The CEO’s job is like no other in the organization. It is infinite. No matter where a company is located or what it makes, its CEO must develop a guiding, over-arching philosophy about how he or she can best add value. This philosophy determines the CEO’s approach to leadership. By approach, we mean which areas of corporate policy—for example, strategic planning, R&D, or recruiting—receive the most attention, what kind of people and behaviors the CEO values in the organization, which decisions the CEO makes personally or delegates, and how he or she spends each day.
The following five leadership approaches for an effective CEO[an approach framework for CEO] :
1. The Strategy Approach: Focusing on the Future, Near and Far
CEOs who use this approach believe that their most important job is to create, test, and design the implementation of long-term strategy, extending in some cases into the distant future.The strategy approach is often selected by CEOs who must frequently make decisions that have enormous consequences. Again, this approach provides the kind of information and involves the sort of testing and planning that well-calculated risk taking requires. This type of CEO needs all the data-driven insight that this approach to leadership generates.
2. The Human-Assets Approach: Managing One Person at a Time
CEOs who strongly believe that strategy formulation belongs close to the markets, in the business units. According to these CEOs, their primary job is to impart to their organizations certain values, behaviors, and attitudes by closely managing the growth and development of individuals.These executives travel constantly, spending the majority of their time in personnel-related activities such as recruiting, performance reviews, and career mapping.They have a a great congruency among their people.Congruency of values, and of the actions born from them in the daily execution of corporate strategy, is the essence of the human-assets approach.Although most human-assets CEOs tend to value employees who display predictable “company way” values such as honesty and loyalty to the corporation, they also believe in individual empowerment. These CEOs can and do give authority to members of the organization to act quickly and freely, without corporate approval.
3. The Expertise Approach: Championing Knowledge
Executives who lead by using this approach believe that the CEO’s most important responsibility is selecting and disseminating within the corporation an area of expertise that will be a source of competitive advantage. They often focus on designing programs, systems, and procedures, such as promotion policies and training plans, that reward people who acquire the expertise and share it across the borders of business units and functions. Their main role is to select, cultivate, and spread a competitive expertise up, down, and across the business units of the organization. Put another way, these chief executives believe that they must create a specific capability that will allow the organization to differentiate itself from its competitors and will thereby lead the company to a position of sustainable advantage. Expertise, they found, can be a process.CEOs who use the expertise approach don’t just preach the gospel of their expertise; they create programs to reinforce it.
4. The Box Approach: Applying the Pressure of Orthodoxy
CEOs who use this approach believe that their companies’ success depends on the ability to provide customers with a consistent and risk-free experience.These executives tend to value seniority within the organization, often promoting people with many years of service to the corporate team and rarely hiring top-level executives from outside the company.Box CEOs often sound remarkably similar to human-assets executives. Leaders from both categories say that they are trying to build organizations in which each individual, in any circumstance, will act just as the CEO would. But instead of using personnel development and the inculcation of values as their means, box CEOs use control systems. They create explicit rules and rewards for acceptable behaviors, outcomes, and results.Box CEOs spend much of their time attending to the exceptions—tracking down the reasons for missed deadlines, unexpected losses, or below-average performances of divisions or employees. These CEOs frequently use internal reviews and external audits, employee rating scales, strict policies, and financial reports.
5. The Change Approach: Upending the Status Quo
CEO whose most critical role is to create an environment of continual reinvention, even if such an environment produces anxiety and confusion, leads to some strategic mistakes, and temporarily hurts financial performance.Seniority matters little to the change agent; passion, energy, and an openness to a new, reinvented tomorrow matter much more. These CEOs identify their chief role as directing the complete overhaul of practically everything about their companies, down to the fundamental underpinnings.Unlike strategy CEOs, change agents focus not on where their organizations will end up but on how they will get there. These CEOs cultivate an environment of constant questioning and risk taking, and frequent reinvention of business practices and products.Compared with CEOs in other categories, change agents are rather unconcerned with financial or procedural controls, written reports, planning cycles, and guidelines. They spend their days meeting with employees, customers, suppliers, and shareholders to champion change and encourage others to do the same—or at least to be patient while change is under way. Virtually no one is neglected.Change agents visit factories to talk with line workers, attend company picnics, and answer their E-mail and voice mail messages daily.
Business is too complex for such simple analysis. But the five approaches do offer a framework for understanding how CEOs manage to give structure and meaning to their infinite jobs, learning to lead as they go.