Complex Made Simple

Four essentials for a successful CEO- Part II of II

By: Stanislav Shekshnia, Kirill Kravchenko and Elin Williams, INSEAD Business School

In Part I of this article, INSEAD Business School laid the groundwork for Alex, a management consultant appointed by company founders of a privately owned conglomerate to create a stand-alone energy company.

In his first year, Alex set out to attract top executives.

In his second year, Alex concentrated on building the newly recruited talent into a team, consulting them on all key decisions. He also reached out to people in all parts of the organisation, invested in new technology and introduced modern policies, procedures and governance practices. Along the journey, he also saw some of his own limitations, notably in image and public speaking. So he got himself a coach, some new suits and attended courses at INSEAD and Harvard.

READ: How do successful startups deal with pressure?

By the third year, all the basics were in place. Alex was able to refine his vision and focus on more sophisticated practices, such as company-wide talent development as well as health, safety and environmental (HSE) management.

By the fourth year, the company had adopted some world-class practices. There was a corporate university, a bottom-up innovation programme and a new compensation system for managers, based on both performance and development. Alex was not only investing in the training of his people but of his suppliers and customers. Based on his recommendations, the board also reorganised the corporate governance system.

By the beginning of the fifth year, Alex had received several awards for being the country’s best CEO and the company had been ranked the nation’s top employer for two years in a row. The management team had also won an award for being number one in the country. The shareholders were making 30 percent annual return on their investment. The vision had become a reality a year ahead of schedule.

WATCH: Video: How a 12-year-old’s dream became a business reality

Walking the talk

Our respondents shared specific practices that help business leaders to develop and keep updating organisational vision. We would like to describe just four of them.

-One of our clients calls the first practice a “walking vision”, which comes from the idea of “walking the talk”. We just call it personification of vision. In other words, the CEO becomes a living representation of what her vision is about. If it’s about excellence, the CEO strives to excel in everything she does. If it’s about collaboration, she makes collaboration her way of work. Diego Bolzonello sums it up: “You must be an example to others and understand the meaning of your actions ”.

READ: Could women be better equipped for business than men?

-The second practice is sometimes called a “talking parrot”. But it simply boils down to reiteration of vision. Good CEOs use every opportunity to articulate their vision: regular management team meetings, corporate conferences, shop-floor walkabouts and occasional encounters in the office corridors. They may use different words each time, but they keep sending the same message about where the company is going and what it stands for.

-The third practice is operationalisation of vision. According to Richard Rushton of Distell Group (South Africa), the CEO is “fundamentally required to shape the future” and part of this future is internal. Corporate rules, policies and procedures, working methods and products… they all speak without having a mouth – and effective CEOs make good use of them to promote the vision. If your vision is “to be number one in the world in the shoe business”, as Diego Bolzonello claims for Geox, you have to make sure that you reward excellence rather than mediocrity. And you must recruit and promote ambitious people, giving them freedom to create and innovate.

-The fourth practice is instrumentalisation of vision. Nishi Vasudeva of Hindustan Petroleum (India) describes it as follows: “a broader vision and a feeling for external factors, so that you can fix difficulties as they arise”. To explain this more fully, good CEOs encourage their people to use the corporate vision as a benchmark for all kinds of decision making. When a VP of marketing asks for advice about who to hire as head of marketing for the Northern European region – an INSEAD MBA with two years’ experience working for the company’s main competitor or an industry veteran – the CEO’s first question should be: “Who would fit our vision better?” The same logic applies to investment projects, acquisitions or divestitures, as well as new products or services.

Setting, communicating and updating a vision for the business is the first and foremost role of the CEO. This vision provides the rest of the organisation with direction, meaning and culture – and becomes a decision-making benchmark for all managers. It may evolve but needs to be deeply embedded in the entire organisation at all times.