A friend recently sent me a McKinsey report on the role of a CEO. It argued that the fundamental core of the CEO role consists of six things:
- Set the direction.
- Align your organization in that direction.
- Mobilize your leaders to deliver in that direction.
- Work with your board.
- Connect with a group of stakeholders.
- Manage your effectiveness.
I am not a big fan of McKinsey. Having recently interviewed the CEOs of Sucden and Sucafina, two successful trading companies, I thought McKinsey had missed the point by concentrating on strategy rather than culture. As we all know, culture eats strategy for breakfast.
I contacted Michael Whitney, a leadership coach and recruitment consultant with Kincannon Reed, to ask him what I was missing.
“How you behave as a leader will characterize how others in the organization behave,” he told me. “Your behaviour as a leader is essential. Take just one example: if you stifle discussion and jump all over somebody, they will think twice about stepping up in the future. You may miss something vital if you don’t allow people to contribute.
“A CEO must trust the employees, and the employees must trust their CEO. It is particularly relevant in a trading company where the bets are big and decisions are taken quickly. A trading environment requires an awful lot of trust. As a leader, you must look people in the eye and ask them: Can I trust you to deliver this?”
“But doesn’t the McKinsey article concentrate on strategy rather than culture,” I insisted.
“Culture is embedded in all of those things,” Michael replied. “You can have the best strategy in the world, but if you cannot forge a good relationship with your board chair or board, you will not be around for long. Your capacity to manage-up will determine the success of your strategy. The board must trust you.
“For example, I was coaching a CEO for whom communication was a bit of a challenge. He was ferociously bright, but he over-communicated. He saw problems and solutions quicker than anybody else in the room, but he was not winning the board, and his executive team was becoming frustrated.
“I worked with him to get him to understand that less is more. How do you take fifteen minutes and turn it into one? What’s your core message? Keep it simple and adapt to your audience.”
I asked Michael how easy it was to tell the difference between a manager and a leader.
“Sometimes you meet somebody, male or female, and just say, Wow. They have an aura. They exude a level of self-confidence which is not brash or in your face. They can listen, engage with you, and make you feel you’re the most important person in the room. You feel drawn and connected to them. Many people are leaders, but great leaders have that aura, that natural presence.
“A leader can seamlessly move between two things,” he continued. They’re confident and happy with strategy, thinking at a high level, and setting a direction of travel. But they are equally as good at making it happen and executing against it. It sounds easy, but it is challenging.
“Looking at leaders through history, it’s also about the moment. A specific set of circumstances will dictate having one type of leader versus another. It goes back to that war versus peacetime scenario.
“Look at what a great leader Churchill was during the war, but he was soon voted out of office once the war ended. Leaders have a life cycle and a sell-by date. Things change around them, but they may not adapt.
“The manager is functionally strong. There isn’t much you can’t tell a manager about how to run a trading desk or a crushing plant. They master their market and the S&Ds that drive it. But ask that manager how they will double the company’s revenue over the next five years. They can’t extend into that.”
Michael spent 13 years in the British Army, and I asked him to list three things he learned there that helped him in his later career.
“First, the armed forces are highly selective and prepare you to lead from a young age,” he answered. “Leadership training is a constant throughout your career. The army teaches you to think logically when making assessments and judgment calls and how to write and communicate succinctly.
“Second, the armed forces teach you cadence. There are periods of intense activity and periods of less intense activity. You go off on operations, and the intensity can be extreme, but you can’t sustain that level of commitment and effort. There are periods when you must reduce the cadence to focus on other things and rebuild the capability to operate again at an intense level.
“Business can learn from that,” he continued. “In business, you have what I call the Duracell bunny syndrome. People think their ticket to success is to be continually moving at a hundred miles an hour. I am not sure it’s the right thing to do in business. People get tired. They burn out. Pausing and thinking gives you the springboard to get back in and reposition.
“The third thing I learned was the value of constant self-reflection. The armed forces expose you to people with more experience than you – strong personalities who will firmly state their case. You must be mature and humble enough to reflect on what they say.
“I’m not sure of the extent to which many business leaders are open to that reflection, to ask why their personality is conditioning them to behave in a certain way. The armed forces continually expose you to your peers. You don’t have a choice but to pause, reflect and think.
“Leaders must understand themselves. They must be able to say, “This is where I stack up and where I don’t.” They must understand their weaknesses and where they need to improve.
I recently talked to a retired CEO who argued that the most critical role of a CEO is to choose, train and form his successor. I wondered if Michael agreed.
“Succession planning is key to any organization,” he told me, “But you must ask if the CEO is the best person to be doing it.”
“I’m working with a CEO who views his executive team as a stable of potential successors. It’s like a horse race. I am not sure it is the right approach, even though he realizes that not every horse will be a winner. You risk having a bunch of egos competing against each other rather than working as a team.
“You can turn that question around and ask if it is better to appoint internally or externally. Do you want an internal person who understands your business and can hit the ground running, or are you happy with somebody who offers something different but will take a little longer to understand what makes the business tick?”
“When does a search for a senior leader go well, and when can it go badly?” I asked.
“It goes well when you and the client invest the time upfront to have a series of conversations with a quorum of people, colleagues, board members, etc, who have views on what the candidate should look like. It can be challenging because opinions differ, and people often don’t know what they want.
“Having these conversations across the organization can give you a clear understanding of what is non-negotiable and where there is scope to compromise. You’re never going to find the perfect person. There will always be trade-offs, and you must understand them.
“The other dimension is around culture. It’s relatively straightforward to tick the boxes on a role’s functional aspects, but the intangibles matter. For example, how does the person behave and react in various situations, especially under stress?
“You must ask the search committee to articulate their company culture now and what they want in the future – not just the core values listed on their website, but what matters to them and the organization.
“A search goes less well when the people you are talking to struggle to articulate the above because it leads to uncertainty and indecision.”
Finally, I asked Michael what advice he would give to someone taking a leadership position for the first time.
First, you must understand yourself. You must be able to say, “This is where I stack up and where I don’t stack up.” You must have emotional intelligence and deep levels of self-understanding and self-awareness. You must understand your weaknesses and where others on your team are needed to back you up.
Second, you must understand that there will be times when you will have to draw upon the support of others and that you must nurture the people who have complementary skills and personalities to you, even if these people tell you what you do not want to hear.
© Commodity Conversations® 2024
This is an excerpt from my new book, Commodity Professionals—The People Behind the Trade, now available on Amazon.
