Being able to think objectively (un-emotionally) about their business is a significant challenge for CEOs of private companies. I believe there are two further fundamental challenges that go with the role and either can be a source of inspiration, a driver, or, a source of inertia, a drag on the organisation.
- CEOs are “Commercially Lonely.” Whilst each CEO is different, they do assume the role as the source of inspiration to the people they lead, to their peers and also to those to whom they are obligated (i.e. fellow shareholders – the board). Just occasionally, when not in the right ‘mindset,’ they may question themselves, doubting they have all the answers.
- CEOs are also “Constructively Discontented” meaning they can see vividly the future potential of the business. Through that lens they see current performance, which might be great compared to previous periods but compared to the vision, falls well short. Focusing on the shortfall can be a driving source of inspiration for the CEO but not always for the Leadership Team who have worked hard to achieve the current status.
So, if being objective and overcoming the ‘distance’ and ‘discontent’ is the challenge, keeping the CEOs ‘mindset’ right is key. One solution is to appoint an Advisory Board; completing this linked survey will help you determine if this is the right solution for your business.
An easy way to help the CEO manage ‘mindset’ is to use a mental framework that can help shape and refine thinking. The framework below will help you step out of executive mode and into ‘investor’ mode, this will only cost you some time, the return on investment may astound you!
A framework to think differently
Imagine that you are no longer in the role of CEO of your company (ABC Co) instead you are the co-owner of a private equity fund. The fund has just purchased a controlling stake in (ABC Co) and appointed you to that Board, representing the fund.
Given your commercial experience and knowledge of the market there is an expectation that you will contribute significantly to the development of the future strategy, performance expectations and evaluation of the CEO.
So, thinking as an investor only, how would you think and act differently towards the business?
- What would your advice be to the CEO about the efficacy of the current strategy?
- How well is the strategy execution being managed?
- How would you describe the calibre and performance of the Leadership Team?
- How well is capital being used in the business?
- Finally, how would you rate the CEO? What skills do they need to build, what weaknesses need to be mitigated and what natural biases need to be overcome?
Can you think of your business using this framework? What now needs to change?
I am really interested in your thoughts on this – were you surprised by your new thinking? I’m happy to invest 30m mins in discussing your conclusions. Please reach out to me for a confidential conversation.