January 10, 2007
The CEO Show
Let’s dig into the bag of popular American sports wisdom to help provide some insights into the role of CEOs in retailing today.
There’s always the one about it not being the coach’s fault the team is losing because, although he develops the game plan, he can’t also go out and catch, block, tackle, etc. The responsibility sits squarely on the players’ shoulders. While that may often be true, it is the coach that gets fired. After all, we’ve heard it’s easier to fire one individual than the entire team.
Of course, there is also the equation of a CEO with a quarterback in football. The thinking here is that, when a team wins, the quarterback gets too much of the credit. When it loses, he gets too much of the blame.
There’s little doubt that CEO is the highest profile position in retailing. Lee Scott, Terry Lundgren, Steve Burd, Tom Ryan, Jim Skinner, Dave Dillon, Bob Nardelli (er, scratch that), Jeff Bezos, Mary Sammons, Jeff Noddle, Brad Anderson, Bob Ulrich and John Mackey are easily matched to the companies they lead.
Lee Scott is the lightning rod for just about any group with a gripe when it comes to Wal-Mart, including investors, employees, financial analysts, labor leaders, environmentalists, human rights activists and government officials.
Terry Lundgren is either boy genius for his national branding strategy for Macy’s or evil incarnate for changing the Marshall Field’s name.
Steve Burd, many claimed, had no clue after Safeway bought and seemingly ran down regional chains such as Dominick’s. He also held too many jobs as chairman, CEO and company president. Now that the company and its various divisions are rebounding as a result of the “lifestyle format,” Mr. Burd is handling his various duties quite well and he’s one sharp retailer.
In the end, what is a CEO to do? Better yet, what is it that a CEO does? Do we even need CEOs? (uh-oh)
Discussion Questions: What should the role of CEO be and how important is it to running a retail business? Of the CEOs, past and present, working in the retailing, which one(s) do you think truly used the position to the maximum benefit of their company?
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The CEO role needs to be defined differently by each company. Michael Dell, Bill Gates, and others see the CEO as the chief cheerleader and focused on future issues. They have “Presidents” or “COOs” to handle the day-to-day running of the business. Other businesses see the CEO as being much more “hands-on.”
There is no “one forumla” that can work across all retailers. To borrow from your sports analogy, not every team runs the same plays with the same personnel, nor achieves the same results. It is very dependent on the resources, strengths of the “players” and the needs of THAT particular business.
I think the recent fallout from some of the Ex-GE Managers that assumed control of other companies in other industries than the one they “knew” at GE is proof positive of that. What works in one environment may not be as successful in another.
Still, having said that…and now painting with a very broad brush…my expectations would be that the CEO would provide:
Modeling of the appropriate behaviors, actions, and efforts expected of others (hard to support a CEO who jets off and then asks you to take the bus!)
Motivates the employees by inspiring them through deeds (not just words…but doing what it takes to succeed).
Has an eye on the future needs of the marketplace.
Demonstrates that s/he cares. It is amazing what people will do in support of a boss/CEO who is perceived to be genuine in his or her caring about employees.
Aside from the day-to-day duties the CEO must perform, he or she must set the tone for the company. This topic brings to mind a discussion quite a few months ago about the former CEO of Radio Shack. The discussion revolved around the possibility of firing David Edmondson for his poor ethical decision. I didn’t realistically think Edmondson was going to keep his job after the story broke, but there was a brief period of time where the board was in limbo on a decision. If Edmondson had remained with the company, what example would that have set for the company’s employees? What about other CEOs? The CEO is also the key component to initiating or overseeing strategic planning and company culture ambitions such as diversity programs and Hispanic marketing initiatives.
I think Bernie has it about right. While the CEO can’t and shouldn’t know the minutia of what is going on in the business, they do set the strategy that the company is going after, they do set the tone on how employees views are valued and if innovation is encouraged or if it is a top down rule, they do set the corporate values, etc. All of that effects what type of talent you attract and keep and how employees and the company perform.
There is an old adage which says “a fish stinks from the head down.” A CEO is the head of the company. The CEO leads. The CEO inspires both his/her employees, customers and stockholders. When the company does poorly, generally, it is because of a lack of leadership. You can make the argument the company had the wrong talent under the CEO. But shouldn’t the CEO recognize that and fix it? The company had the wrong strategy. But shouldn’t the CEO recognize that and fix it? By the same token, if a company does well, isn’t it because the “troops” were inspired? Or is it because they had the right strategy? Or maybe they had very talented people? All those can be attributed to the CEO. While it is the company’s people who do all the “grunt work” and do the day-to-day, it is the CEO who sets the direction, pace and desire. It is the CEO Show!
Perhaps the most important role of the CEO is to maintain the vision for how the company will grow and prosper and then to provide the discipline, teamwork, and leadership to help make it, i.e., the vision, a reality through his/her people.
It seems to me that the “good and bad games” of each of the executives discussed can, in large measure, be analyzed in light of the effectiveness of vision, discipline, teamwork and leadership.
It’s very difficult to identify contemporary leaders and somewhat controversial, so my nominations look to the past and include:
>George Jenkins for his prescient views and his ability to mold and motivate what has become an incredibly effective organization.
>Milton Perlmutter whose vision brought Pathmark out of the Shop Rite organization and whose business acumen allowed Pathmark to redefine the role of own label at that time.
>Robert Wegman whose vision and steely discipline has laid the groundwork for his son and now his granddaughter to lead what is inarguably one of the best food retailers in the world.
If we have the chance in 20 years, it would be great fun to apply the same criteria to our contemporary leaders.
I guess there are some solid comparisons between a CEO and a coach but I’m not too sure about the quarterback analogy. I do know that great retailing CEOs (and you mention some above) have vision about where they plan to take the organization and can articulate — “sell” — that vision to the “team” that does the actual work.
Great CEOs and coaches know how to assemble a strong coaching staff that all work in harmony toward achievement of the game plan. The great CEO knows how to assemble and direct and focus this talent to ensure the players/associates performance is maximized.
Great CEOs and coaches can make mid game adjustments to the plan, and articulate the reasons for the change in a way that everyone understands and supports, and great CEOs lead by example in their work ethic, commitment to excellence, and leadership by example. They take the heat for failures, and support their staff and players in an appropriate way.
Finally, they can communicate with the fans (shareholders) in a way that offers reinforcement that we have a plan to succeed, and a clear vision of how we will get there.
I worry that it will be difficult to get a truly insightful discussion on this topic (though I hope I am wrong) because it seems to dip into the realm of personal identification. Let me explain. The business world loves heroes, and from the data we have been able to gather, it is for two reasons: others who are heroes can make us feel good about ourselves as humans and can give us the hope that one day, we could also be a hero like that; second, being a hero is a huge ego-boost because it says we are special, we are more powerful and more clever, and we have helped others who are inferior.
So this means that we love athletes, especially professional ones (as long as they win). We love firefighters. We love soldiers. And of course, we love CEOs. That’s why we sports-metaphorize them to death.
This veneration of heroes is a form of worship, and there is a strong possibility that we NEED this worship, especially now, with such a fixation on fear and threat. It appears to serve an important purpose; however, it has a most unfortunate disadvantage: it prevents us from seeing a more realistic and useful model not only of CEOs, but of how organizations work.
There is no doubt in my mind that we NEED a different model: 92% of all retail organizations have a 70% customer service rating or worse, 96% of all retail organizations meet customer expectations at 65% or worse, and 100% of all retail organizations are 25% inefficient or worse.
We have tens of thousands of pages of data that explores what we call an organization’s Master System. This System controls everything an organization does. It runs the organization in every way, and in effect, “controls” every person in the organization, including the CEO. Making an organization truly more effective means significantly altering its Master System.
We have found that a large percentage of business executives find this idea repellent, because, they say, it means they are not the ones in control, and in fact, they are being controlled. It is easy to see why, then, that the business world would rather talk about heroes than explore real data that might be more useful.
In “Going Deep” my book on leadership, I talk about the “Corporate Spiritual Leader.” An absolutely critical function in today’s competitive environment. Why? Because it helps businesses do what the Florida Gators did.
It doesn’t always have to be the very top man or woman. For example, at Microsoft, Bill Gates isn’t the spiritual leader, Steve Balmer is.
This is the ‘beloved leader’ and there doesn’t seem to be very many anymore. We can probably name more ‘leaders’ in jail than we can those who are ‘beloved.’ This is the CEO for whom the employees would climb the highest mountain, ford the widest river, etc. You want employees saying “I saw and heard my leader this morning, nothing can stop us.”
I suggest a 30/30/20/20 division of how CEOs can be the capital ‘L’ Leader. 30% of their time on ‘brain trust’ activities like thinking. Just plain ‘thinking’ like you do while on a run, in the shower or long country drive — not in the Board Room. Too many ‘leaders’ say they “don’t have time to think.” Why would anyone follow someone who doesn’t have time to think?
30% on communication — riding up and down on a white steed telling everyone how it’s going, what’s coming next, encouraging their spirit, affirming their value. Cheerleading.
20% on mentoring, coaching and succession planning. A Leader isn’t afraid of encouraging those with more talent and vision than he/she has.
20% on operational details. Little tiny numbers on spread sheets. I get a lot of flack (and may today, too) on this point. Many say the CEO should be spending 80% of their time on the details. If you want the company to lose its soul, then you go ahead and do that. I suggest that view is exactly why so many businesses are struggling for their last breath today. Now someone has to be on top of the numbers; that’s what brilliant senior managers are for.
The ratio of these four roles changes as you move through the organization – but EVERY employee needs to do some of each. We are desperate for Corporate Spiritual Leadership these days – and ignore the ecological value if you want; it is the decisive competitive factor.
CEOs help set the tone and they’re a key component of business culture. Allen Questrom turned around Federated and J.C. Penney. If his Federated turnaround was considered just a fluke, a lucky accident, he proved it wasn’t by turning around a second floundering retailer, Penney’s. Ralph Lauren isn’t just a great designer, he’s one of the best retailers the world has ever seen. American retail companies who thrive don’t perform because of patents, copyrights, or monopolies. They thrive because their people do. And the top person is the CEO.
Ian Percy is right on with his CEO calculations. I have worked for several CEOs in my lifetime. When a CEO gets involved in all the details of the company,it’s the kiss of death. What do you hire talent for? I believe employees should be empowered and the mantra should be: ” Use your best judgment, I want you to ask for forgiveness, not permission.” What employee wouldn’t jump through hoops for a CEO like that?
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The CEO role needs to be defined differently by each company. Michael Dell, Bill Gates, and others see the CEO as the chief cheerleader and focused on future issues. They have “Presidents” or “COOs” to handle the day-to-day running of the business. Other businesses see the CEO as being much more “hands-on.”
There is no “one forumla” that can work across all retailers. To borrow from your sports analogy, not every team runs the same plays with the same personnel, nor achieves the same results. It is very dependent on the resources, strengths of the “players” and the needs of THAT particular business.
I think the recent fallout from some of the Ex-GE Managers that assumed control of other companies in other industries than the one they “knew” at GE is proof positive of that. What works in one environment may not be as successful in another.
Still, having said that…and now painting with a very broad brush…my expectations would be that the CEO would provide:
Modeling of the appropriate behaviors, actions, and efforts expected of others (hard to support a CEO who jets off and then asks you to take the bus!)
Motivates the employees by inspiring them through deeds (not just words…but doing what it takes to succeed).
Has an eye on the future needs of the marketplace.
Demonstrates that s/he cares. It is amazing what people will do in support of a boss/CEO who is perceived to be genuine in his or her caring about employees.
Aside from the day-to-day duties the CEO must perform, he or she must set the tone for the company. This topic brings to mind a discussion quite a few months ago about the former CEO of Radio Shack. The discussion revolved around the possibility of firing David Edmondson for his poor ethical decision. I didn’t realistically think Edmondson was going to keep his job after the story broke, but there was a brief period of time where the board was in limbo on a decision. If Edmondson had remained with the company, what example would that have set for the company’s employees? What about other CEOs? The CEO is also the key component to initiating or overseeing strategic planning and company culture ambitions such as diversity programs and Hispanic marketing initiatives.
I think Bernie has it about right. While the CEO can’t and shouldn’t know the minutia of what is going on in the business, they do set the strategy that the company is going after, they do set the tone on how employees views are valued and if innovation is encouraged or if it is a top down rule, they do set the corporate values, etc. All of that effects what type of talent you attract and keep and how employees and the company perform.
There is an old adage which says “a fish stinks from the head down.” A CEO is the head of the company. The CEO leads. The CEO inspires both his/her employees, customers and stockholders. When the company does poorly, generally, it is because of a lack of leadership. You can make the argument the company had the wrong talent under the CEO. But shouldn’t the CEO recognize that and fix it? The company had the wrong strategy. But shouldn’t the CEO recognize that and fix it? By the same token, if a company does well, isn’t it because the “troops” were inspired? Or is it because they had the right strategy? Or maybe they had very talented people? All those can be attributed to the CEO. While it is the company’s people who do all the “grunt work” and do the day-to-day, it is the CEO who sets the direction, pace and desire. It is the CEO Show!
Perhaps the most important role of the CEO is to maintain the vision for how the company will grow and prosper and then to provide the discipline, teamwork, and leadership to help make it, i.e., the vision, a reality through his/her people.
It seems to me that the “good and bad games” of each of the executives discussed can, in large measure, be analyzed in light of the effectiveness of vision, discipline, teamwork and leadership.
It’s very difficult to identify contemporary leaders and somewhat controversial, so my nominations look to the past and include:
>George Jenkins for his prescient views and his ability to mold and motivate what has become an incredibly effective organization.
>Milton Perlmutter whose vision brought Pathmark out of the Shop Rite organization and whose business acumen allowed Pathmark to redefine the role of own label at that time.
>Robert Wegman whose vision and steely discipline has laid the groundwork for his son and now his granddaughter to lead what is inarguably one of the best food retailers in the world.
If we have the chance in 20 years, it would be great fun to apply the same criteria to our contemporary leaders.
I guess there are some solid comparisons between a CEO and a coach but I’m not too sure about the quarterback analogy. I do know that great retailing CEOs (and you mention some above) have vision about where they plan to take the organization and can articulate — “sell” — that vision to the “team” that does the actual work.
Great CEOs and coaches know how to assemble a strong coaching staff that all work in harmony toward achievement of the game plan. The great CEO knows how to assemble and direct and focus this talent to ensure the players/associates performance is maximized.
Great CEOs and coaches can make mid game adjustments to the plan, and articulate the reasons for the change in a way that everyone understands and supports, and great CEOs lead by example in their work ethic, commitment to excellence, and leadership by example. They take the heat for failures, and support their staff and players in an appropriate way.
Finally, they can communicate with the fans (shareholders) in a way that offers reinforcement that we have a plan to succeed, and a clear vision of how we will get there.
I worry that it will be difficult to get a truly insightful discussion on this topic (though I hope I am wrong) because it seems to dip into the realm of personal identification. Let me explain. The business world loves heroes, and from the data we have been able to gather, it is for two reasons: others who are heroes can make us feel good about ourselves as humans and can give us the hope that one day, we could also be a hero like that; second, being a hero is a huge ego-boost because it says we are special, we are more powerful and more clever, and we have helped others who are inferior.
So this means that we love athletes, especially professional ones (as long as they win). We love firefighters. We love soldiers. And of course, we love CEOs. That’s why we sports-metaphorize them to death.
This veneration of heroes is a form of worship, and there is a strong possibility that we NEED this worship, especially now, with such a fixation on fear and threat. It appears to serve an important purpose; however, it has a most unfortunate disadvantage: it prevents us from seeing a more realistic and useful model not only of CEOs, but of how organizations work.
There is no doubt in my mind that we NEED a different model: 92% of all retail organizations have a 70% customer service rating or worse, 96% of all retail organizations meet customer expectations at 65% or worse, and 100% of all retail organizations are 25% inefficient or worse.
We have tens of thousands of pages of data that explores what we call an organization’s Master System. This System controls everything an organization does. It runs the organization in every way, and in effect, “controls” every person in the organization, including the CEO. Making an organization truly more effective means significantly altering its Master System.
We have found that a large percentage of business executives find this idea repellent, because, they say, it means they are not the ones in control, and in fact, they are being controlled. It is easy to see why, then, that the business world would rather talk about heroes than explore real data that might be more useful.
In “Going Deep” my book on leadership, I talk about the “Corporate Spiritual Leader.” An absolutely critical function in today’s competitive environment. Why? Because it helps businesses do what the Florida Gators did.
It doesn’t always have to be the very top man or woman. For example, at Microsoft, Bill Gates isn’t the spiritual leader, Steve Balmer is.
This is the ‘beloved leader’ and there doesn’t seem to be very many anymore. We can probably name more ‘leaders’ in jail than we can those who are ‘beloved.’ This is the CEO for whom the employees would climb the highest mountain, ford the widest river, etc. You want employees saying “I saw and heard my leader this morning, nothing can stop us.”
I suggest a 30/30/20/20 division of how CEOs can be the capital ‘L’ Leader. 30% of their time on ‘brain trust’ activities like thinking. Just plain ‘thinking’ like you do while on a run, in the shower or long country drive — not in the Board Room. Too many ‘leaders’ say they “don’t have time to think.” Why would anyone follow someone who doesn’t have time to think?
30% on communication — riding up and down on a white steed telling everyone how it’s going, what’s coming next, encouraging their spirit, affirming their value. Cheerleading.
20% on mentoring, coaching and succession planning. A Leader isn’t afraid of encouraging those with more talent and vision than he/she has.
20% on operational details. Little tiny numbers on spread sheets. I get a lot of flack (and may today, too) on this point. Many say the CEO should be spending 80% of their time on the details. If you want the company to lose its soul, then you go ahead and do that. I suggest that view is exactly why so many businesses are struggling for their last breath today. Now someone has to be on top of the numbers; that’s what brilliant senior managers are for.
The ratio of these four roles changes as you move through the organization – but EVERY employee needs to do some of each. We are desperate for Corporate Spiritual Leadership these days – and ignore the ecological value if you want; it is the decisive competitive factor.
CEOs help set the tone and they’re a key component of business culture. Allen Questrom turned around Federated and J.C. Penney. If his Federated turnaround was considered just a fluke, a lucky accident, he proved it wasn’t by turning around a second floundering retailer, Penney’s. Ralph Lauren isn’t just a great designer, he’s one of the best retailers the world has ever seen. American retail companies who thrive don’t perform because of patents, copyrights, or monopolies. They thrive because their people do. And the top person is the CEO.
Ian Percy is right on with his CEO calculations. I have worked for several CEOs in my lifetime. When a CEO gets involved in all the details of the company,it’s the kiss of death. What do you hire talent for? I believe employees should be empowered and the mantra should be: ” Use your best judgment, I want you to ask for forgiveness, not permission.” What employee wouldn’t jump through hoops for a CEO like that?