Monday, November 1, 2010


CEO's that successfully fail


The myth that surrounds the persona of a CEO as a person who never fails has been blown away by the adversities that continuously affected theindustry during the past couple of years. The supposedly best have bitten the dust, while some so called non entities have not only proven equal to the task but they have also successfully steered their organization out of the turmoil and put it back on the growth track.

Now what is the factor that separates the successful CEO from the ones that fail?

It's rarely for lack of smarts or vision. Most unsuccessful CEOs stumble because of one simple, fatal shortcoming. Here's what we aren't saying: That failed CEOs are dumb or evil. In fact they tend to be highly intelligent, articulate, dedicated, and accomplished. They worked hard, made sacrifices, and may have performed well terrifically for years.

Nor are we saying execution is the only reason CEOs falter. Sometimes they adopt a strategy so flawed that it's doomed, or they refuse to confront reality in their markets, or they antagonize their board. And when a CEO really goes down in flames, there's almost always more than one reason.

It's clear, as well, that getting execution right will only become more crucial. The worldwide revolution of free markets, open economies, and lowered trade barriers and the advent of e-commerce have made virtually everybusiness far more brutally competitive. The frantic spread of information through technology is making customers everywhere more powerful and pushing toward the commoditization of everything. Institutional investors who now own a substantial portion of equities relentlessly demand results.

One important area of failure for the CEO’s is the failure to put, the right people in the right job, and of course the relative failure to fix problems in time..

Selection &; Retention factor.

Sometimes strange anomalies not strictly related to merit become the criteria for selection and retention of an employee. A relatively less confident CEO would avoid recruiting a highly accomplished deputy for the fear that the latter would attract the attention of the governing board and present a viable alternative to the incumbent CEO. A sense of insecurity within often dictates such decisions.

On the other extreme is the highly overconfident CEO, who thinks that he can mentor and coach anyone to exacting delivery levels. My man theory comes in to effect here. Here he selects a person who he thinks will remain loyal to him in adversities and not turn tables on him. The philosophy of “I would rather take the devil I know, rather than the one I don’t.

Other less important but influencing factor could be, the person creates a positive vibe in the social media, hence a good individual to be around. The person may be more acceptable to the majority of the members of the governing board. He has successes in a different field, and hence would succeed here also. Sometimes these people are selected in preference, to the home bred executives who have contributed positively to the organization. Sacking important executives may or may not impact the organization negatively, but retaining non performing ones would definitely, waiting indefinitely in the hope performance will definitely impact the organization negatively.

More often than not these deemed success turnout to be reasons for doomed bottom lines & careers.

The CEO’s role extends beyond the bottomlines. It pays to treat employees as stake holders.
Making the bottom line your top priority may not be the best way to improve profitability. Recent research shows that CEOs who put stakeholders’ interests ahead of profits generate greater workforce engagement—and thus deliver the superior financial results that they have made a secondary goal.

This finding is based on survey data gathered from 520 business organizations in 17 countries, many of them emerging markets. If a CEO’s primary focus is on profit maximization, employees develop negative feelings toward the organization. They tend to perceive the CEO as autocratic and focused on the short term, and they report being somewhat less willing to sacrifice for the company. Corporate performance is poorer as a result.

But when the CEO makes it a priority to balance the concerns of customers,employees, and the community while also taking environmental impact into account, employees perceive him or her as visionary and participatory. They report being more willing to exert extra effort, and corporate results improve.

Inspiring Vision 

Jack Welch, the legendary former CEO of GE was well known for cultivating a breed of successful CEO’s from within, who were not only great success but also contributed to GE for more than a decade as CEO’s. The continuity factor at the top often creates the comfort , and puts them ahead of organizations that don’t have this factor.

It is important to create a vision that inspires and directs the organization. And ensure that, it is broad enough to allow great flexibility. Communicate your vision to everyone in your organization and create an innovation-adept culture environment that encourages entrepreneurial creativity to make the vision a reality.

"Leaders inspire people with clear visions of how things can be done better,“ writes Jack Welch “The best leaders do not provide a step-by-step instruction manual for workers. The best leaders are those who come up with new idea, and articulate a vision that inspires others to act.”

All said and done, it is still not possible to lay down the formula for the success or the reasons for the failure of the CEO’s. People with early setbacks in life like Steve Jobs have turned out to be great success in later part of their lives & career. "Lee" Iacocca's  story of the turnaround in Chrysler Corporation is a folklore people never tire of singing. Adversities sometimes throw up leaders that normal circumstances may not.
Hope you have enjoyed reading this article. Please come out with your valuable views.

Best wishes,


No comments:

Post a Comment