There are three competencies that are necessary to have if a CEO is to be successful. A CEO clearly needs to be good at the many competencies that all good leaders need, but these three aren’t quite as critical for leaders at other levels.
A CEO who masters these skills drives the success of their organization, commands a significant salary, and sometimes becomes legendary. In contrast, a CEO who doesn’t do well with these competencies does average at best and at worst is invited to leave the organization. It explains why the average tenure for a Fortune 500 CEO is only about four and a half years.
The first skill that’s essential for a CEO is the ability to develop a vision for the future. In the absence of a future that is different from the present, a CEO is destined to make only incremental improvements, simply tweaking what already exists. A CEO who has a vision of the future can put a strategy in motion which, if executed well, can alter the course and the fortunes of a business.
How can someone gain the ability to have vision and foresight? It first requires that a CEO have external awareness. In other words, he or she must have a sense of trends, developments and changes in behavior in the world outside of the organization. Only by being observant can new insights be gained. Next, having vision requires that a CEO keep from being restricted in his or her thinking by self-imposed (and usually unfounded) constraints. In other words, he or she must think “outside the box.” As a friend of mine likes to say, “If you argue for your limitations, you get to keep them…”
How do you gain a fresh perspective? The most effective means is to remove yourself from the day-to-day and spend time reflecting. You’ll end up gaining new insights and perspectives on your business.
The second skill that’s essential for CEO success is the ability to make decisions with incomplete information. Almost always, the vision of a new future requires heading into uncharted waters. There is no way to have all the facts before action is taken.
How do you gain this ability? It obviously requires some tolerance of risk, therefore a CEO can’t be overly risk averse. The key is to minimize the risk, so that if things don’t go as planned, all is not lost. It is essential to consider the various possible scenarios and then review the result of each. Making decisions without all the information requires a CEO be clear on the underlying problem so as not to address a symptom instead. But at some point, a decision must be made without having all the pieces of the puzzle.
Influence and Persuasion
The third skill that every good CEO must possess is the ability to influence and persuade. Although a CEO can dictate his or her desires to the organization, the results gained from people who are simply complying will be very different than from those gained by a committed organization.
How can someone improve their ability to influence and persuade? It first requires that a CEO gain the trust and respect of the organization. Trust and respect are earned over time, and are determined as people observe the way in which we conduct ourselves on a daily basis. The level of trust and respect that people have for us greatly impacts the degree to which we are able to influence them.
The second aspect to influencing others relates to the fact that people “buy” emotionally. It doesn’t matter whether we’re talking about selling widgets or a vision of the future, people make their decisions to accept or reject on an emotional level. (They then use facts and logic to rationalize and justify their decision.) One of the most effective means of evoking emotion is through the use of stories. And some of the most effective stories are analogies. The artful use of analogies not only can evoke emotion, but can avoid arousing defensiveness in people. Effective CEOs are master storytellers.
If you want to be a more effective CEO or want to prepare yourself to become a CEO, it is essential to have vision and foresight, make decisions without all the facts, and master the ability to influence others.