The Chief Executive Officer is positioned on the nexus between the daily operation of a business and the strategic planning of its future. They are the leaders of the C-suite team and all C-level officers report to them. The CEO in turn has to report to the Board of Directors or Owners and present a vision of where they want to take the company. The relationship between the CEO and the owner/board is critical to how effective they can be.
So what makes a good CEO?
Primarily the CEO formulates strategy and commercial vision for the company. They need to get any strategic plans and inherent risks signed off by the company owners or the board. The latter will always be much more conservative in their attitude to risk and forward planning. This is a common cause of tension between both parties.
So a good CEO needs to master this relationship. They must formulate a plausible strategy which includes manageable risk and convince the higher-ups that the risk is just that, manageable and worth taking. They have to be able to sell the idea to the board. A commercial vision, by its nature is a nebulous thing. In communicating that vision they need to convince the directors/owners of the market imperatives and business opportunities as well as engaging them emotionally.
According to PriceWaterhouseCooper’s 2013 Irish CEO Pulse survey: “In Ireland, over half (56%) of Irish business leaders will increase their innovation capacity. And today’s CEOs recognise that they need to be directly involved in driving innovation within their business, with 37% reporting their role as ‘leader’ in this area, and 34% as ‘visionary’.”
The CEO has the same basic job as an entrepreneur: they have to grow the company. They need to look out onto the market (and nowadays this means the global market) and discern the weak signals that identify future trends and opportunities. A great example of this is Eamon Hession CEO of Irish firm Púca. He saw the hugely underdeveloped potential of SMS texting in online marketing, and integrated it into a highly successful mass-marketing strategies. We also have Bill McCarthy another Irish CEO, this time of Mapflow. He led a marketing team that identified the subtle differences in marketing into the US and Canada and turned it to Mapflow’s advantage, establishing a successful operation in both markets. Currently, over eight thousand commercial property underwriters rely on Mapflow to assess their risk and manage their exposure.
A good CEO will have innate talents to help them make strategic decisions. During their journey to the top seat they have to sharpen and hone these instincts.
The successful CEO will find new ways for company operations to do more in a shorter period of time: they must always innovate in their efficiency drive as is mentioned in the aforementioned PWC CEO Pulse Survey – the full document can be found here.
PwC found that more and more CEOs see the need to take the lead in operational innovation and a majority of Irish business leaders recognise the importance of innovation in the way they do business as well.
A CEO will benefit enormously if they have substantial experience in those markets they’re trying to plot a course through. They will have a practical understanding of clients and customers and will be aware of the cyclical trends in the market. Increasingly however, according to the Harvard Business Review, CEOs will have to manage not market cycles but permanent crises. And this is no more true than in the technology sector which is being hit by continual waves of hyper-disruption.
The C-Suite Manager
The CEO is the team lead of all C-level executives, usually they will have the deciding influence in putting this top management team together. They know that their executive team has to be a resource. The C-level officers they hire will be managers who can be trusted to run their departments without any escalations which could eat into the CEO’s time. They will expect them to implement the strategic plan once it’s signed off by the top decision makers and run it successfully in their respective departments. The CEO will also be able to trust their team to deliver the metrics agreed with the board.
Catch the legendary Jack Welch giving a master class in corporate team building in the video below.
The team will also be a source of information from each dept. It will be able to report back trends within the company’s operations and changing market behavior as well as status reports on policy implementation.
It’s almost a cliché to say that a CEO has to be a leader but at the same time as Henry Mintzberg Cleghorn Professor of Management Studies at McGill University, emphasised in a 2013 Wall Street Journal webcast a CEO has to be a manager as well otherwise they won’t know what’s going on within the company. A CEO will try to have excellent relations with ordinary staff beyond their C-Suite team. This is a tall order as there are ferocious demands on their time but a great CEO will recognize the necessity of doing this.