The loneliness of the CEO
By: Miguel Galván
The loneliness of the CEO in the Transformation of the Company.
Today, CEOs have the double challenge of transforming the company in the face of technological, regulatory and competitive disruptions, and that of responding to the day-to-day operation of the business. In most cases, the CEO is alone in this reality. CEOs face pressure from the Board, shareholders, employees and their own team, as they all have a particular perspective and interest. However, the CEO is the only one who sees the company as a whole, from the strategic, operational, organizational, cultural, financial and competitive perspectives.
I remember the words of a very successful and experienced CEO, when he was facing the integration of his company with another of similar size, different culture and both successful in his market. He knew that he had the options of operating the two companies separately, or that one absorbed the other, or the one that was of his particular preference, taking the best of both companies and building something totally new and more powerful: “I imagine the building that I want to build, but I don’t know how to”. It may be rare to hear such humility from the CEO’s mouth, but it is not rare for it to happen in the face of great challenges when the transformation of the company wants to be achieved.
I must emphasize that this has nothing to do with the managerial or leadership capabilities of the CEO: it has to do with the fact that today’s companies are organized to operate and solve day-to-day problems, manage functions through their executives and, at times, execute specific changing projects, whether technological, organizational or business processes.
Is this enough?
Having experienced the transformation of companies from different trenches: as a consultant for Strategy and Business Processes in Latin America, as Vice President in a transnational company and as CEO of a large Mexican company, our opinion is that it is not. It is also demonstrated by the fact that more than 70% of Transformation initiatives fail in the first two years according to studies carried out by MIT, Deloitte, McKinsey and BCG. Frustration is brewing within the company due to failed changes, financial, human and time resources are wasted; even worse, the company’s culture is damaged by attrition, loss of talent, or isolated projects triggered by functional areas.
The CEO feels optimism for each started project and for each leader who seems to be in favor of change with his projects, but is disappointed when he sees, from the solitude of his office, that the organization is not moving as a whole and that those isolated efforts will not be enough.
Why does this happen?
The organization is a social system, and like any system, each of its parts affects the performance of the whole in the medium and long term.
Innovating the business model and landing the strategy in an integral way in the organization, changing the management, the operation, the technology, the talent and the culture, in other words, transforming the company as a whole, it is typically not a part of anyone’s job description in the organization, nor is it part of the experience required in key positions.
Each of its managers is in charge of a part of the business, be it a function, a region or a unit, and their explicit and tacit metrics and incentives are geared towards this. There is no function that helps the CEO to look at the Company as a whole; even horizontal or support functions look at the organization cross-sectionally, but with the lens of finance, human resources, or some other perspective.
The comprehensive perspective to which we refer is one that is clearly oriented to the business strategy, is faithful to the values of the company and its founders and encompasses the operating model (including suppliers and customers), organization, talent, culture and technology; and not least: it happens at the right time, fitting in correctly with the rest of the ongoing efforts, maximizing investment and profit. This ensures a permanent evolution of the company, adapting it to the fluctuating environment, facing the challenges of the industry, of disruptive business models and taking advantage of this changing environment.
It might be thought that it is not necessary to see the company as a whole for the management and transformation of the company, which is very complicated; however, only from the chair of the CEO is the need clearly seen.
Indeed, the CEO is responsible for seeing and managing the whole; However, to do so and at the same time, face the double challenge that we have mentioned (operate and transform simultaneously), requires the support of what I call your Architect of the Transformation.
This Architect is the one who helps him to see the company in a systematic way, from his different perspectives or plans of the building, and can, from those plans, validated by the CEO, orchestrate the pertinent changes. This Architect is not responsible for a function and does not operate or execute change initiatives by himself; however, it must have a comprehensive vision and orchestrate that all efforts are made according to a methodology, a work program, where the pieces fit together, in substance, form and opportunity. The Architect of Transformation is a support for the CEO and his Executive Committee, he does not seek to be the main character.
To transform the company in this way is to travel a different path. A path that requires accompaniment with the CEO and his Architect of Transformation. At Business Transformation Consortium (BTC) we have the experience of having traveled this path in different industries, countries, types and sizes of companies, and we have built a method to accompany the CEO and his Architect, to successfully develop the ability to Transform the company in an integral way.