Thursday, June 30, 2005

What a CEO does

Business success is all about focus - focusing on the right things.

At a brainstorming session for a company recently, we had an interesting discussion on how one evaluates a CEO. What should he/she be focusing on, and how do we measure success?

Part of it is easy. Look at the bottom line every quarter or year. If things are going right, you are hitting your targets, and (hopefully) exceeding them. We also agreed that tracking the share price (for those companies that put a value on their shares) is key.

And there it stopped - for some. If those two indicators are going the right way, some people said, what more do you need?

I argued for much more. I believe the CEO's job is complex and multi-dimensional. You can't just measure the past. To make sure the CEO is focused on the right things, you have to measure the present - and try to measure the future.

So I pushed to add metrics such as market share, R&D, market leadership and new product development to the CEO's burden. And, some measurement of employee engagement/morale/satisfaction, as well as ongoing monitoring of staff turnover levels. There are lots of off-the-shelf tools you can use to study these, to make sure things are truly going well.

To protect the future, I also argued for a strategic-planning metric. Today's markets are changing fast. How focused are we on what we need to do to keep on being successful - next year and the year after that?

You can't measure our success at predicting tomorrow (not yet, anyway). But you can encourage the CEO to keep one eye on the future, and then measure his or her ability to continually motivate individuals and teams to focus on where the markets, trends and technology are heading - and propose new strategies for moving forward.

The CEO's job is not just to perform - but to protect the company's freedom to perform in future.

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