attention to financials before he saw his publicly traded company forced into bankruptcy. The reason, he said, was that the numbers would simply “swim together,” overwhelming his discomfort with financial indicators. Although it’s not hard to remedy—I have seen hundreds of CEO`s do it—a CEO first has to admit there’s a compelling need to learn how to avoid going broke.
3) A lack of clear vision. Successful CEO`s lead the organisation to where it needs to be, and find ways to get buy-in at all levels. This is hard—otherwise, all organisations would do it well. Done right, clear vision can substitute for the field manual, empowering everyone to make crisp decisions in the company’s interest.
4) Lack of passion. Most organisations no longer need arms and legs (command and control); instead, they need hearts and minds (sell and enrol). People need to be led more than they need to be managed. Provided things are going well, a lack of passion is usually burnout, which comes from solving the same issue over and over. When things aren’t going well, avoidance may look the same as ‘lack of passion,’ but it’s not—CEO`s may talk about packing it in when instead they really need to face the difficult task at hand. Some years ago Fortune magazine polled 500 of its more successful readers and learned their strategies for success: (1) know thyself (2) seize opportunity, and (3) pursue meaning. When I encounter a lack of passion in an otherwise successful CEO, I gently suggest a process to revisit personal core beliefs. The fundamental questions of Who am I? Why am I here? beg to be answered, and if urgent tasks continually pull me away from considering these important questions, burnout and depression may be the result. Passion matters, greatly. Passion of CEO`s passes through to all employees who generate more profit.
Why CEOs Fail - Breakout External Link.
5) Lack of clarity on the reasons for success. Great CEO`s hold their associates accountable and responsible for knowing what activities cause results. CEO`s focus on what to do, and let associates take care of the “how.” Then, on a regular basis, associates monitor the activities that lead to success. For a sales manager this might mean counting and publicly posting the number of cold calls and referrals every week, in addition to the actual sales results. The difference between champions and good performers is not terribly great sometimes, but champions win consistently because they understand what causes a win. Finally, successful CEO`s foster (and insist on) the use of reliable, continuously improving, and innovative methods for getting work done before they let their associates take care of the “how.”
6) Distractions such as acquisitions, golf, and other anxiety management techniques. Successful CEO`s pay attention to the central task, which is putting the organisation in touch with reality and leading.
7) Disconnecting from customers. Some of my most successful CEO clients are on the road over half the time, talking to customers.
8) Disconnecting from employees. The best leaders find ways to keep in touch with their employees, not only because they are genuinely interested in their lives, but also because they realise there is profound knowledge in the ranks. Passionate CEO`s have passionate employees to drive profit up.
9) Integrity outages. I’ve heard many MBA candidates complain about leadership that says one thing and does another. I do not have hard data on this, but I suspect that associates will tolerate no more than about three inconsistencies before they start to tune out.
My CEO clients work hard, teaching me every day what it means to be decisive and fully engaged in life. I am certain of only two things: Confusion is a precondition to learning, and losses a company success. Excellent CEO`s listen and learn every day and have an excellent team around them for success. People make profit!
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WHY CEOS FAIL!