What’s the difference between a good CEO and a bad CEO? The simple answer is effectiveness. Good CEOs are effective and use that effectiveness to build and lead effective organizations that build enduring companies; bad CEOs don’t.
Good CEOs understand and promote the operational values that drive effectiveness. They value progress over activity, clarity over harmony, finishing over starting, priorities over urgencies, trust over control, and global throughput over local efficiency.
Bad CEOs confuse activity with progress and prioritize harmony over clarity. They love to hear good news but hate to hear bad news. They have no trouble starting new things but have difficulties finishing. They are quick to fight fires and get easily distracted from priorities. They need to feel in control and get a false sense of security from precise budgets, plans, and forecasts. They focus on local efficiencies at the expense of global efficiencies. They talk about accountability but aren’t very good at holding themselves or their team accountable.
Build a Strong Team
Good CEOs build strong leadership teams that work as a team. They understand that by working as an effective team and by valuing the team’s goals over their individual goals, they can get much more done, much more quickly. They have no tolerance for dysfunctional team dynamics. They value individual accountability but understand that individual accountability is not enough by itself. Team accountability is paramount for ultimate success.
Bad CEOs assemble a group on individuals that are called the leadership team. They place a high value on harmony and as a result, fail to prioritize the team over the individuals. They live with the dysfunctional behavior that results.
Good CEOs expect and let their team members do their jobs. They know if they have hired the right people, they will do a better job than the CEO could. They know that micromanagement is a waste of everybody’s time. If they find themselves constantly intervening, they take corrective action, even if it’s the hard choice of replacing the team member.
Bad CEOs find themselves intervening in their team members day to day jobs, either because they didn’t hire the right people to do the job or they fall under the spell self-enhancement bias in which the CEO evaluates work product more highly the more self-involved they are in its production. Their actions foster life sucking anxiety and self-doubt that lead to risk avoidance and underperformance.
Focus on Progress
Good CEOs understand the importance of focusing time and energy on the things that matter. They value progress over activity. They focus their time on getting meaningful things done and engage their organization to make it happen. Good CEOs have an intuitive feel for the laws of organizational physics. They get maximum results by focusing their organization on a very small number of important challenges.
Bad CEOs don’t do a good job of distinguishing the important from the urgent and spread their time around like peanut butter on a sandwich. A little bit here and a little bit there. Lots and lots of activity, but little progress.
Be Accountable for the Quality of the Strategy
Good CEOs understand the difference between good strategy and bad strategy. They know that good strategy provides leverage to amplify the power of the organization to create value and advantage. They hold themselves accountable for developing a good, clear strategy. They have the courage to make the tough choices of deciding what to do and what not to do. They know that while getting to simple can be harder than complex, it’s worth the extra effort to get to simple. They don’t bend to a false optimism that their organization can do more just by adding things to the list of priorities. They produce strategies that focus their organizations on the most important limiting constraints on the business.
Bad CEOs either don’t understand the difference between good strategy and bad strategy or don’t hold themselves accountable for producing a good strategy. They confuse goals and objectives with strategy or produce vague strategy statements like “creativity is our superpower” or “building world-class competencies.” The result is a bad strategy that fails to help the organization focus on the most important things. Even worse, they fail to make to make the hard choices and present the organization with a long list of “priorities.”
Value Clarity Over False Harmony
Good CEOs know the importance of clarity and alignment and don’t let themselves fall into the trap of thinking people are aligned when they are not. They are aware of the danger of close communication bias, where you overestimate what people close to you know and under communicate as a result. They are persistent and put in the hard work to make sure people throughout the organization understand the strategy and how their work contributes. Good CEOs understand the dangers of unspoken conflict within the management team and force conflict resolution to prevent organizational confusion. They know that true harmony can only be achieved when there is clarity.
Bad CEOs avoid the potential conflict that comes from forces clarity. Instead they accept false harmony and may talk about the need for alignment but fail to do the hard work to achieve it. Most often this is because they are not aware of or do not appreciate the level of organizational confusion. Their management teams will declare that they understand the strategy, but when you dig into the details, you will find that they have each added their spin and interpretation of the strategy. So much so, that when asked fewer than 30% of the leadership team will be able to list the company’s top three priorities consistently. The result is an unresolved organizational conflict that leads to different organizational functions working at cross purposes.
Plan as a Team
Good CEOs understand that great strategy implementation requires a cross-functional plan, not just a compilation of functional plans. They make their team build the plan and make explicit cross-functional tradeoffs the optimize the overall result.
Bad CEOs are uncomfortable with the conflict that comes from having to make cross-functional tradeoffs. They let individual team members build functionally optimized plans at the expense of overall results.
Expect and Deal with Uncertainty
Good CEOs understand that we operate in a world of uncertainty and that both skill and luck impact the results. They seek to understand what drives outcomes. They work hard to help their leaders and managers distinguish the signal (skill) from noise (luck). They develop the skill to make better bets that lead to better and more reliable outcomes.
Bad CEOs routinely associate successful results with skill and bad results with luck. They will often reward results without regard to the role of luck. Like good CEOs, they make bets too, but with much poorer understanding of the odds of success.
Focus the Best Talent on the Most Important Work
Good CEOs concentrate their best talent on the most important work. They know that by concentrating their talent on the most important work, they greatly increase their chances of success. Moreover, they appreciate the side benefits such as inspiration and talent retention that come from great talents being able to work side by side.
Bad CEOs fail to understand the power of concentration and spread their best talent across the organization. To increase harmony, they will “fairly” allocate talent across the different organizational functions. It might lead to a short-term sense of harmony within the management team, but it is ultimately an ineffective use of this valuable resource.
Move and Decide with Pace
Good CEOs understand the need for speed and tempo in the review and decision-making cycles. They have faith in the power of Agile management. They know that by having frequent, fast and informal review cycles, issues get raised and cleared more quickly which speeds the organization to results. They are willing to sub-optimize the efficiency of their time if it means that big, important work gets done more quickly.
Bad CEOs get tangled up with overly complex and long review processes. They fail into the trap of the formal and large official reviews which value the efficiency of the CEOs time over the need for the organization to get things done quickly.
Play to Win
Good CEOs manage for the win. They value effectiveness over being liked. They take the hard decisions even when it’s not popular. They can be both brutally honest and incredibly inspiring. As Steve Jobs once said “My job is not to be easy on people. My job is to take these great people and push them and make them even better.” He expected his people to do great things and build a great, enduring company. He played to win.
Bad CEOs fail to provide the leadership needed to win. They fail to make the difficult decisions and accumulate management debts such as unresolved conflicts, retention of dysfunctional team members or a sense of unfair treatment that undermines their organization’s durability. They fail to understand that leadership is about having both the courage to take hard decisions and the capability to inspire passion and loyalty.
The reality is that no CEO is perfect, and every CEO will embody a combination of good CEO and bad CEO attributes. The point is that every CEO can be a better CEO. Effectiveness can be learned, and every CEO can become more effective. If you want to become a good or better CEO then use the attributes listed here as a target to be pursued.