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Why Most CXOs Will Never Make It To Business CEO And What They Can Do About It?

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Why Most CXOs Will Never Make It To Business CEO And What They Can Do About It?

CXOs will never make it Business CEO

Kevin1 was a brilliant finance executive. After doing a few years in an accountancy practice he had joined a company in its finance department and steadily risen in rank over the years to become its Chief Finance Officer.

The board trusted his numbers as well as his prudent judgment. Yet, when third time in five years Kevin was overlooked for promotion to the role of CEO of his company he shared his frustration with me.

He has worked the board, and knew each of the members, even the new ones, well enough to regarded as a reliable ‘colleague’.

They knew that he would not mind taking up the challenge and were also aware that two of their last three choices did not turn out to be that brilliant.

Yet they were reluctant to hand over the mantle to him. He had already proven his case by his excellent leadership of the finance function as well as his strategic thought process.

What else did he need to do to prove to the board the most obvious thing – that they were ignoring the best candidate for the job.

We started discussing perceptions and his indispensability as the CFO, but soon we got past that discussion and started drawing figures on paper napkins.

It was clear that he had a great coverage of the entire length and breadth of the finance function as we went through the pyramid that later turned into figure 1 below.

Strategy of Business CEO

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Figure 1: Activities carried out in a typical Finance Department

Whether it was funding, or budgeting, or financial control or treasury management he had made his mark on the business.

He was proud that the auditors, investment bankers as well as the commercial bankers were all very complimentary of his accomplishments.

Despite knowing all this, the board would not give him the final nod. As the discussion meandered from the finance function to the CEO’s role another figure on the paper napkin illustrated the conundrum.

This figure was later turned into figure 2 after a few revisions.

As I discussed my experience from shipboard command that most captains had to rely a lot on the chief engineer and hence seemed to favour chief engineers over chief officers.

After all they had been chief officers themselves and could do the role themselves, if they ever had to.

But, despite all their engineering knowledge, most captains could never replicate the knowledge base of a chief engineer.

Most successful captains were those who seemed to get the best co-operation from the chief engineers and knew how to get it.

A modern organisation is far more complex than the shipboard company. Reporting to a CEO is a complement of 5-10 people and each of them is a potential candidate for the role.

It appeared in Kevins case that, whether by design or not, the board preferred an executive for the CEO role who could integrate the gaps between the various points of views and get the best performance out of the entire team.

Just by law of numbers there are between 5-10 internal candidates, in addition to all the external potential hires, for each role of CEO.

While many of them may not be serious contenders, there are still enough contenders to make each race an interesting contest.

Human Resources of Business CEO

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While each contender with a real chance is exceptionally good at the functional area they come from – whether it is sales, or marketing, or finance or operations – the one that can integrate the entire team and engender a unique shared vision of future, that the board can buy into, generally get the nod.

Inevitably, as shown in figure 2, there are gaps between the functional areas. There are also parts of the functional areas that outsourced to third parties – whether in logistics, or IT or marketing or other areas.

Integrating these external parties into the organisation’s fabric in such a way that they start sharing organisation’s vision and functioning as a responsible part of the team is even more difficult.

In my view Chief Executives of future will distinguish themselves on this capability –

to integrate useful outsiders into the organisation’s fabric, to outsource strategically, to build a business network of mutually dependent entities and to get this network working in unison towards the shared vision.

So, What Can You Do About It?

To become a successful CEO in future, strategic thinking will not be enough. An ability to create a vision of the future, will not be sufficient either.

Going beyond that, you will need to be able to engender that shared vision throughout the organisation, know how to bridge the inevitable functional gaps,

identify the key external parties that are useful to your vision and bring them into your organisations’ business network and make them a productive part of this network.

I discuss more about business networks in my book ‘The 5-STAR Business Networks’ and a free download of the first three chapters is available from this link. Notes:

1. Names and events have been modified significantly to protect the confidentiality of the people involved. However, the substantive material is, more or less, reproduced faithfully.

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Copyright - These concepts, frameworks and ideas are copyright of GLOBAL SUPPLY CHAIN GROUP from the time of their creation. Do NOT copy these without permission and proper attribution.

Notes:

1. These ideas and concepts will be usually expressed by our thought leaders in multiple forums - conferences, speeches, books, reports, workshops, webinars, videos and training. You may have heard us say the same thing before.

2. The date shown above the article refers to the day when this article was updated. This blog post or article may have been written anytime prior to that date.

3. All anecdotes are based on true stories to highlight the key points of the article - some details are changed to protect identification of the parties involved.

4. You are encouraged to comment below - your real identity and email will not be revealed when your comment is displayed. Insightful comments will be featured, and will win a copy of one of our books. Please keep the comments relevant, decorous and respectful of everyone. All comments represent opinions of the commentators.

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ABOUT THE PRINCIPAL AUTHOR

Today, Vivek and his partners are among 20-30 people on the planet earth who have this deep understanding of supply chain systems, practices and tools. CEOs, COOs, executives and Boards call them in most challenging situations once they know the full potential of supply chain based transformations. Following are key milestones in Vivek's journey:

  • Started in 1983 as a merchant navy cadet at 18 years age, worked his way to qualify as a Captain – qualified to take command of any merchant ship, worldwide.
  • Earned a top tier MBA from UNSW at the top of his class.
  • Joined highly regarded strategy consulting firm Booz Allen & Hamilton, consulting to the CEOs, Boards and senior management of global corporations within Australia.
  • To learn and specialise in supply chain – against all odds, sought out the co-inventor of supply chain in Germany and convinced him to be a partner in his firm, GLOBAL SUPPLY CHAIN GROUP, launched in January 2000.
  • More than 500 successful blue chip projects with high impact business transformations in large corporations using the full power of SUPPLY CHAIN MANAGEMENT.
  • 4 Seminal and path breaking business books IN SUPPLY CHAIN MANAGEMENT – these are available in bookstores and universities and libraries worldwide.

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THE 5-STAR BUSINESS NETWORK

If you are deeply passionate about the world of business and supply chain networks as I am, and enjoy digging answers to critical questions that will help build and steer your business with wisdom, then join me. This book is a journey of exploration through the world of business networks that run along the veins of today’s commercial world.

4.3
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OUTPERFORM OUTSOURCE OUTPROFIT

The trend of outsourcing continues to grow unabated with the whole gamut of services, from simple to mission-critical tasks. There is not a single company on earth that does not outsource anything. It is not just about cost arbitrage, it is also a finer expression of division of labour at the organisational level. Like all leverage, outsourcing is a double-edged sword too. On one hand, it allows you to do more, faster. On the other hand, if it goes bad, it can easily kill your business. If you do not believe that is possible – you can google the Fox Meyer saga from the 90s and see for yourself.

4.3
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UNCHAIN YOUR CORPORATION

Businesses Are Chained By Unseen Chains. If You Are Looking For Ways To “Unchain Your Corporation” A Successful Business Transformation Is Required.

Successful Business Transformations Are Difficult, Yet Rewarding.

Business Transformation Is Fast Becoming A Question Of Survival In The Modern Globalised Era.

Modern Supply Chains Integrate Businesses And Economies Faster By Systematic Information Sharing From Internal And External Sources.

Companies Can Multiply Profits By Progressively Ramping Up Cohesion And Collaboration Of All Moving Parts In B2B Network To Achieve Tighter Integration.

4.3
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GREEN SUPPLY CHAIN – AN ACTION MANIFESTO

It is generally accepted that environmental consciousness is now changing to environmental proactiveness as organizations are discovering that it makes good commercial sense.

Boards are asking the management to review their policies related to environmental norms, not only to bolster their corporate social responsibility aims, but also because consumers are asking for greener supply chains

It is also widely agreed that consumers will increasingly prefer to buy more and even pay more for products or services provided in an environmentally sound manner.

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