What makes an excellent CEO?

Management Insights

I was scouting around for articles on how I could improve my performance as a leader in Polestar and found an excellent article by McKinsey.  As many of you run, or aspire to run, businesses I thought I would share some of its insights.



Traits of a CEO

In the ever-evolving landscape of business, CEOs play a pivotal role in steering their organisations towards success. Exceptional CEOs possess unique mindsets and adopt effective practices that set them apart from their peers. A recent article by McKinsey explores these attributes, shedding light on the key traits that contribute to CEO excellence. Let’s delve into the insights provided and uncover the secrets behind effective leadership.

  1. Action-taking approach: prioritising decisive decision-making over excessive deliberation. By embracing a proactive approach, these leaders seize opportunities and address challenges swiftly, maintaining momentum within their organisations. They understand that taking calculated risks is crucial for driving innovation and achieving strategic goals.
  2. Willingness to learn: an insatiable curiosity that drives their continuous learning and exploration. They actively seek new perspectives, remain open to diverse ideas, and encourage intellectual curiosity within their teams. By fostering a culture of curiosity, CEOs stimulate innovation, adaptability, and a willingness to challenge the status quo.
  3. Focus on the long term: great CEOs maintain a long-term vision and strategic focus beyond immediate results. By setting ambitious goals and aligning their organisations towards sustainable growth, these leaders foster stability, inspire confidence, and ensure resilience in the face of market fluctuations.
  4. People-oriented leadership: the best leaders prioritise their people, recognising that the success of their organisations hinges on the engagement and development of their teams. They invest in creating a supportive work environment, where employees feel valued, empowered, and motivated.
  5. Proactive talent management: it is also the role of a CEO to recognise that attracting and retaining top talent is vital for for their organisation’s success; emphasising talent development, succession planning, and a diverse workforce will ensure a sustainable talent pool that can drive innovation and navigate future challenges.
  6. Data-driven decision making: in the age of data, embracing analytics and adopting a data-driven approach to operations can make all the difference to an organisation’s performance. By leveraging data and insights to inform strategic choices, these CEOs minimise guesswork and increase the likelihood of favourable outcomes.
  7. External engagement: the input of external parties, including various stakeholders, can often be crucial in the smooth running of a business. They foster relationships with customers, partners, regulators, and industry peers to gain valuable perspectives and stay tuned into market trends. By nurturing external networks, externally engaged CEOs enhance their strategic foresight and make informed decisions that align with the broader business landscape.
  8. Resilience and adaptability: in the face of challenges and uncertainty, these traits, demonstrated by a CEO, can be the unifying force a business needs in trying times. Through embracing change and inspiring their teams to navigate turbulences, these leaders position their organisations to thrive amidst disruptive forces.



Final thoughts

Little academic research on the role of the CEO illuminates quite how they think and what they do to excel. For example, recent studies that detail how CEOs spend their time don’t examine the difference between a good use of time and a bad one. Research does, however, demonstrates how traits such as drive, resilience, and risk tolerance make CEOs more successful; this insight is helpful during a search for a new CEO, but it’s hardly one that sitting CEOs can use to improve their performance. Other research has tended to produce findings such as the observation that leaders are effective in some situations and ineffective in others – interesting, but less than instructive.

McKinsey, on the other hand, successfully sets out which mindsets and practices are proven to make CEOs most effective. It is the fruit of a long-running effort to study performance data on thousands of CEOs, revisit their first-hand experience helping CEOs enhance leadership approaches, and extract a set of empirical, broadly applicable insights on how excellent CEOs think and act. It offers a self-assessment guide to help CEOs (and CEO watchers, such as boards of directors) determine how closely they adhere to the mindsets and practices that are closely associated with superior CEO performance.

CEOs who insist on rigorously measuring and managing all cultural elements that drive performance more than double the odds that their strategies will be executed. And over the long term, they deliver triple the total return to shareholders that other companies deliver.

By Charles Whelan on 20/01/2020