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Key factors that make up successful leadership

Scott Keller is a senior partner at McKinsey & Company. He is the author of six books including Beyond Performance: How Great Organizations Create the Ultimate Competitive Advantage. Carolyn Dewar is a Senior Partner at McKinsey & Company. She has published over 30 articles in the Harvard Business Review and the McKinsey Quarterly and is a frequent keynote speaker. Vikram (Vik) Malhotra is a Senior Partner at McKinsey & Company, where he has worked since 1986. He has served on the Board of Directors of McKinsey and as Chairman of McKinsey Americas.

Below, Keller shares five key takeaways from the trio’s new book: CEO Excellence: The six mindsets that separate the best leaders from the rest. Hear the audio version – read by Keller himself – in the Next Big Idea app.

1. The role of the CEO is more important than ever.

According to the Edelman Trust Barometer, there has been increased trust in CEOs helping us navigate pandemics, disrupted supply chains, labor shortages, geopolitical instability and climate events. But for government leaders, religious leaders, community leaders, and media leaders, that trust has waned. So there is a strong mandate for CEOs to stand up and make a difference on a broader societal stage.

And if you look at things financially, you’ll see that, as you’d expect, high-performing CEOs outperform by definition — but at the rate of three times the total return to shareholders within an industry. If you look at the top quintile, the top 20% of value-creating companies across all industries, they create more than 30 times the economic value of the next three quintiles combined. That means jobs, GDP growth and wealth creation for pension funds. So overall, the CEO job is a really important role, probably more so than ever.

2. Very few people excel in the CEO role.

30% of wealth 500 CEOs stay in the role for less than three years. Turnover rates have increased by 38% over the past 10 years. If you look at the chance that a CEO will bring a company of average performance and value creation to the top quintile, they have a 1 in 24 chance, the analysis says.

So what help is there for CEOs to achieve the excellence they aspire to? Well, there are many individual CEO biographies or autobiographies out there, but they are usually interesting and in-depth because of the uniqueness of the CEO’s personal profile, the unique makeup of the company, and the nuances of the external context in which they operate. They are typically not highly generalizable across many different situations. While there are tips and pointers that can be picked up, they’re not really a practical guide to how to excel in the CEO role.

Then you look into the science and see what the consultants have to offer. There’s a lot of generalizable information out there, but it’s more descriptive in nature: “Be a good relationship builder, show resilience, be a great strategic thinker, be decisive” – ​​things like that. And these studies rarely distinguish between great performers and average or even worse performers in the role. So our goal was to both define the role and decode how those who excel think differently and do things differently.

3. Being a CEO is more about spinning records than finding magic bullets.

If you learned how to skipper a sailboat, you would learn six things at once. They would learn to learn “Course Well Done” which adapts to drift and tide to get from A to B in the most direct way. You would learn the centerboard position correcting for lateral drift. You will learn the sail trim that puts the sail in the most efficient position. You would learn boat balance to ensure the boat does not tip over. You would learn boat trim, which keeps the boat level. And you would learn a lot about how to be a skipper when it comes to not soaking in the rum, motivating your crew, weather forecasting and more.

The point here is that you would learn six important things to do all at once. Similarly, there are six responsibilities central to the CEO role: providing direction, aligning the organization, mobilizing leaders, engaging the board, connecting with stakeholders, and managing your personal effectiveness. These six responsibilities must all be managed simultaneously.

It’s actually a pretty liberating idea because being a CEO doesn’t mean you have to be great at anything — you just have to be great at managing it. It’s an integrative skill. Johan Thijs, CEO of Belgian bank insurer KBC, told us: “I’m good at a lot of things. And maybe I’m very good at one or the other, but I’m not the best at all. But that’s not important – what’s important is that I can balance everything together.” In short, it’s about spinning records, not finding silver bullets.

4. There are six mindsets that make a difference.

From one way of thinking comes a thousand ways of behaving. For example, in the 18th century a Manchester shoe company sent two salespeople to Africa and they received two telegrams in return. One said: “Hopeless situation. Nobody wears shoes.” But the other said, “Glorious opportunity. Nobody has shoes yet.” And we’ve found a core mindset for each of the dimensions of the role that really separates the best from the rest.

Let’s start with the direction setting Way of thinking. Imagine being given the keys to a $30 billion ship employing 30,000 people. It would be reasonable to take as the first principle, “Do no harm and be extremely careful how we take this matter forward.” But that’s not the kind of mindset our top-performing CEOs have had. Of course, they didn’t want to harm themselves, but thought: “How do we increase the speed? How do we achieve a better goal? How do we find a better route with smoother water?” It’s a “fortune favors the brave” mentality. For Ajay Banga at MasterCard, it wasn’t about “let’s try to beat Visa” but “let’s kill cash because that’s really the market we want to conquer.” Or for Mary Barra at GM, it’s less about ” Let’s win in the global automotive industry” and more about “Let’s change transportation”.

When it comes to orientation of the organization, it would be easy for CEOs to stick to the aphorism, “Not everything that counts can be counted,” which essentially says, “The soft things matter, but it can only be done to the best of our ability.” Ours CEOs rejected this notion. Their mindset was, “Treat the soft stuff like the hard stuff.” They demanded the same level of rigor and discipline on the human side of things as they did on the operational side of things.

In terms of Mobilization by leadersmany CEOs might tend to be, “Look, we need to have the right mechanics in place – the right meetings at the right time with the right people on the right issues.” Our top CEOs said, “No, no, no – the first one what you have to think about is the psychology of the team.” Feike Sijbesma, the CEO of DSM, talks about how the bricks are useless without the cement.

Let’s get to those board engagement Responsibility, and the mindset there isn’t one that says, ‘My role is to lead the board.’ It’s someone who looks at the board and sees that this valuable asset needs to be tapped and thinks, ‘How can do I help my board help my company?” This leads to widely differing behaviors in terms of the level of transparency they have, the number of forward-looking items they put on the agenda, how they influence the composition of the board and how they feel about the formation of the board of directors.

Next we have responsibility for connection with interested parties. Many CEOs would be drawn to the question, “Okay, who am I meeting and when? What do I have to say?” Whereas our top CEOs focused on motivation. The mindset was, “Let’s start with this why.” A simple example would be Netflix’s Reed Hastings – when he meets with reporters, he understands that they want to tell the truth but are also compelled to be entertainers. So if he wants to get his message across best, he gives them both.

That brings us to the final mindset that’s around personal effectiveness. The mindset of many people is to do whatever needs to be done. That’s perfectly rational and quite commendable, but it’s not the mindset our CEOs had. Our top-performing CEOs had the mindset, “I will do what only I can do. Everything else is delegated to others and handled in different ways. So everything is still getting done, but I will add whatever value I can add in a unique way.” And part of that is the view from the balcony over all the different dimensions of the role.

5. These lessons are important everywhere.

In fact, the insights we took from these CEOs, forged in the crucible of some of the most complex leadership environments, are quite applicable to less complex leadership environments. And with that in mind, we hope this work will help leaders everywhere—not just CEOs—be more effective.


The items originally appeared in The next big ideas club Magazine and is reprinted with permission.

https://www.fastcompany.com/90738512/key-factors-that-make-a-difference-in-successful-leadership?partner=feedburner&utm_source=feedburner&utm_medium=feed&utm_campaign=feedburner+fastcompany&utm_content=feedburner Key factors that make up successful leadership

JACLYN DIAZ

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