Every successful transformation starts with the right leader. Boards must ensure that the incumbent CEO can drive the change - or find another one who can. Boards must also secure unwavering commitment and accountability from the selected CEO.
This can be especially uncomfortable when the incumbent CEO has done a good job running the core business but has struggled to achieve the same success in preparing the organization for the future. When transformations falter, the issues can nearly always be traced back to lack of accountability and commitment from the CEO.
Boards must appoint CEOs based on what they can do, not on what they have done. Finding the right leader can be tricky - it takes a special type of person to lead both the day-to-day of a company and a successful transformation at the same time (as it is clear from the 70% failure rate for business transformations). While those CEOs don’t need to be superhumans, they must be super leaders. They must also understand that the ultimate success or failure of the transformation is as much their responsibility as running the core business is.
While CEOs come from diverse backgrounds and have unique strengths and weaknesses, there are some essential characteristics they must demonstrate in order to be successful in leading a company’s transformation:
High emotional intelligence. It is time we say “enough” to big ego CEOs who look at their companies as a platform to promote themselves. CEOs must put their companies first, even when that is not in their best interest. They must demonstrate humility to recognize, learn from, and share their mistakes while building trust and moving the company forward. They must exhibit vulnerability and empathy towards their employees and customers, as well as courage to develop a culture of accountability and a high-performing executive team.
High accountability. CEOs must understand that they are accountable for everything that happens in the company, and act accordingly. The best book I’ve read about this topic is “Extreme Ownership” by Willink and Babin.
When failure happens, don’t blame others; take charge. Face the brutal facts. Drive alignment. Enforce the right standards and culture. Roll up your sleeves and help your teams when needed. Empower your teams.
These core insights should be fully embraced by CEOs.
Strategic mindset. CEOs must be able to understand the current situation and emerging trends to define, in conjunction with the leadership team, where the company should be headed. While they don’t need to be the smartest nor more knowledgeable people in the room, they must be able to ask the right questions and tap into the skills of their teams and other experts to develop a compelling vision that will resonate with employees and become a rallying cry for the organization.
Authentic communication. A big part of the CEO’s job during a transformation is to craft the vision of the company and then relentlessly communicate it to the organization. They must do so in a very personal way, telling the story with their own words and explaining what that means to them. That is the main way to start winning the hearts and minds of the employees and to break the vicious cycle of employee disengagement and quiet quitting. CEOs must inspire employees and customers to care about the vision, bringing them along for the journey.
Change agent. With the pace of change accelerating, it is paramount for CEOs to constantly be looking for ways to elevate the work the company does. No company can afford to have a leader simply focused on maintaining the status quo. CEOs must be curious and hungry to try new things. They must inspire change within their companies. They must remain adaptable and flexible to adjust as needed, driving their teams to embrace change as a normal part of the work.
Bias for action. It doesn't matter how long they wait, CEOs will never have all the information they’d like to make most of their decisions. CEOs must be able to read the situation, gather the relevant insights and opinions, make a decision, and explain their rationale. If that proves to be a wrong decision, they shouldn’t become defensive; instead, they should own it and adjust the course. And they should demand that same bias for action from all leaders.
Understanding of technologies and their applications. Technology is present in everything we do, and your company is no exception. CEOs must become proficient in the applications of those technologies and the ways they can help them fulfill the vision. CEOs don’t need to know about all the apps or new start ups; they need to understand key trends and their implications. In the future, the companies that succeed will be the ones that learn how to leverage technology in their operations; CEOs will play an instrumental role in making that happen.
Along with CEOs, Boards co-own the outcome of their companies’ transformations and must take decisive steps to set their companies up for success. This is not a nice to have; this is one of the main obligations Boards have to shareholders. If your Board has made a mistake in selecting a CEO, own it and do better next time. Don’t dwell on it; the extra time will just make things that much harder for the entire company.