CEO Excellence is a fascinating book about the characteristics and mindsets that differentiate the best CEOs from the rest. The book breaths a deep respect for the complex and complicated waters that CEOs navigate. However, it doesn’t fully live up to its promise in the subtitle to define the six mindsets that distinguish those excellent CEOs from their more ordinary counterparts. Those mindsets, later called responsibilities, are too general to be meaningful. They are: set the direction, align the organization, mobilize through leaders, manage personal effectiveness, connect with stakeholders, engage the board. Each responsibility is divided into three elements and many more details, sometimes overlapping or not so easy to separate from each other. The value of the book is much more in the richness of the details than in the concept. The book goes deep into the CEO’s mind, including many revealing observations and quotes. There are only a few books which do that with such a deep understanding of the dilemmas that CEOs are facing as the three authors, all working for McKinsey, are demonstrating here.
The performance of 200 of “the best CEOs of the 21st century” has been researched for this book. The authors started with a database of 2,400+ CEOs of the 1,000 largest public companies over the past fifteen years. Of those, 998 were more than six years in their roles. Of those, 523 were delivering a total return to shareholders in the top two quintiles, of whom 146 were also recognized in the best CEO industry lists. The authors added 54 CEOs from underrepresentated areas (geography, skin color, gender) who had to meet their tenure, performance and/or reputation bars. The book doesn’t say if a client relationship with McKinsey was a pro or con for being part of the book. Interviewed CEOs include Ajay Banga (Mastercard), Mary Barra (GM), Dick Boer (AholdDelhaize), Greg Case (Aon), Larry Culp (Danaher), Jamie Dimon (JPMorgan Chase), Bill George (Medtronic), Herbert Hainer (Adidas), Reed Hastings (Netflix), Nancy McKinstry (WoltersKluwer), Satya Nadella (Microsoft), Sander Pichai (Alphabet), Feike Sijbesma (DSM), Peter Voser (Shell).
“Three things struck us more deeply than we’d imagined”, the authors write: how unique the role really is, the number of contradictions a CEO faces, and the sheer amount of work involved in doing the job well. “The top job is the only role in an organization that is literally peerless.” There is no place where you can learn to be CEO, so most of them are making it up on the go. When they were board members before they became CEO, they thought they knew what it would be like, but they really didn’t until they landed in the CEO chair. It is lonely at the top. CEOs very rarely get honest feedback on what they do or say. Moreover, they don’t hear anymore what is really happening in the organization: employees tell them what they assume the CEO wants to hear. Their colleagues come to them because they need something from them, not to bring them anything. Their jokes get funnier and they win more often at golf.
The best CEOs are more shapers than takers: they don’t accept reality as it is but bend it to their will. They take risks doing that. They don’t minimize uncertainty and guard against making mistakes, but assume that fortune favors the bold. If you would ask them if they were sure, they would reply: “Of course not”. As Steve Ballmer, former CEO of Microsoft, said: “Be bold and be right. If you’re not bold, you’re not going to do much of anything. If you’re not right, you’re not going to be here.” Part of the deal is to kill as much as you create.
The book contains an interesting chapter about the interaction between the CEO and the board. The CEO doesn’t manage the board, the board manages them, the authors write. That may be formally true, but the CEO can influence the board by controlling the information they get, putting topics on the agenda or leave them out or using informal power. “For a CEO there is no better way to understand what it means to be a board member than to become a director at another company.” The authors only write about the Anglo-Saxon board model, where boards are representing the owners, i.e. the shareholders. In many countries in continental Europe boards are obliged to take the interests of all stakeholders into account. Moreover, two-tier boards are different from one-tier boards, although in many large companies a hybrid model has emerged.
The chapter about personal effectiveness is also a great read. CEOs have a “soul-crushing schedule”, it says. They have to be both psychologically and physically fit. It is not only the sheer amount of work, but also the mental burden. As one CEO says: “I felt I was walking through land mines every day. I didn’t thrive, I just didn’t get blown up”. They work very long hours, but “no one has ever lived to outwork the job. It will always be bigger than you”. Most of them are never off the grid. They take phone calls and read emails, also during their holidays. I liked the anecdote of Ajay Banga of Mastercard who hands his laptop to his wife during their vacation. She locks it in the safe and he doesn’t get the code. He is allowed to use the device twice a day, at 7:30 am when the family is still asleep, and at 4pm when they are having cocktails at the pool, to respond to the emails that can’t wait.
Carolyn Dewar, Scott Keller, Vikram Malhotra. CEO Excellence. The six mindsets that distinguish the best leaders from the rest. Simon and Schuster, 2022