On June 16th, 2022, McKinsey Senior Partner Carolyn Dewar sat down with High Alpha Partner Mike Fitzgerald for a virtual fireside chat to disucss themes from her new book, CEO Excellence. The book draws on intimate interviews with 67 of the world’s best CEOs to understand the mindsets that set them apart.
Being a CEO is one of the most complex and challenging roles in business. You are no longer a specialist. Instead of being great at a functional aspect of the business, you must meaningfully tend to all six responsibilities and keep all six plates spinning at all times. Yet, no guidebook or framework describes what excellence looks like in this all-important role. The book presents a unique opportunity for investors and startup leaders to understand the research findings, listen in on those conversations, and understand the six mindsets that helped top CEOs make an extraordinary impact.
Fortune favors the brave and the bold. The best CEOs do not tame uncertainty; they embrace it. They understand that vision and boldness are not a bottom-up effort. CEOs who have a distinct perspective and game-changing vision do it in four steps:
- Recognizing and magnifying intersections
- Making it about more than money
- Looking back to look ahead
- Involving their employees
2. Aligning the organization
Treat the soft stuff as the hard stuff. The CEOs Carolyn interviewed believe that the soft stuff is as important as the hard stuff; they also expect the soft stuff to be managed with the same level of structure and rigor. But, the reality is that the soft stuff can be complicated. It’s much harder to do the emotional work that comes with developing and inspiring people. The best CEOs ensure that every senior leader owns the people implications of the company strategy.
3. Mobilizing through leaders
Solve for the team’s psychology. Many CEOs focus on getting individual leaders who are great at their roles. The excellent CEOs focus on the psychology of the team and prioritize how they work together. You can’t do it all by yourself, even in a small, fast-growth company. But, how do you get a diverse group of independent-minded people to coalesce around a purpose? Carolyn offers the following advice:
- The first step is understanding that people in your organization have different motivators. Leaders tend to fall into a trap where they assume that what is most meaningful to them is also the most meaningful to everyone else. But, if you think like that, you are only hitting the hearts and minds of 20% of the organization.
- Permit the organization to think boldly. Carolyn said, “Great CEOs start by thinking, “Here is my big, bold strategy. What is the game we’re playing, and what’s the mandate or the reach we should consider?”
- Define the “first team” norms. The CEO role is often very lonely. It’s an information asymmetry problem. Nobody who works for you sees what you see. And nobody you work for sees what you see. According to Carolyn, “your leadership team below you must establish the mindset that the top team is every member’s “first team,” meaning everyone is expected to put the company’s needs ahead of those of the business unit’s or function’s.”
4. Engaging the Board
Help directors help the business. Everyone has a boss somewhere. As the CEO, they are often responsible for engaging with the board regularly. Many CEOs think, “How do I minimize my time spent on board meetings? Let’s make sure the board gets enough information, but not too much.” That mindset starkly contrasts the perspective of the CEOs Carolyn spoke with, who embraced the board as a valuable and trusted source of expertise.
When asked about what successful CEOs have done to engage with their board, Carolyn shared the following pieces of advice:
- Create a seven-by-seven list of things going well and things not going well. Carolyn said, “one of the CEOs I interviewed said that the day before he meets with the board, he pulls out a piece of paper and writes down five to seven things that he wants to talk to the board about. He then dedicates the first hour of their board meeting to sharing those five to seven things. Not the last hour of the meeting. The first hour.”
- Build radical transparency with the board. Carolyn said, “the best CEOs will be very transparent on the things that aren’t going well and where they need help. They share what keeps them up at night.”
5. Connecting with stakeholders
Start with your why. According to Carolyn, “Research shows that a company’s relationships with external stakeholders can influence as much as 30 percent of corporate earnings.” Great CEOs connect with all their stakeholders. They ask, “Why are we relevant to our stakeholders?” The best CEOs dig deeper to understand stakeholders’ motivations, hopes, and fears.
Carolyn mentioned that employees have growing expectations that their employers reflect their social values. Which begs the question — how can CEOs balance these demands without alienating prospective investors and customers? Carolyn said, “The expectations are changing so quickly. Business RoundTable has been talking about stakeholder capitalism for a long time and I think these last couple of years have really started putting that to the test. What does it mean to operationalize? We talked to alot of CEOs about their responsibilities to stakeholders, and three concentric circles bubbled up to the top.”
- What you are responsible for within your four walls. In this circle, you have the most control.
- What you are not responsible for outside of your four walls, but directly impacts your ability to operate. You can imagine why you’re getting involved in taking a stand or trying to shape the debate because it’s directly in your ability to operate.
- Societal and political issues. This circle has nothing to do with your business, except that employees, customers, and increasingly investors are starting to choose where to work, what to buy, and where to invest based on whether they think companies are morally aligned.
6. Managing your personal effectiveness
Do what only you can. The choices that the best CEOs make to manage their personal well-being and effectiveness is just that — personal. You must figure out what matters to you and be intentional in making time for it. The best CEOs excel at prioritizing and “doing what only they can do.” They should manage the dimensions of personal effectiveness: using time and energy, choosing a leadership model, and maintaining perspective.
If you missed the event, you could watch the entire conversation with Carolyn here. Every month, we sit down with leaders like Carolyn and dig into learnings from their backgrounds and careers. Make sure to subscribe to our newsletter to get updates on upcoming events.