Published in Philippine Daily Inquirer, August 22, 2003
PITY those organizations headed by chief executive officers (CEOs) without blueprints for strategic direction.
This may sound insane today. But it does happen with the less professionally run organizations â€“ big or small.
This leads to mismanagement and mediocre performance.
For an expert CEO, three months is often sufficient to get the required data, establish the network linkages within and outside the organization, scan the environment, evaluate the organizationâ€™s strengths and weaknesses â€“ information that will enable him to crystallize the framework of a strategic
direction and shared values for the company.
While major details of the strategic direction can be fleshed out in the near future with key senior and middle managers, the soul of the strategic plan or the big idea necessarily emanates from the CEO, supported by the Board of Directors.
This is the very reason why CEOs get substantial compensation and incentives â€“ to pull the organization towards one direction that will help it reach its objectives, improve shareholder value and sustain existence for the longest time.
If the Board allows a situation where the CEO simply coasts along, the same Board may be party to not understanding the value of a strategic business plan.
Great, successful CEOs are visionaries to a large extent, musical conductors steering the organization to play beautiful, in-sync music. Hence, CEOs who believe that they can delegate entirely their strategic responsibility to consultants have no business being a CEO.
Sir Colin Marshall, British Airways chair is the visionary behind the airlineâ€™s successful corporate turnaround in the 80s. The airline was originally known for its indifferent treatment of customers.
Marshall led British Airways to a new philosophy grounded on what he calls, â€œan evangelistic determination to strive for customer excellenceâ€. This, he did in an era where customer service was not yet the norm for operational excellence.
When Carly Fiorina was appointed CEO of Hewlett Packard, the first thing she did was capitalize on the organizationâ€™s heritage and success. The companyâ€™s new tag line, Invent, became a mantra inside and outside the company, asserting a renewed mission, â€œThe original start up will act like one againâ€. Needless to say, a new leader rediscovering the companyâ€™s heritage has released new-spirited energy throughout the organization.
A vision, mission and strategy that is clearly articulated and communicated can help shape a positive, company culture. A CEO can only build a strong, meaningful culture based on a compelling vision and organizational direction.
Lack of vision, confused or doubletalk strategy can only lead to muddled results and negative behavior thus, a negative bottom line. In 1991, Melvin Goodes was appointed CEO of Warner Lambert at a time
when the company was perceived as a likely takeover candidate. Five years later, Warner Lambert more than enjoys the buoyant confidence of its shareholders as the company reported more than quadruple earnings in five years.
Goodesâ€™ mission was to â€œchange a culture of entitlement to a culture that expressed, stimulated and rewarded individual and team performance,â€ a mission made real through a 360 degree program that is a forced ranking system that evaluated employeesâ€™ contributions coming from four sources i.e. peers,
direct reports, supervisors and oneself.
Further, the companyâ€™s strategic direction was clearly articulated in a vision and culture statement that espouses five attributes the company would like to stand for. These are sound sciences that provide superior products and attractive prices, speed and being first mover in exploiting new opportunities, rewarding individual and team successes, openness and candidness in dealing with partners and finally, recognizing creativity and prudent risk-taking.
Professional will and humility
In a breakthrough research project by Jim Collins, author of the book Good to Great, he reveals that great leaders have built enduring companies through an unexpected combination of personal humility and professional will.
This interesting finding came at the height of a prevalent belief among traditional thinking board of directors that a larger than life egocentric leader can effectively transform organizations.
When George Cain became CEO of the family-controlled Abbott Laboratories, it was a middling performing company. But Cain, despite a modest personality had a strong vision of â€œinspired standardsâ€ fleshed out by a mission to correct what was the very root cause of Abbottâ€™s ham performance and that is nepotism.
Cain displayed strong professional will when he rebuilt an executive team and board with the best people he can find even if it meant replacing family and friends of family. His message, â€œIf you couldnâ€™t become the best executive in the industry within the span of your responsibility, you are likely to lose your paycheckâ€. While this direction initially created a sour note at Christmas gatherings where Cain is part of the family, nonetheless, he proved his point with Abbottâ€™s profitable growth even outperforming industry favorites, Merck and Pfizer.
The same attributes characterize Darwin Smith, another gracious but fearless personality and Chief Executive Officer of Kimberly Clark for twenty years.
In 1971, Smith with resolute determination clearly defined the companyâ€™s identity and strategic thrust as a consumer paper products company with investments in brands like Huggies diapers and Kleenex tissues. In doing so, he made the most dramatic decision in the companyâ€™s history to sell its mills, a move sneered at by many.
Two decades later, Kimberly owns Scott Paper and is the top performing in six of eight consumer paper product categories.
Contrast this to the egocentric, former CEO of Scott Paper; Al Dunlop who loves to breast beat about his accomplishments.
While still a CEO, Dunlop shared in a Businessweek issue, â€œThe Scott story will go down in the annals of American business history as one of the most successful, quickest turnarounds everâ€.
Unfortunately, his only real claim to fame while CEO of Scott for two years was his substantial paycheck of $100M for 603 days of work from an ailing organization with a compensation subsidized mainly by cutting the workforce, slashing R & D projects, penny pinching and pussy footing on marketing investments â€“ all these eventually led to the companyâ€™s sale.
Clearly, enduring success can only come to organizations that are able to establish a symbiotic, cohesive relationship around a compelling vision, culture and energizing leadership. Without the fluid direction of a CEO, often the highest person tasked with operational guidance and leadership, the company can only fall apart or drop dead into hellâ€™s bottomless pit truly, a frightening proposition for