The importance of aligning board, business and CEO

| May 14, 2018

A lack of appreciation for the importance of corporate wisdom by far too many boards is jeopardizing the profitmaking potential of companies in this new commercial era.

These boards focus on managing costs with very little understanding and appreciation of the business levers that create and position a value proposition to customers and the drivers of profitability, cash flow, and shareholder value.

Nowhere is this more evident when boards engage with or seek to appoint the individual best capable of leading and managing the business into the turbulence of the future – sure, every organisation wants to grow.  But, the universal principle that there is no ‘no growth without effort’ is often overlooked.

Boards whose members represent a wide range of experiences and perspectives are better placed to avoid the perils of groupthink and in doing so, serve as a resource to the newly appointed CEO – especially where he or she may have competency gaps.

Underpinning the appointment of the CEO is a realistic appreciation and awareness of the difference between growing, building and expanding the organisation.  The differences are quite profound and each requires very different mindsets.

The building organisation is generally well established and seeks to consolidate its gains.  It has time-proven business development processes and a focus on quality.

Characteristically, growth may be slow but the bonus is high client and customer retention.  The skillset for the CEO of such an organisation is good communication and eye for detail and planning to ensure processes are developed and followed.

They empower people and this acts as a beacon to attract quality staff, so coaching and team building should be a part of their mantra.

The expanding organisation focuses on developing new markets or niches by exploiting product and service innovation.

This business requires a leader able to create change and alignment.  Making sure personnel and operational infrastructure are facing the same direction is the imperative – as is an enduring and empowering culture.

Consequentially, they need to be effective strategists that can inspire, motivate and empower.  They certainly need to be able to keep diverse teams focused and may need to engage people and organisations to support any skillset gaps.

Creating a competitive point of difference to facilitate market share growth and sales or alliance networks is the focus of the growing organisation.

This organisation is generally fast-paced and non-bureaucratic.  Flexibility and innovation are matched to an intimate understanding of both the market and client needs.

The CEO is able to contend with the dual challenges of developing new markets and products – whilst doing so with often restricted financial resources.  These are the visionary leaders able to motivate and inspire their teams.  A capacity to be ahead of the curve and the ability to be a strategic thinker is invaluable.

Boards no longer have the luxury of time to redress the consequences of appointing a CEO that turns out to be a square peg in a round hole.  An unvarnished view of the challenges facing the business, industry and CEO is paramount – as is an appreciation that organisations must be aligned from top to bottom in order to thrive in the modern commercial era.