Deloitte, last month, unveiled their 2019 finalists in the latest iteration of their New Zealand Top 200 Awards. Accompanying this announcement, Ross Milne (Chairman, Deloitte New Zealand) gave his thoughts on what it is he feels makes a great CEO: see NZ Herald article Deloitte Top 200: What Makes a Top-Class CEO (sic) for his full thoughts. Whilst it made for interesting reading, one could dispute Mr Milne’s ideas and further explore the most common traits that the best Chief Executives share.
Firstly, one can infer from Mr Milne’s description of CEOs as ‘Pioneering’[1] and ‘Undisruptable’[2] that he believes the best Chief Executives conform to the stereotype of being ‘Charismatic extroverts’[3] (Harvard Business Review, 2017). If this line of thinking is taken as true, one would suggest a rethink in terms of CEO characteristics as HBR research suggests that it is ‘Introverts’[4] instead that are ‘More likely to surpass…expectations’[5] than their extroverted counterparts in top level CEO positions.
The research also goes as far as to say that ‘Educational pedigree [of those studied] in no way correlate[s] to performance’[6], pointing out that, of the 6 million CEOs across companies in America analysed, ‘Only 7% of the high-performing (sic.) CEOs had an undergraduate Ivy League education’[7]. What this essentially means is that the more traditional background associated with high flying executives no longer applies to contemporary business life. Whilst we acknowledge our interpretation of Mr Milne’s words might be a stretch from his intended meaning, we would still argue for caution when highlighting industry leaders as ‘Pioneer[s]’[8] as there may be something more subtle and nuanced occurring in the case of great leadership.
In terms of Mr Milne’s comment that ‘CEOs are charged not just with exploiting the current business model and creating efficiencies’[9], we think this doesn’t match up to the reality of the Chief Executive role: one only has to look at the research of Birshan, Meakin and Strovink (McKinsey and company, 2017) to see that ‘Exceptional CEOs’[10], defined as being those ‘Whose companies’ returns to shareholders had increased by more than 500 percent (sic.) over their tenure’[11], are 58% ‘More likely than others to conduct a strategic review early in their tenure’[12] whilst also being 19% ‘More likely to launch [cost saving] initiatives than the average CEO’[13]; and if all of that doesn’t sound like ‘Exploiting business model[s] and creating efficiencies’[14], it’s hard to say what does.
Mr Milne also advocates that top executives have an ‘Acknowledgement that failure is inevitable – the best CEOs encourage taking measured risks as part of their company culture’[15]. Whilst it’s a fair suggestion that setbacks shouldn’t compromise good modes of working and that measured risks come part and parcel of leadership roles, one could argue that the idea of failure being ‘Inevitable’[16] doesn’t seem like a ‘Measured’[17] mindset. It could be seen as pedantic to scrutinise semantics so heavily, but the point is still fair: assuming failure will happen regardless of your efforts takes away the accountability from CEOs and creates a destructive mindset, free of consequence. If a CEO is free of consequence, they can pursue whichever direction they like without fear of reprisal to the detriment of the greater cause. One only has to look towards the hubris of infamous despots over history to understand the pride that comes before a fall. What way of thinking might better suit the discerning CEO, then? A suggestion is that there should instead be a deprioritising of failure as an ultimate deterrent to a bigger and better future whilst ensuring due diligence on all projects is in place. Whilst failures are not always be the all and end all of a company and can be learning opportunities for driving later projects, one could argue that it’s still better to avoid making silly mistakes that could have otherwise been avoided.
In the same vein, Mr Milne’s idea of the ‘Measured risks’[18] of the best CEOs aren’t actually that common in practice either. In the aforementioned McKinsey study, it was found that ‘Exceptional CEOs’[19] were a lot less likely to dramatically overhaul company direction in the first two years of their tenure:
· Mergers or acquisitions: 3% less likely
· Geographic expansion: 4% less likely
· Management reshuffle: 23% less likely
· Business/product launch: 40% less likely
· Organisational redesign: 48% less likely[20]
One could perhaps argue that top CEOs make up the difference following the initial transition period into a role, but, then, given that ‘The median tenure for CEOs at large-cap companies was 5.0 years at the end of 2017’[21] (Equilar, 2018), having slowly decreased over the decades, that only leaves three years for the best CEOs to catch up to their more risk taking counterparts – even if the conjecture were true in the first place.
To give a fair account of his words, however, there are a few points of Mr Milne’s where we find agreeance. The notion that ‘CEOs are…good listeners’[22] is certainly true and Mr Milne does well to highlight that those best engaged in their CEO role ‘Take the time to truly understand their customers’[23]. One might go further, though, and assert that the listening required of a great leader extends to more than simply listening to those who drive revenue through purchases. It can be all too easy for top executives to lose focus on communicating with those in their business who are directly creating value through providing the company’s products or services, but these persons are normally those with the greatest insight into the everyday affects of their work, meaning their information can power meaningful changes to future direction. Through listening to staff, the best CEOs provide ‘Enhanced decision making’[24] (Forbes, 2019) by not worrying about ‘Winning the debate but instead doing what’s best for the organization (sic.)’[25].
All in all, Mr Milne’s notes make for an interesting read and, despite the fact we might disagree on certain points on what it is that really makes a great CEO, we have to thank him for his ideas: after all, without sparking discussion, what hope would there be of inspiring progress? We just hope that through our contribution, we can continue to keep the ball rolling in terms of charting the best methods of C-Suite management.
Citations:
[1]Ross Milne, Interview by Duncan Bridgeman, Deloitte Top 200: What makes a top-class CEO?, nzherald.co.nz, (Auckland: New Zealand Media and Entertainment, 2019). [2]Ibid. [3] Elena Lytkina Botelho et al., What Sets Successful CEOs Apart, hbr.org, (Boston: Harvard Business Publishing 2017). [4]Ibid. [5]Ibid. [6]Ibid. [7]Ibid. [8]Ross Milne, Interview by Duncan Bridgeman, Deloitte Top 200: What makes a top-class CEO?, nzherald.co.nz, (Auckland: New Zealand Media and Entertainment, 2019). [9]Ibid. [10]Michael Birshan et al., What Makes A CEO ‘Exceptional’?, mckinsey.com, (New York: McKinsey and Company, 2017). [11]Ibid. [12]Ibid. [13]Ibid. [14]Ross Milne, Interview by Duncan Bridgeman, Deloitte Top 200: What makes a top-class CEO?, nzherald.co.nz, (Auckland: New Zealand Media and Entertainment, 2019). [15]Ibid. [16]Ibid. [17]Ibid. [18]Ibid. [19] Michael Birshan et al., What Makes A CEO ‘Exceptional’?, mckinsey.com, (New York: McKinsey and Company, 2017). [20]Ibid. [21]Dan Marcec, CEO Tenure Drops to Five Years, equilar.com, (New York: Equilar, 2018). [22] Ross Milne, Interview by Duncan Bridgeman, Deloitte Top 200: What makes a top-class CEO?, nzherald.co.nz, (Auckland: New Zealand Media and Entertainment, 2019). [23]Ibid. [24]Dana Brownlee, 5 Communications Best Practices Of Great Leaders, forbes.com, (New York: Forbes Media, 2019). [25]Ibid.
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