CEO Excellence – Carolyn Dewar , Scott Keller, and Vikram Malhotra
The book “CEO Excellence: The Six Mindsets That Distinguish the Best Leaders from the Rest” was written by McKinsey senior partners Carolyn Dewar, Scott Keller, and Vikram Malhotra and published in 2022.
The book focuses on the six mindsets that distinguish the best leaders from the rest and provides practical tips and advice for building these mindsets in oneself.
The book is targeted towards leaders and executives who are looking to enhance their leadership skills and drive their organizations to success. The book emphasizes the importance of adopting a growth mindset and learning from failure in order to succeed in today’s fast-paced business world.
1 .Direction-Setting Mindset: Be Bold
In today’s complex world, many CEOs try to minimize uncertainty and guard against making mistakes. It sounds sensible. After all, the old adage that “discretion is the better part of valor” would seem to make sense for a job that has such a huge impact on a company’s stakeholders.
Ultimately, however, such a cautious mindset has proven to deliver results that follow the dreaded “hockey stick” effect, consisting of a dip in next year’s budget followed by the promise of success, which never occurs.
4. Board engagement Mindset: help directors help the business
CEOs find it challenging to engage with the board because directors are the CEO’s boss, unlike any other boss. Additionally, it’s not the CEO’s role to determine who is on the board or how it operates. However, boards rarely add value to the organizations they govern, and only 30% of board members report effective processes.
The best CEOs change their mindset to focus on helping directors help the business instead of helping the board fulfill its fiduciary duties.
5. Stakeholder Connection Mindset
CEOs must interact with stakeholders more often than ever before. This includes customers, partners, employees, investors, governments, and more. How well a business performs can be linked to how well the CEO handles these interactions.
Research shows that a company’s relationships with external stakeholders can influence as much as 30 percent of corporate earnings.
- Most CEOs ask their public relations departments to help them maintain good relationships with stakeholders. The focus is predominately on who to talk to, about what, and when. The best CEOs, however, start with the question of “why?”
- By deeply understanding the motivations, hopes, and fears of their constituents, excellent CEOs create strong bonds with the outside world that help the business prosper in the long run.
6. Personal Effectiveness Mindset: Do what only you can do
CEOs have a lot of responsibilities. To meet these challenges, they must be psychologically and physically fit. This is not easy, but it is essential.
The best CEOs know that they are responsible for their own personal effectiveness. They make time for what matters to them, and they delegate tasks that can be done by others.
The best CEOs focus on what only they can do. They prioritize the most critical issues and delegate the rest. This allows them to be more effective and to avoid burnout.
3. Mobilizing leaders Mindset: Solve for the team’s psychology
The dynamics of a top executive team can make or break a company. Investors know this—it’s why they cite the quality of the top management team as the single most important nonfinancial factor in evaluating a new IPO (an initial public offering, in which a private company sells its shares to the public).
Their instinct is backed by the data: when a top team works together with a common vision, a company is twice as likely to have above-median financial performance. As leadership expert John Maxwell once said, “Teamwork makes the dream work, but vision becomes a nightmare when the leader has a big dream and a bad team.”
Improving personal effectiveness
Here are some tips for CEOs to improve their personal effectiveness:
- Make time for what matters to you. This includes your physical and mental health, your family and friends, and your hobbies and interests.
- Delegate tasks that can be done by others. This will free up your time so that you can focus on what only you can do.
- Prioritize the most critical issues. This will help you to be more effective and to avoid burnout.
Solve for the team’s psychology contd.
The best CEOs recognize this challenge and acknowledge that it’s their leadership that will determine whether their team’s work lives up to its potential and propels the company forward. When thinking about how to get the most out of their leaders, many CEOs start with questions such as, “How often should we meet?” and “What should be on the agenda?”
The best, however, think less about what the team does together and more about how the team works together. They obsess with solving the team’s psychology and let the mechanics of coordination and execution follow.
Engage with the board
CEOs can engage with the board by:
- Communicating regularly and substantively between board meetings. This includes sharing information about the company’s performance, strategy, and risks.
- Inviting the board to engage on business-critical matters. This can help the board provide valuable insight and counsel.
- Taking the lead in driving the engagement process. This will allow the CEO to have greater influence over the process.
By engaging with the board, CEOs can help directors add more value to the business.
A bold mindset contd.
- The best CEOs approach setting the direction of their company with a different mindset. They embrace uncertainty with a view that fortune favors the bold. They’re less a “taker” of their fate and more a “shaper”—constantly looking for and acting on opportunities that bend the curve of history.
- CEOs who embrace this mindset are well aware that only 10 percent of companies create 90 percent of the total economic profit (profit after subtracting the cost of capital) and that the top quintile performers deliver thirty times more economic profit than the companies in the next three quintiles combined.
The odds of moving from being an average performer to a top-quintile performer over a ten-year period are only one in twelve.
2. Organization Alignment Mindset: Treat the soft stuff as the hard stuff
To successfully implement a strategy, it’s important to prioritize the “soft stuff” related to people and culture, which accounts for 72% of the barriers to success. Many CEOs acknowledge this but don’t expect the same level of planning as they do for financial plans.
The best CEOs treat the soft stuff as the hard stuff and ensure that every senior leader takes ownership of the people-related implications of the strategy. Without addressing mindset issues, even technical problems can lead to failure.
Ask the right questions
Here are some questions CEOs can ask themselves to better understand their stakeholders:
- Why is our company worthy of operating in society?
- Why are we relevant to each of our stakeholders?
- Why are each of our stakeholders relevant to us?
- Why are they choosing to do whatever they might be doing?
By answering these questions, CEOs can develop a deeper understanding of their stakeholders and build stronger relationships with them.
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