The Downside of Passion

By Mike Myatt, Chief Strategy Officer, N2growth

Review any list of positive leadership traits and “passion” will undoubtedly rank near the top – rightly so. In most cases passion is an asset capable of carrying you through tough times, sharpening your perspective, revealing purpose, and helping you succeed in the face of overwhelming odds. You’ll find no shortage of content describing the positive attributes of passion, but few that examine the downside of passion, and trust me, there is a downside. On more than a few occasions I’ve witnessed passion run amok resulting in untold harm. Virtually any positive trait when taken to extremes, misunderstood and/or misapplied can quickly become a liability. So, in today’s post I’ll examine the downside of unbridled passion…

The word “passion” comes from the Latin root which quite literally means “to suffer.” Therefore it should come as no surprise that those who are passionate in their pursuits are often willing to make personal and professional sacrifices in order to reach their objectives that the unimpassioned simply won’t make. Channeled properly, this is a huge advantage. As a person who provides advice and counsel to leaders I can tell you I’ve rarely come across a successful person who hasn’t been truly passionate.

You’ll find no argument from me that passion can almost single-handedly propel leaders to new heights of success. History is littered with accounts of marginally talented individuals who have risen to greatness based upon little more than being passionate about the pursuit of their objective. Passion creates a “refuse to lose” mentality which can enable the average person to move outside comfort zones, take-on greater risk, go the extra mile, and achieve phenomenal results. However it’s important to note the same trait which can propel you to the top can also send you over the edge of a cliff. Passion is not aptitude, nor is it omnipotence, neither is it totally unique. These are nuances lost on many…

This is where things begin to get a little tricky – passion without perspective and/or reason can actually serve to distort one’s perception of reality. These distorted perceptions can quickly become a very slippery slope that will blur the lines between fact and fiction…very dangerous territory for any leader. Have you ever known someone who wanted something to be true so badly that they started to adopt positions and manufacture circumstances to support their own false reality? Just because you can convince yourself (or others) that your position is correct, doesn’t necessarily mean that it is…

Just as there exists a very fine line between brilliance and insanity, there also exists a fine line between passion and many negative traits such as narrow-mindedness, narcissism, fanaticism, delusion, and even paranoia. For instance, there is a big difference in a leader who is passionate about their business, and one that is emotionally over-invested in their business. Passion which is balanced by perspective and reason can reveal purpose, but passion absent those filters can just as easily impede purpose.

Healthy passion for one’s business actually brings focus and clarity of thought, which serve to accelerate growth and create sustainable success. However being emotionally over-invested in one’s business can lead to irrational decisioning, prideful or ego-driven actions, the use of flawed business logic, and poor execution. These are the regrettable and completely avoidable precursors to unnecessary loss and/or failure.

It is not at all uncommon for entrepreneurs and executives to be too close to the forest to see the trees. Passionate professionals thinking clearly will seek independent outside counsel and advice to continually gut-check and refine their thinking. Emotionally over-invested professionals will either avoid counsel or surround themselves with legions of yes-men. Another trait of healthy passionate thinking is to recruit tier-one talent at the executive leadership and senior management levels in order to stimulate innovation and thought growth. Effective leadership teams have a balance of left-brain and right-brain thinkers from a variety of backgrounds so that they can draw from the broadest possible array of experiences when formulating positions and options. Emotionally over-invested professionals tend to surround themselves with very small teams of like minded individuals from similar backgrounds who tend to reinforce each others thinking instead of challenging it.

I applaud those of you reading this post who constitute the passionate minority…I would however also counsel you to take pause and evaluate your current positioning and thinking. Are you operating in a vacuum? Do you seek advice and counsel from those who will tell you the truth, or from those who will just tell you what you want to hear? Is your passion creating clarity, focus and purpose, or is it blinding you from seeing the reality of your current situation?

As always, I welcome your thoughts, experiences and opinions and encourage you to comment below…

Social Media for CEOs

By Mike Myatt, Chief Strategy Officer, N2growth

Nary a week passes where I don’t hear from a CEO who’s grappling with this social media conundrum: should I, or shouldn’t I? The inquiry usually goes something like this: “I’m interested in learning more about social media, but my board thinks it’s a bad idea, I don’t have any additional bandwidth, and I’m not even sure where to start…is social media really effective for CEOs?”  The discussion about whether or not CEOs should become more digitally accessible  is certainly not a new one, but in my humble opinion, it’s a tired one that should have ended long, long ago. In today’s post I’ll share my thoughts on why it’s time to put a fork in the social media debate…

Background/Disclaimer
We have a social media practice at N2growth, I use social media, and all of the CEOs I coach are participating at some level in social media. That said, my feelings are not prejudiced, just biased- there is a difference. Experience matters in this debate, and frankly, most of those who opine in dissent don’t have much experience to draw from…In an effort to be balanced, I have nonetheless attempted to represent both affirmative and dissenting opinions below:   

The Dissenting Position:
The stance of the risk adverse is there is little to be gained, but the potential for much to be lost in social media initiatives involving C-level executives. The fear of exposing executives and the corporate brand to public criticism, along with disclosure concerns with regard to forward looking statements, and other confidential information have caused concern for boards and legal departments. They are risk managers who believe in protecting what was rather than embracing what is, and what will be.    

The Affirmative Position:
Proponents of C-level social media participation believe the digital universe provides the CEO with the ultimate platform to evangelize the corporate brand, and to effectively communicate across multiple constituencies. They are opportunity managers who believe engagement to be more valuable than silence, they believe in dialog not monologue, they believe in change and innovation – not in status quo.   

The Truth (as I see it)
A main point of consideration for CEOs is that social media transforms you from an enigma (the stereotype of the uncaring corporate executive) into a human being that people can relate to…social media personalizes you in a way that few other mediums can.  Whether you Tweet, Blog, Facebook, YouTube, etc.,  these communities allow you to be known for the whole of who you are as an individual, not just as a bio on the corporate website. The following list is comprised of  a few representative examples of reasons why all CEOs should be actively engaged in social media:

  1. Leadership Benefits: As CEO, you’re not supposed to be the relic, but the visionary. This may hit a little close to home for some, but the message needs to be heard. Great leaders lead by example. How can you ask members of your team to be innovative, engaged, proactive, creative, authentic, transparent, and communicative if you are none of those things? You cannot be an effective leader if you don’t model the behavior you seek in others. Be a leader or be a disingenuous hypocrite – the choice is yours.  
  2. Learning Benefits: Social media is not just a tool for pushing out corporate propaganda – use it as such and you’ll pay a steep price. What it is, is open access to people, relationships, communities, and constituencies. Put simply, it’s a chance to observe, listen, process and learn. A CEOs needs to understand that in addition to affording them with the benefit of directly engaging consumers of their goods and services, social media also provides a window into the insights or their employees and allows them to monitor the pulse of their culture. Social media also allows you access to business, market, and competitive intelligence in real time. 
  3. Business Benefits: Yes, I know, you’re the CEO and you have to pay attention to business. Well, social media does have significant ability to drive revenue, increase personal and corporate brand equity, open markets, create relationships, drive innovation, improve morale, build partnerships, attract & retain talent, and to generate communications leverage. Not only does social media work, but it works even better when the participant has a bit of cache. The truth is the farther up the org chart one resides, the more influence one possesses, the more leverage one creates, and the more one can accomplish via social media. You can do none of these things effectively by sticking your head in the sand and pretending social media doesn’t matter.
  4. Communications Benefits: I hesitate to mention this becasue it’s been so overused, but becuase it’s true, here goes: “The conversation is already taking place, so you might as well be a part of it.” Social media gives you the ability to be proactive in your communications, or if needed, provide a rapid response to crisis. Unfortunate things happen in business, and sadly, they’ll likely happen to you at some point. Having strong relationships, supporters, and fans created through social media is invaluable – so is having a channel to quickly and credibly communicate with those who are not.
  5. Legacy Benefits: I’ve often said the best legacy is one that can be lived before you’re gone. A legacy is shaped by the sum total of your personal and professional contributions, and most significantly by those contributions which have been the most beneficial to others. Social media takes your personal interests and your professional body of work and gives them access to a larger community. Social media can enhance the value of existing relationships and create new ones, it can help you evangelize your passions, recruit people to your causes, and to help others with their causes. Social media can help you and those you care about make significant contributions.     

To those of you reading today’s post who still haven’t seen the light, and believe that social media is either insignificant, or that the window of opportunity has passed you by, I put forth the following demographics as proof of the power of the social media as a medium:

  • There are nearly 150 million social media users in the U.S. alone, which is more than 60% of the U.S. internet population.
  • According to eMarketer, the average time spent per user on social networks as of late 2010 exceeded 5 hours per month. Remember this is an average number, many users eclipse this number by a significant amount. As an example, according to clickZ, Blog readers average 23 hours online each week. 
  • Nielsen data  shows a 2x lift in brand metrics around social ads vs. non-social ads. 
  • GroupM’s research reports a significant lift in search behavior from users exposed to a brand on social networks. 
  • Over 12 million American adults currently maintain a blog.
  • I have clients who have tens of thousands of Facebook Fans, oodles and oodles of Twitter followers, popular blogs, have driven huge increases in revenue, and have quite literally changed the dynamics of their businesses, brands and cultures via social media. 

If I haven’t convinced you yet, let’s look at what some other CEOs said just in reference to Blogging in a recent issue of Inc. Magazine:

  • “More effective than any marketing budget for getting our name out there.”
  • “Within 60 days of launching our blog, it is our top referral source.”
  • “Results have been great – we had more than 100,000 visits in May alone.”
  • “Our clients love it, and lots of people in our industry pay attention to it.”
  • “The blogs are 50 percent of website traffic. Great participation.”

So, do I think CEOs should be actively engaged in social media? In a word; YES. If you’re a CEO who hasn’t taken that first step, or if you’re struggling with strategy or execution, give me a call and I’ll help. If I can’t help I’ll refer you to someone who can… 

Thoughts?

Leadership Interview – Michael Hyatt

By Mike Myatt, Chief Strategy Officer, N2growth

CEOs that make great decisions are rare these days. Humble, authentic leaders who really understand their craft are equally scarce. Chief Executives who actively engage in social media also find themselves in the minority among their peers. Michael Hyatt (@MichaelHyattwww.michaelhyatt.com) is that rare commodity. As Chairman and CEO of Thomas Nelson Publishers, the largest Christian publishing company in the world, and the seventh largest trade book publishing company in the U.S., Michael’s track record of leadership has stood the test of time. After reading the following interview you’ll know why…

Mike Myatt: What is your first recollection of really knowing that you were called to be a leader?

Michael Hyatt: When I was a junior in high school, I noticed that I always went first. I didn’t wait on others if I thought something needed to be done. I took initiative. When I did this, I noticed that others would jump in and follow me.

Mike Myatt: Has your leadership style changed over the years, and if so, how?

Michael Hyatt: Very much so. I had a lot of success early in my career. I became arrogant and began to think of myself as the guy who had all the answers. Fortunately, I experienced some stunning failures soon after my string of successes. They humbled me. I refer to this as receiving “the gift of ears.” I learned to listen more and talk less.

Mike Myatt: What was the single biggest “ah-ha” moment you’ve had as a leader?

Michael Hyatt: When I realized that my thinking had a direct impact on my actions which had a direct impact on my outcomes. It all starts in my head.

Mike Myatt: How has social media impacted you as a CEO?

Michael Hyatt: It has given me more direct access to my employees, my customers, and the media. It has raised the visibility of our company and given me the opportunity to shape how people perceive us. It has provided me with a personal platform and a way to teach and learn.

Mike Myatt: How has your faith impacted your leadership style?

Michael Hyatt: I hope it informs everything I do. Jesus is the ultimate leader. I have learned so much about leadership from reading the Gospels. I intentionally try to emulate Him. Kind of “HWJL”—How would Jesus lead?

Mike Myatt: Who had the most significant influence on shaping you as a leader?

Michael Hyatt: Two previous bosses, one positive and one negative. (Don’t ask for names!) Additionally, two executive coaches, who have helped provide objective feedback and input.

Mike Myatt: What has been the most difficult decision you’ve had to make as a leader?

Michael Hyatt: Putting my job on the line over a principle I was unwilling to violate. This has happened several times in my career. The stakes have always been enormous, and I was so frightened each time that I was physically shaking and sick to my stomach. But I had to make a stand. Thankfully, in retrospect, those decisions were critical. I don’t regret a single one.

Mike Myatt: What’s been most rewarding to you as a leader?

Michael Hyatt: I think giving people hope that you can lead effectively without compromising your character. Young leaders today are desperate for role models. They can quickly become cynical if they don’t have positive examples. This has motivated me to live my life intentionally in every sphere. (I should also point out that I often fail. But even there, being willing to admit it is a type of modeling.)

Mike Myatt: What do you see as the primary role of a leader?

Michael Hyatt: To model the five aspects of leadership: insight, initiative, influence, impact, and integrity.

Mike Myatt: What do you see as the single biggest stumbling block for leaders?

Michael Hyatt: The idea that they have to have all the answers. The more humble and transparent a leader is, the more effective he or she will be.

Mike Myatt: What do you see as your greatest strength as a leader?

Michael Hyatt: My commitment to modeling the behavior I expect in others.

Mike Myatt: What do you see as your greatest weakness as a leader?

Michael Hyatt: I am too trusting. Trust is good. It builds rapport and connects people to you. However, if it is granted too early, without sufficient experience, it can be disastrous. I have made this mistake many times—and keep making it. Apparently, in this area I am a slow learner. Over the years, I have learned to surround myself with people who are less trusting and can look out for me.

Mike Myatt: Is it more difficult to be a leader today, why or why not?

Michael Hyatt: Yes, I think it is way more difficult. For starters, we are in the middle of a giant shift between generations who think very differently. As a result, they have to be led differently. Leaders have to be flexible in order to succeed. In addition, the economy makes it very difficult to succeed in business. We are having to re-think how we do business and adjust our value propositions.

Mike Myatt: What’s the best and worst example of leadership you’ve observed in recent times?

Michael Hyatt: The best example is former boss who kept his word, even when it cost him personally. He demonstrated tremendous integrity that impacted me deeply. The worst example—and I have actually witnessed several of these—is of leaders who can’t let go. They appoint successors then turn on them.

Mike Myatt: What should leaders today be focused on with regard to the future?

Michael Hyatt: I think it is more difficult than ever to have clarity about the future—in any field. Between the economy and technology, everything is changing. As a result, I think it is more important to build a culture that is flexible and nimble, so you can respond to changes quickly. This is more critical than trying to figure out where everything is going.

Mike Myatt: If you could give our readers one piece of advice on leadership, what would that be?

Michael Hyatt: You are not as good as you think when things are going well; you are not as bad as you feel when things are going poorly. Retain your perspective and surround yourself with people who will love you and will tell you the truth.

Mike Myatt: Do you have anything new in the works that you’d like our readers to know about?

Michael Hyatt: I am working on a couple of books, one on leadership and one on productivity, but they are still a ways off.

Mike Myatt: How important is “legacy,” and how do you hope to be remembered?

Michael Hyatt: I have given a lot of thought to this, particularly in the Life Planning process that I advocate. I want to be remembered as a man who loved God, gave himself to others, and was faithful to the very end.

If you’re a fan of Michaels or if you just want to share a thought with him, please let him know by leaving a comment below.

CEOs In Crisis

By Mike Myatt, Chief Strategy Officer, N2growth

CEOs In CrisisCEOs are in a state of crisis. As an adviser to CEOs, I can tell you that chief executives are under siege on all fronts…This is clearly a defining time for CEOs as an occupational class. To be clear, I’m not using the term “crisis” as it relates to dealing with the difficulties and challenges associated with navigating a recession, rather I’m talking about CEOs being able to successfully manage the intensity of negative public opinion.  In today’s post I’ll share why I believe most CEOs are unfairly being vilified.

Will the actions of a few bad CEOs take down the reputations of all, or is the American public smart enough to see through the blame game currently being played by the media and the politicians? Look, I understand that Americans are upset about the economic debacle we find ourselves presently entangled in. I’m upset and outraged as well. Nobody could listen to the stories of CEO abuse that have circulated in the media of late and not have the hair stand-up on the back of their neck. That being said, not all CEOs are bad guys…in fact I’ll go so far as to say rogue CEOs are the exception and not the rule.

So, are CEOs getting a bad rap? In a word, yes. We’ve entered the blame zone of rash allegations and finger pointing in order to deflect responsibility. While I understand that no sane person could have watched the events of the last few month’s and not want to pin the blame on someone, simply assigning “villain” status to chief executives as a class because their compensation plans seem egregious to some is not the answer.

So, is CEO compensation out of control? In some cases I absolutely believe it is, but not in every case as many politicians and pundits would have you believe. I take great exception to those chief executives that take advantage of the position they hold, the shareholders they represent, and the relationships they’re entrusted with. That being said, the CEOs described in the preceding sentence don’t constitute the majority of chief executives.

I have called for transparency in previously addressing the issue of Rogue CEOs and Board Accountability. I can tell you from first hand experience that most chief executives are hard working professionals who take their fiduciary obligations very seriously. Moreover they hold the position of chief executive while incurring great personal risk and sacrifice. All one has to do is watch a CEO testify on Capitol Hill to know that the buck does eventually come to rest with the chief executive. I would be remiss if I didn’t take this opportunity to chasten the shameless politicians who use national tragedy and congressional testimony as a publicity platform to air venomous soundbites in order to transfer blame and placate their constituencies, but I digress…

At face value, I don’t care how much money a CEO does or doesn’t make. The issue is not the amount of remuneration paid out to CEOs, but rather on what basis, and when it is paid out. Simply put, CEOs that perform deserve all the compensatory benefits that accompany said performance, and to compensate them for the risk they undertake in the execution of their duties. Conversely, those CEOs who fail to perform have no business maximizing compensation to the detriment of the stakeholders they were supposed to be serving. I have no troube with a CEO using a corporate jet to conduct business that is in the best interests of shareholders. It is the CEO who abuses shareholder trust by using the corporate jet for personal gain or frivolous activities that has crossed the line. Again, keep in mind that most CEOs have never even seen the inside of a private jet…

Sure some CEOs are idiots, but so are a certain percentage of people in any occupational class. No doubt CEOs will need to work overtime in order to rebuild trust and credibility with the public…Their actions must match their words, and they need to demonstrate an understanding that holding the title of chief executive is a priviledge, not a right. All of this said, what is perhaps most important for the American public to realize is the true peril that lies ahead if we over-react and neuter CEOs such that they become nothing more than powerless figureheads. Oversight is a good thing, but where were these concerned politicians leading up to this current mess.

Bottom line…it is not wrong to assign some blame to the rogue CEOs who deserve it, but it is terribly wrong to assign blame to those good chief executives just because CEO is printed on their business card.

Leadership vs. Management

By Mike Myatt, Chief Strategy Officer, N2growth 

Leadership MattersAs a person who makes their living in the field of leadership, I can tell you without any doubt that “Leadership” is different than “Management.” While there seems to be a never ending stream of politically correct pontificating in corporate circles about the differences between managers and leaders, most of it misses the mark. Leaders and managers play different roles, and have different purposes. They both are unique in their value, and in their contribution. While most of the commentary I have read on Leadership vs. Management attempts to please all constituencies, those of you who have read my work in the past know that I am rarely politically correct, nor do I ever seek to try and please all the people all the time.

While there is clearly a need for both managers and leaders in the business world, and while I respect and have developed close friendships with many a manager, this author simply believes that the law of scarcity applies to the topic at hand. There is an infinitely greater supply of managers causing a much greater demand for leaders. Put simply, because leaders are much more difficult to come by, they are therefore more valuable to the enterprise.

The paragraph above begs the question why are there fewer leaders than managers? I believe it is largely for one of three reasons:

  1. I know this isn’t a popular stance, but the reality is that not everyone has it in them to be a leader, and thus the old axiom “a born leader.”
  2. Many people that possess leadership ability haven’t cultivated their leadership skills to the point where they’re comfortable in leading, or;
  3. While there are many managers that possess highly refined leadership skills, many of them simply don’t possess the desire to be in a leadership role. 

The intrinsic quality of leadership often begins with nothing more than raw talent and a certain state of mind. To possess the innate qualities of a leader is however not the same thing as being a leader. As important as your DNA is, effective leadership skills are developed and refined by time, experience, and a true desire to be more than just a manager…the desire to be a true leader.

Let’s breakdown the DNA of a typical leader A leader is usually a very creative, dynamic, outgoing, and unflappable individual. They tend to think big picture focusing on vision and strategy while looking to make a long-term impact. By way of contrast let’s examine the DNA of a manager. Managers are usually more analytical while focusing on process and procedure looking to make short-term contributions. Two key points of distinction between leaders and managers are that leaders attend to the needs of the enterprise with a focus on the future, while managers attend to the needs of individuals with a focus on the present.

We have all witnessed companies that have been over managed in the absence of leadership. When leadership has been abdicated to management in a corporate setting you will always find that growth slows, morale declines, creativity wanes, and the competitive edge is weakened. That being said, I have personally experienced the value of true leadership at every stage of my life from the athletic playing field, to the military battleground, to the corporate boardroom. Let’s look at an example of the value of leadership from each of the three areas:

  • An example from the world of athletics: If you were the owner of an NFL franchise and had to choose between having the #1 quarterback in the league or the #1 center in league what would your choice be? Again this doesn’t mean that a great center isn’t valuable, it just means that the role player isn’t as valuable to the team as having the talent factor and leadership characteristics of a true impact player. Simply reflect back upon your own life experiences and you’ll see that you have come across many utility players over the years, but very few franchise players.
  • A military example: Contrast if you will the differences of two enlisted men of the same rank. The first is a NCO in a headquarters unit charged with the administrative support of a company commander.  The second NCO is a combat controller in a special operations unit charged with coordinating air strikes from the ground behind enemy lines.  While both of the enlisted men described above hold the same rank, are part of a team, and play important roles, one is clearly an impact player in a leadership capacity while the other is solely a utility player acting in a management capacity.  The military has determined that it is a rare individual who exhibits the characteristics necessary to become a member of a special operations unit.  Therefore they are willing to make a much larger investment in the combat controller, and in return, the military expects a much larger contribution from that individual.
  • A corporate example: This example will be short and sweet, but hopefully very clear in its statement of impact. Who do you believe is of greater value and makes a larger contribution to a corporation, someone who administers policy and creates processes, or someone who sets the vision and creates the strategy? Just examine the difference in the pay stubs of the two individuals contrasted above and you’ll quickly see who the enterprise deems to be of higher value.

I want to be clear that I am not “anti” management. I am however very “pro” leadership when it comes to optimizing the talent factor in any organization. My bias toward leadership doesn’t mean that I don’t understand the principles behind such truisms as: “there is no “I” in team” or, “the sum of the parts is greater than the whole” or that “a chain is only as strong as its weakest link.” Rather it simply means that I believe you achieve a much greater return on human capital with investments made into leadership due to the scope and scale of the impact that a leader can make. The bottom line is that I prefer to lead rather than manage, and to be led rather than to be managed.

The trick is to invest in your managers such that they embrace and adopt leadership traits and characteristics. The strongest organizations apply leadership development programs across the enterprise to enrich the quality and productivity of their workforce. The simple truth of the matter is that if you don’t develop leaders from within you won’t have depth or scale to your organization as it applies to leadership. A bonus is always hidden when you come across a great leader who happens to possess strong management skills as well…    

Transitioning the CEO

By Mike Myatt, Chief Strategy Officer, N2growth

Transitioning the CEOToday’s Myatt on Monday’s question comes from a board member who asks: “Our current CEO is underperforming against expectations…How does the board know when it is time to transition the CEO?” While it is refreshing to hear a board member paying attention to CEO performance, the decision to replace a CEO not only requires a complex analysis, but the wrong decision will have far reaching consequences. In today’s post I’ll share my thoughts on the right reasons to transition the CEO…

The first thing to understand is that transitioning the CEO should only happen as a result of a sound succession plan. Spontaneous or surprise changes in leadership are the worst possible scenario, and should be avoided at all costs. In collaboration with the board of directors, it is a CEOs obligation to identify and develop successor leadership (a recent article in Fortune points to the successful transition of A. G. Lafley and is worth reading). Nobody knows what the future holds…whether the CEO is called upon to resign, or decides of his or her own accord to pass the baton, a company that has developed a strategic process surrounding the succession planning of key executives will transition more smoothly than those entities who wing it…

Before I address the question at hand, for contextual purposes, I believe it’s important to actually define the role of the board of directors. While there are certainly a variety of opinions as to the roles and obligations of a company’s board of directors, from my perspective they can all be boiled down into four simple responsibilities:

  1. Shareholder Accountability: A board member’s primary responsibility is to act in good faith as a fiduciary in representing the long-term best interests of shareholders. A board’s actions and decisions must be able to pass the litmus test of public scrutiny (legally, morally, and ethically), rise above personal agendas, and always place shareholder interests above all else;
  2. Corporate Governance: A board must insure that the corporation’s charter and by-laws are adhered to. Moreover a board must use its best efforts to hold executives accountable for insuring that corporate actions fall within other legal, financial, regulatory, and compliance boundaries. Ignorance and apathy are not the traits of a good board. Great board members are proactive, involved, supportive, consultative, experienced, and savvy. They know the rules, play between the lines, and do the right things.
  3. CEO Oversight: It is the board’s job to select the CEO, provide the CEO with support and guidance, and to hold the CEO accountable. Good boards exercise great care and prudence in profiling CEO candidates, recruiting the right CEO for the job, providing the CEO with a clear job description, successfully onboarding the CEO, and holding the CEO accountable for meeting a set of clearly defined expectations. Good boards do not attempt to micro-manage a CEO, rather they understand their highest value in being a value added resource for the CEO focused on helping the CEO become successful.
  4. External Visibility: A key responsibility of the board is to serve as an external champion of the corporate brand. Board members should have a clear understanding of the corporate vision and mission, and where prudent, evangelize the message for the benefit of the corporation. Whether this requires providing networking assistance, investor relations support, or engaging the media, a highly regarded and active board can add substantial value to the enterprise.

Let’s turn our attention back to the original question…In the text that follows I’ll offer several points that will help a board evaluate whether or not they have the right CEO for the job:

  • Tenure: In a previous post entitled “CEO Term Limits” (a must read for board members) I stated that there is no such thing as a standard shelf-life for a CEO. No rules of thumb apply when evaluating whether a CEO has outworn his/her usefulness purely from a chronological perspective. I’ve witnessed CEO’s where the company has outgrown their skill sets, and/or abilities within a year of hire (a bad hire…), and I’ve also observed many instances of CEOs that have successfully guided companies for 20+ years. The question is not how long a CEO serves, but rather what he or she does while serving. Whether age 32, or age 72, a board must ask themselves, is our CEO doing the job, and perhaps the better question is, are they the best CEO for the job?
  • Performance: The topic of performance is a multi-faceted issue. A CEO’s performance should be benchmarked against a variety of key performance indicators which are clearly spelled out in the chief executive’s employment agreement. When evaluating performance, a board must evaluate whether a lack of performance exists across all areas or in a single area, whether the lack of performance is a short-term aberration vs. the likelihood of it being a burgeoning problem, and whether the CEO can be coached through the performance gap or whether the lack of performance is an irreconcilable issue.
  • Ethics Violations: The character of the CEO is often synonymous with the brand of the enterprise. Once a chief executive has violated the public trust, or made a gross or negligent error in judgment which could taint the corporate brand, a board should move swiftly to restore the integrity of the corporation. Many things can be spun, justified, rationalized, or managed, but a lack of ethical behavior on the part of the chief executive is not one of them.
  • Loss of Confidence: Once the board, the employees, the capital markets, the press, or other key constituencies have lost confidence in the CEO, the board must replace the CEO. A CEO cannot lead, motivate, or inspire without the trust and confidence of those they serve.
  • Lack of Development: The corporate enterprise and the business world in general, are dynamic, fluid, and evolving environments. Therefore great chief executives cannot be static in their personal or professional development, or in their strategic and tactical approach to doing business. A CEO that does not exhibit the ability to change, innovate, and grow with the world around them is someone who will likely need to be replaced.

In the final analysis, the board’s decision as to whether a CEO should be replaced is a decision that should be made within the framework of managing risk and opportunity. The board must weigh the transitioning a CEO against the financial costs, the impact of the business disruption and lack of continuity that can come with replacing the CEO, the market reaction to a change in leadership, and whether the decision is ultimately motivated by right thinking.

Thoughts?

Bill Clinton Gets It Wrong

By Mike Myatt, Chief Strategy Officer, N2growth 

Say it ain't so Bill...Bill Clinton gets it wrong again…During a campaign rally in Orlando last night in which Bill Clinton was introducing Barack Obama, he built his warm-up speech around what he called “the four things that really matter in a president.” According to Bill Clinton, the four things it takes to be a great president are: 1) Philosophy; 2) Policies; 3) Ability to make a Decision, and; 4) The ability to Execute on Decisions. Wow…What about Character, Integrity, Track Record, Service Above Self, etc. (see “Leadership DNA“).

I’ll agree with President Clinton that the ability to make a decision is a good thing, but only if the decisions made are good decisions, made for the right reasons, and made at the right time. I’ll also concede that the ability to execute is a desired quality in a president. However, most people I know aren’t looking to elect a philosopher as president, nor are they looking for a policy wonk. What most people are looking for is a candidate who has a proven track record of facing difficult challenges with integrity…a candidate who will subordinate their self interests to the interests of this great nation. As a top CEO Coach, I know a bit about leadership, and what it takes to be a great leader. John McCain has all the leadership traits we could possibly look for in a president, and why we listen to the drivel of media bias over the substance of a long-term, demonstrated track record of success is beyond my compreshension.  

While I won’t turn this post into a long rant, I’ll simply close with the following thoughts: John McCain gave this country 5 and 1/2 years as a prisoner of war. When he was given the opportunity to leave early because of his status as the son of an Admiral, he rejected the offer so that other soldiers who had been there longer could return home. This demonstrates the strength of character and the quality of decisioning I want in our next president.

Bottom line…If John McCain can give us 5 and 1/2 years in a prisoner of war camp, I can give him my vote for four years in the oval office.   

Are CEOs Getting a Bad Rap

By Mike Myatt, Chief Strategy Officer, N2growth

This is not how you want to be viewed...Are CEOs getting a bad rap? In a word, yes. As a top ceo coach, I can tell you that CEOs are under siege…in fact, I would go so far as to say that CEOs as an occupational class are in a state of crisis. I understand that Americans are upset about the economic debacle we find ourselves presently entangled in. I’m upset and outraged as well. What’s frustrating to most is that there are many more questions being posed than answers being given at this point in time. We’ve entered the blame zone of rash allegations and finger pointing in order to deflect responsibility. While I understand that no sane person could have watched the events of the last few weeks and not want to pin the blame on someone, simply assigning “villain” status to chief executives as a class because their compensation plans seem egregious to some is not the answer. In today’s post I’ll examine the issue of CEO Compensation and why I believe CEOs are unfairly being vilified.

So, is CEO compensation out of control? In some cases I absolutely believe it is, but not in every case as many politicians and pundits would have you believe. I take great exception to those chief executives that take advantage of the position they hold, the shareholders they represent, and the relationships they’re entrusted with. That being said, the CEOs described in the preceding sentence don’t constitute the majority of chief executives. I have called for transparency in previously addressing the issue of Rogue CEOs and Board Accountability. That being said, rogue CEOs are the exception and not the rule. Most chief executives are hard working professionals who take their fiduciary obligations very seriously. Moreover they hold the position of chief executive while incurring great personal risk and sacrifice.

At face value, I don’t care how much money a CEO does or doesn’t make. The issue is not the amount of remuneration paid out to CEOs, but rather on what basis, and when it is paid out. Simply put, CEOs that perform deserve all the compensatory benefits that accompany said performance, and to compensate them for the risk they undertake. Conversely, those CEOs who fail to perform have no business maximizing compensation to the detriment of the stakeholders they were supposed to be serving. Let me use the actual case of Dick Fuld, the former CEO of Lehman Brothers to see if I can help you clarify your thoughts on the topic of CEO compensation. I would ask that you watch the video and form an opinion from what you see:

If you were to just watch the above video of his recent testimony without knowledge of the whole picture, I think you would probably come to the conclusion that he displays a lack of sincerity, credibility, and remorse. One of the oldest and most highly regarded investment banks failed on his watch, and all you witness in observing his testimony is what appears to be Dick caught in a self-serving, sanctimonious CYA maneuver. Now, lets take a look at things with a bit more disclosure, and from a bit of a different perspective. Look at the following revenue and profit numbers (I rounded the numbers for simplicity sake) under Dick’s leadership of Lehman Brothers leading up to the failure:

  • 2004 Total Revenue: $21 Billion – Net Income: $2 Billion
  • 2005 Total Revenue: $32 Billion – Net Income: $3 Billion
  • 2006 Total Revenue: $46 Billion – Net Income: $4 Billion
  • 2007 Total Revenue: $59 Billion – Net Income: $4 Billion

During the time frame noted above, Lehman showed steady growth in both revenue and profitability under Dick’s leadership. If you look at the most aggressive estimates of the amount of his total compensation during that time period it totals nearly $480 million dollars. This number is less than 1% of the $140 Billion of gross revenue and less than 4% of the $13 Billion of net income earned over the same period.  I don’t believe this number is in and of itself a bad number, especially given the fact that most of Fuld’s compensation was incentive based. Fuld had no employment contract, received no golden parachute upon exit, and there were no last minute insider stock trades that he benefited from. Dick Fuld didn’t receive excessive compensation any more than his other executives and investment bankers did. They were highly compensated in an industry that offers lucrative pay. While not palatable to all, it is certainly not a crime.

The real issue surrounding Fuld is not his compensation, but rather his poor decisioning in failing to manage the risk associated with the complex synthetic and derivative securities they were participating in. However he was not alone in this regard, as all other financial institutions were trading in these securities as well.  

Let me shine the light squarely on those individuals whom I believe are the real culprits in this debacle. It was not the investment banking CEOs, but the corrupt CEOs of Fannie Mae, Freddie Mac, and the corrupt politicians who allowed them to function without oversight and accountability. I must also chasten the shameless politicians who use national tragedy and congressional testimony as a publicity platform to air venomous soundbites in order to transfer blame and cater to their constituencies leading up to an election. Oversight is a good thing, but where were these concerned politicians leading up to this mess. Arm chair quarterbacking and shameless self-promotion at the expense of others is not why we elect our public servants, but I digress…

Bottom line…it is not wrong to assign some blame to the rogue CEOs who deserve it, but it is terribly wrong to assign blame to those good chief executives just because CEO is printed on their business card.

First Time CEOs

By Mike Myatt, Chief Strategy Officer, N2growth

Don't just roll the dice as a new CEO...Today’s Myatt on Monday’s question was posed by a new CEO who asked: “Do you have any tips for first-time chief executives of a start-up company that would allow for a faster and more effective transition?” Virtually all of the advice and counsel I provide to CEOs is just as applicable to first-time CEOs as it is to tenured executives. Moreover, while start-up and early stage companies certainly have unique issues, great executive leadership is really not life-cycle centric. While I could suggest you buy a copy of my book, or read other posts contained on this blog (not bad suggestions by the way), I thought it might be interesting to see how other CEOs would answer the question. In the text that follows, I have provided a variety of answers to today’s question, which have been put forth by a number of different C-level executives and directors… 

“Take a very critical look at your product, how competitors will respond, and why customers are going to give you a chance. The high tech landscape is littered with companies that had great ideas and were even first to market, only to be crushed. Netscape is a great example, along with countless PC companies, dotcoms, and yes even wireless companies. Patents in theory are great, in reality they are easy to get around and expensive to defend, so you can’t hang your hat on that. The bottom line is that founders are rightfully proud of their product, company and strategy; and this often blinds them to the competitive threats in the market place and the challenges of entering/penetrating the market and gaining market share. The best question to ask is why.”
CEO of a Service Company

“Retain a CEO Coach…someone who’s been there before and knows how to avoid the land mines that you would undoubtedly uncover if left to your own devices”
CEO of a Technology Company 

“All that matters when you are starting is funding. Period. If you don’t have the money backing you, the best laid plans in the first 100 days, or rallying your troops to support your efforts won’t matter. Number one priority should be an excellent member of the team who is LOCKED into the venture community that has done this before.”
   ~ CEO of a Technology Company

“Build a customer value analysis spreadsheet or table that succinctly quantifies the value to a potential customer. If you can demonstrate an overwhelming or compelling customer benefit (e.g. X months payback, Y percent IRR [internal rate of return] etc.), then investors will be intrigued. It’s not the technology; it’s the value it creates for customers, and your ability to defend your unique intellectual property, through patents and trade secrets, that should be emphasized.”
Senior Executive of an Energy Company

“I cannot overemphasize the importance of having a skilled and trusted finance professional on your team from day one. I would recommend that you not even make the first phone call to a VC or Angel without this person in place (either a full time or trusted contractor/CFO for hire type). Second, you must get referenceable customer traction (installs and most importantly revenue, however little) as soon as possible. Third, from day one, make sure you build a workable/trusted alliance with the founders and that they are in agreement that you ’are‘ the CEO both outside and inside the company.”
CEO of a Software Company

“You need to take some fast actions on low-hanging fruit to show the organization and team that you are quick on your feet and a decisive leader. They (your new team) all know the low-hanging fruit, pick some. And as the CEO, you are responsible for the Corporate Culture, so make it clear early on what type of culture you are driving.”
CEO of a Telecom Company

“Talk to everyone in the organization and in the industry as soon as possible; deliver bad information immediately (and don’t try to ’spin‘ it); and remember to breathe!”
CEO of a Consumer Services Company

“1. If you haven’t already, draft a ‘first 100-day’ plan.
2. Start-ups and early stage companies are fun to run; but you need to move quickly….constantly work at creating a higher sense of urgency — even when you think things can’t possibly move any faster.”
President of a Media Company

In the start-up operation, it is very important that you do the ‘SWOT’ analysis (Strength, Weakness, Opportunities and Threat). Moreover, a pilot run based on a predetermined period would unfold all the problems related to your start-up operations. Isolate them, and find solutions and alternative methods to address the same and move forward. The key is to have a positive cash-flow at the end of the first year.”
President of an Apparel Company

“Surround yourself with trustworthy people as quickly as possible. With so many decisions to make in a short amount of time, you will often have to move forward without having all of the information you would want. This works best when you can tap into people who have relevant, specialized expertise and are not afraid to challenge your thinking, while at the same time have demonstrated a commitment to making the overall business successful (not just about themselves). Then you will be more likely to make fewer critical mistakes.”
Senior Executive of a Biotech Firm

“Understand the culture and the current people who play in that culture. I found that some have hidden agendas that will undermine what you were brought in to accomplish.”
Senior Executive in the Food and Beverage Industry

“You need to be a good listener. Hear what your people have to say about what is working and what is not. Make them feel that they are part of the change process and you will have their buy-in along the way. Create an action agenda that outlines clearly where the company is going and what needs to get done along the way to achieve the desired results and continue to keep people updated on the company’s progress.”
Senior Executive of a Pharma Company

“Make sure you have a clear understanding of the priorities of your Board of Directors, both individually and collectively, and establish good frequent dialog with them. No matter how brilliant your action plans and strategies, you must be in alignment with your board’s expectations and priorities to be successful as CEO.”
Managing Partner, Private Equity Firm

“Take some private time. Don’t let the job define you.”
Senior Executive of a Telecom Company

“One sure way to win respect and loyalty is to find out what the key priority of the team was that was dismissed by the former CEO. If there is any kind of consensus that the company was being held back in an area by your predecessor, you can look like a hero; show that you listen to and value your subordinates’ ideas, and there is a good chance that they are right and the company will pick up in performance.”
CEO of a Marketing Company

“Leadership is the key attribute for ensuring success as a CEO; and leadership, in my opinion, is very much driven by one’s ability to manage expectations of the numerous constituencies a CEO must deal with — employees, board members, investors, strategic partners, community, industry associations, etc. To accomplish this requires clear and precise communications with all, combined with the ability to adjust your/their expectations as critical information is obtained, assessed and addressed.”
~Senior Executive of a Financial Services Firm

“My advice would be to develop your personal networks while in the CEO position, to have a support system outside the company, and to develop a net in the event that the position does not work out to your expectations.”
~Director of a Phara Company

“It is all about expectations! Or, more to the point, the difference between expectations and reality. Try as we might to control the reality of our surrounds, it is far easier to control (or at least moderate) the expectations.”         ~ CEO of an IT Consultancy

“If possible, a few days before you actually start, have the HR person or CFO hold a short meeting of all your direct reports to be; the person controlling the meeting asks, ‘What do we want to know about John/Jane Doe?’ The second question asked is, ‘What do we want him/ her to know about us as a group?’ The third question is, ‘What do we want him/her to do for the company?’ The fourth question is, ‘What do we want him/her to do for us as a group?’ The responses are noted and presented to you when you first take the chair. It can be quite surprising what comes out of these questions asked when you are not there and may never know (at least for sure) who asked what, unless the one raising the question tells you.  The one critical point is that when you reconvene the group to give them your answers, to be done within 72 hours of your start, you are totally honest and candid, as you will be measured against your initial statements. This does not mean that actions cannot be flexed from the initial statement but do them with recognition of what you said and give comment as to why, so all can understand; it helps the trust factor significantly. Obviously the objective is to shorten the learning period in a structured way, and for me it has always proven beneficial.”
CEO of a Manufacturing Company

“1. Meet with your board members individually (typically over lunch or dinner).
2. Find a very good mentor.
3. Stay calm, stay cool, stay collected.”
CEO of a Bank

“It is all about making money! Nothing more, nothing less. You’re in because they made a bet that you will make them more money than the other guy. You’re out because you did not make very much money for them. Don’t ever forget that.”
CEO of a Professional Services Business

“What is success as a CEO? It’s simply this: Living life without fear in your gut (living with peace) and looking back and being proud of yourself for the positive impact you made on people, both high and low in rank. You see, it’s all about your attitude and how people see you. What’s inside can be contagious.”
CEO of a Manufacturing Company

“Do not hesitate to make a decision. Hesitation or being indecisive will become rampant in the organization. Do not be shy about laughing at yourself in front of others. Never compromise your personal ethics and beliefs. Finally, know when it is time to go home. It is a job.”
President of a Manufacturing Company

The Benefits of a Top CEO Coach

By Mike Myatt, Chief Strategy Officer, N2growth

The question is; you’re already the CEO so why should you make the investment into retaining a Top CEO Coach? The obvious anwswer is CEOs simply have more to gain from intelligent counsel than any other person on the org chart. Given the nature of the position, along with the numerous studies, which provide ample data affirming the extraordinary results that can be achieved by utilizing a top CEO coach, I’m always amazed at the number of CEOs who don’t yet have a coach on retainer. In today’s blog post I’ll examine the reasons why I believe all (yes, I said all) chief executives should leverage the services of a top CEO coach.

As bright, talented, experienced, motivated and savvy as most CEOs are, they are only one person. Moreover, CEOs are the individual in the company most likely to be operating in a vacuum. The only thing CEOs can count on is their performance is constantly being evaluated by virtually everyone in the value chain. Combine that with the fact performance standards and expectations are constantly being raised, and it is no wonder that CEOs often feel overwhelmed. The simple truth is, there is no more difficult job than that of the chief executive. This is largely because the proverbial buck stops with the CEO as he or she is expected to have all the answers and make all the tough decisions.

Executives who rise to the C-suite do so largely based upon their ability to consistently make sound decisions. However, while it may take years of solid decision making to reach the boardroom, it often times only takes one bad decision to fall from the ivory tower. The reality is in today’s competitive business world, an executive is only as good as his/her last decision, or their ability to stay ahead of contemporaries and competitors. CEOs who don’t maintain an edge will be replaced by those who do. One of the keys to maintaining such an advantage is to find someone who can keep you on the razor’s edge (see why CEOs most often call me).

As the CEO, the reality is you have no true peers within the business, so where do you turn for advice and counsel? If you’re like many CEOs, you’re put in the awkward position of seeking feedback from those individuals reporting to you. This is not where you should seek unbiased information, as it’s unlikely your subordinates will tell you the hard truths or provide you with open, candid criticism of your actions. They are certainly not in a position to hold you accountable, or most times, even provide you with intellectually challenging input.

Most successful chief executives make heavy investments in building their skill sets, knowledge base, and subject matter expertise early in their careers, only to make minimal investments in their professional development when they reach the C-suite. It is however at the C-suite level an executive must be on top of his/her game as they have the broadest sphere of influence, the largest ability to impact a business, and they also now have the most at risk. It is at this point in the career lifecycle the CEO should make the heaviest investment in refining their game because it’s at this level increased performance will pay the biggest dividends.

Wouldn’t it be nice to seek counsel from an objective third party who has walked in your shoes, and is not caught-up in office politics therefore having no axe to grind or turf to protect someone who has an extensive network outside your business and is a true intellectual and experiential peer of yours? A top CEO coach can afford all these benefits and more…

In addition to my operating duties at N2growth, I also maintain an active personal advisory practice where I’ve worked with thousands of leaders around the globe, including working directly with more than 150 public company CEOs (most of whom are Fortune 500 chief executives). For most of these professionals, the decision to retain my services was driven by one of two distinct motivations;  some had a defensive motive wanting to protect what they had worked so hard to achieve, and; others had an offensive motive looking to take their companies or careers to the next level.

Regardless of which camp the aforementioned CEOs fell into, they were already very successful people who recognized that its lonely at the top, and that they could not afford to keep operating in a vacuum. I actually have a few clients where I am just one member of a coaching team that is on call to deliver real time advice and assistance when the need arises.

I don’t actually like the term coach as a descriptor for what I do as that particular label can tend to give the wrong impression. Sure, in some cases I coach and/or mentor, but most of my clients simply view me as their closest personal advisor. As their advisor, my role is to serve them in the manner of greatest value whether it be behind the scenes or in plain view. Over the years I have played the role of ambassador, emissary, influencer, facilitator, expediter, personal brand manager, lobbyist, buffer/shield, crisis manager, negotiator, publicist, strategist, tactician, collaborative thinker and a variety of other roles as needed. These are the capabilities chief executives should look for in a coach. I urge you not to settle for anything less than the best advisor available.

The question is not whether coaching will provide results, rather, it’s can you find the right coach capable of producing the results you’re looking for? While my personal practice is somewhat limited in terms of the type and number of clients I work with, we have other coaches that can assist you, or I can provide you with referrals to other professionals outside of our firm. Regardless of how you find your advisor, you should consider asking the following representative questions when evaluating a potential coach:

1. Who’s paying the coach? It is my recommendation that you personally retain the coach or use company funds under your discretionary control. You want someone whom you can trust implicitly, and whose loyalty is pledged to you and you alone. If the coach is being paid for by the board of directors or company investors then while you will likely still receive good advice, the coach’s loyalty will reside with someone other than you.
2. Is your coach qualified? Remember that the coaching industry is full of practitioners that paid a few hundred dollars for a professional designation, but yet have little or no real experience. Make sure that your coach not only possesses a track record, but that their skill sets and competencies are relevant to your needs.
3. Does your coach have references? The best indicator of a coach’s ability to help you will be based on how he or she has helped others…No successful clients’ equals a coach that should be avoided.
4. What does the coach charge for his/her services? Remember, you get what you pay for. If your coach is only charging a few hundred dollars a month it’s likely representative of the caliber of advice you’ll receive. If your total annual compensation is well into the seven figures, and your company is producing billions in revenue, then you can afford to (actually you can’t afford not to) retain the services of a tier-one coach.

In closing, I’ll issue an open challenge to any CEO reading this post: I can come-up with a virtually endless amount of legitimate reasons and benefits for why you should leverage the services of a top CEO coach, and I’ll bet you can’t come-up with a single valid reason (excuses are not reasons and don’t count) why you shouldn’t. If you would like to discuss how coaching can benefit you or your executives feel free to contact me. If you still have doubts about coaching Click Here to see what other noted executives and the media are saying about retaining an executive coach. Best wishes for continued success.