Excellence
LEADERSHIP
™
THE MAGAZINE OF LEADERSHIP DEVELOPMENT, MANAGERIAL EFFECTIVENESS, AND ORGANIZATIONAL PRODUCTIVITY
VOL. 22 NO. 9
SEPTEMBER 2005
Feeding Frenzy
This scene of gulls and a grizzly
feeding on Pacific salmon
provides food for serious thought.
Without this seasonally abundant
food source, the entire ecosystem
would be either endangered or
lack nutritional enrichment.
STEPHEN R. COVEY
MALCOLM GLADWELL
MARSHALL GOLDSMITH
TOM PETERS
Mission and Margin
Personality Plus
The Action Faction
Develop disciplines
to lead and execute . . . . .3
How well can we
predict behavior? . . . . . . .9
Leaders Make
Values Visible
JACK WELCH
PATRICK LENCIONI
Correlate mission and
behavior of leaders . . . .13
Cultivate in your
people a proactive
bias for action . . . . . . . . .17
DENNIS NALLY
Choose Teamwork
MARK MURPHY
Dare to differentiate
the performance
of your people . . . . . . . . . .4
Start by building
trust and then
opting in . . . . . . . . . . . . . .10
Why CEOs Get Fired
Leaders get fired when
confidence is lost . . . . . .14
ROBERT REICH
MICHAEL PORTER
TONY SCHWARTZ
CEO as Strategist
Fire on All Cylinders
The Vitality Curve
The Art of Narrative
You need to tell
the right stories . . . . . . . . .6
Great strategies are
leader-driven causes . . .11
JUDITH E. GLASER
Making Changes
RICHARD C. HUSEMAN
AND PAMELA A. BILBREY
Transformation can
be exhilarating in
the give and take . . . . . . .7
Break Out
What’s a
Manager to Do?
Great leaders achieve
‘impossible’ goals . . . . . .12
Which activities
boost performance? . . . .16
Look through
the energy lens . . . . . . . .15
How Much Is Enough?
Balance regulation
with strong
internal control . . . . . . . .18
LAURIE ANDERSON
Success in the Sandbox
Forge alliances to
achieve your vision . . . .19
JIM TRINKA
BRUCE CRYER
Listen to the Heart
Do the math and
focus on the heart . . . . . .20
leadershipconfidence
Why CEOs Get Fired
K e e p t h e t r u s t a n d c o n f i d e n c e o f t h e b oa r d .
agers, and to sell the need to change
course. Another group identified the
CEO’s inability to follow-through and
E OFTEN ASSUME ensure that changes were made.
that CEOs get
2. Ignoring customers (28 percent):
fired (or forced to
Many board members have close ties
resign or retire) because of financial
with, or are themselves, customers of
performance. But if that were the whole the organization. When a CEO ignores
story, every CEO who ever missed a
or alienates customers, it not only
quarterly target or lost money would
undermines the business and revenue,
be immediately dismissed. Several
but it undermines board support. Board
world-class CEOs have seen their stock members said their test for whether the
price dip, missed earnings forecasts, or CEO was sufficiently engaged in the
even lost money for a time. While
business was the extent to which they
financial performance may be an easy
evidenced intimate knowledge of cusexplanation, it’s also incorrect.
tomers, customer needs, and trends.
So why do CEOs get fired? Our
3. Tolerating low performers (27 perLeadership IQ research team found 286 cent): When CEOs allow an obvious
organizations that recently ousted their low performer to linger (without any
CEO and interimprovement or
viewed board
discipline), it
members to disdestroys the
cover the reasons
CEO’s credibility
why. The answer
and makes it
was that the
politically diffiCEO was
cult for them to
removed when
hold others
the Board lost
accountable.
confidence.
Board members
These Directors
complained of
understand that stock price, revenue,
CEOs becoming too emotionally
and profit won’t grow exponentially
attached to a low performer(s), whether
every quarter. However, they do need
from loyalty, fear of being seen as too
confidence the CEO will take the actions harsh, or unrealistic optimism. Board
necessary to achieve growth over time. members also suspected that CEOs
often covered for poor performers out
Five Top Reasons
of fear that they might divulge embarWhat causes a Board to lose confirassing or indicting information.
dence? Here are the top five responses
4. Denying reality (23 percent): Board
from our interviews, including the per- members said they could handle bad
centage of respondents who gave this
news and course corrections. What they
response (percentages exceed 100 percouldn’t handle was a CEO who was in
cent because some respondents gave
denial of the bad news. Many board
more than one answer).
members felt that they were closer to
1. Mismanaging change (31 percent):
the market and customers than the
Virtually every organization indicated
ousted CEO, and that the CEO was far
they were undergoing, or had recently too insulated from frontline realities.
undergone, a change initiative. HowBoard members also said they would
ever, half of board members said that
rather have bad news and a plan to fix
their change initiative did not go well.
it, than no news or sugarcoated news.
Most pointed to a failure on the CEO’s
5. Too much talk, not enough action
part to motivate employees and man(22 percent): We heard many comments
by Mark Murphy
W
14
w w w. L e a d e r E x c e l . c o m
about CEOs talking the talk, but not
walking the walk. CEOs could talk endlessly about grand visions and strategies,
but would both neglect a tactical plan for
the “who, what, when and where,” as
well as evidence of its implementation.
Three Vital Lessons
These results provide three vital
lessons for CEOs (and aspirees):
First, the issues that get CEOs fired
tend to be “soft” issues. Most CEOs
spend much time and energy on “hard”
issues like finance, strategy, and operations because they’re expert in those
fields and less prone to make mistakes.
“Soft” issues, like managing change,
cause CEOs to stumble. However, CEO
mistakes can be fixed through training
and coaching. Skills like managing
change, connecting with customers, and
managing low performers can be
learned quickly. Just as there are protocols for analyzing competitors, so too
are there formal protocols for managing
change and diagnosing low performers.
Second, lack of execution is much
more damaging to a CEO’s career than
lack of vision. Vision gets more media
attention than execution, and it makes
for better presentations, but it didn’t
matter much to the Directors. Boards
tolerate strategic errors, as long as the
CEO acknowledges reality and quickly
takes action in a new direction.
Third, get out of the executive suite
and into the field. Whether leading a
change initiative, connecting with customers, or assessing the talent pool,
information is limited if CEOs stay in
their office. This is especially true for
negative information—what CEOs need
most. After Jeff Immelt took over for
Jack Welch at GE, he spent his first few
months visiting customers. He wanted
to hear the customers’ needs in their
own words and uncover areas where
GE needed to improve. If board members receive negative feedback before
you, you’re in trouble. But if the board
has confidence that you understand
customers and the market, and can
manage change and take action, even if
that means making some tough choices,
you will keep your job.
LE
Mark Murphy is Chairman and CEO of Leadership IQ, and coauthor of Leading on the Edge of Chaos: The 10 Critical
Elements for Success in Volatile Times. 202-772-4257 or
mark@leadershipiq.com
ACTION: Take these lessons to heart.
L e a d e r s h i p
E x c e l l e n c e