BEYOND THE KNOWN
“One of the greatest ways to avoid trouble is to keep it simple.” – Charlie Munger
Observing leaders in our Executive and Board of Director search practice, comfort with uncertainty continues to challenge Boards and CEOs attempting to blur the line between governance oversight and daily commercial decisions. Regardless of how the line is observed, Boards must govern and CEOs must lead effectively, with increasing uncertainty. Yet, keeping decisions simple and actionable is critical.
Below, we discuss two observations to maintain balance and gain advantage.
RELATIONSHIPS DRIVE RELATIVE CERTAINTY
Today, if it isn’t competition, it’s likely asymmetrical and black swan events. Or, perhaps, it is technology/innovation and cyber security breaches. And, on top of it all, are possible activists seeking “wins,” or, formerly benign, institutional shareholders seeking to influence the Director nominating process, revised corporate charters, and expressions of social responsibility, etc.
Irrespective of the confluence of pressures, and the accelerating movement of the underlying economic plates, successful CEOs and Corporate Directors seek to decode alternatives and develop unique insights that, we have observed, derive from cultivating relationships externally.
Insularity isn’t a winning strategy…and never has been!
Even today, we believe that CEOs and Directors rely too heavily on hard analytics and don’t recognize the true benefits of melding those analytics with developing a process of inside/outside circles of trust. And, as a result, the critical questions aren’t asked.
Often, Boards and CEOs are surprised by events, and even outflanked.
“The best leaders are the best note takers and best learners. They are shameless thieves.” – Tom Peters
Directors should encourage inclusive and substantive debate in the boardroom, as well as assure that their CEOs make an ongoing commitment to “blue ocean” thinking, collaborating with key stakeholders/ecosystem/influencers, and acknowledging a codependency of interests potentially yielding “relative certainty” for all.
SUCCEEDING WITH CEO SELECTION & LEADERSHIP APPOINTMENTS
“It’s not in the stars to hold our destiny but in ourselves.” – Shakespeare
Who should lead is “THE” seminal issue for boards today. Getting it right isn’t easy. The impact of transition often can’t be evaluated in the short term. But, if successful, it creates a true opportunity to accrete sustainable value.
How can Boards improve and increase the selection odds?
Many times, Directors are overly impressed and swayed by a CEO candidate’s experience or swagger, selecting leaders based on a “knowledge now” basis, and without full consideration as to how a leader will likely perform beyond the “known.”
Projecting a potential CEO’s “lift” and ability to lead through ambiguity, we believe, must be debated among Directors as an essential part of selection. And, after appointment, it should be on the table as part of the Board’s ongoing role in evaluating a CEO’s effectiveness and performance.
Boards with the most success select their CEOs differently. The best tend to, in addition to accomplishments, heavily weigh the so called “soft” factors, such as whether a leader is genuinely collaborative (with the Board and within the company’s organization), and judging dexterity to make tough decisions with confidence and dispatch.
So, when it comes to CEO selection and consideration, we suggest consider the following;
- Go beyond first impressions and references, no matter their source!
- Investigate how a candidate has handled adversity, and, how each candidate recovered to a winning position.
- Dig deeply to understand the candidate’s ability to balance enterprise opportunity and risk.
- Ask, “Was his/her company strengthened by the candidate’s leadership through upswings and adversity?” Find out why his/her team embraced and supported this individual.
- Establish and exchange views about “success metrics” with candidates and be willing to openly discuss benchmarks and time frames. Learn from each candidate’s thoughts. Inevitably, each candidate’s experience, depth of critical thinking, communication style, and way of working will come out.
And, if your Board isn’t convinced, don’t hire on compromise!
As we have advised our boardroom clients, in looking forward, “the visible” in CEO selection is only the first cut.
The Koblentz Group is an executive search firm specializing in recruiting “C” level leaders and corporate directors for companies in the multi-unit consumer and business service sectors. Over the past 30 years, its partners have successfully conducted hundreds of “sensitive matter” recruitments for public, investor owned and emerging companies. The Firm serves its clients worldwide.