Most people are aware that a CEO sits at the top of the corporate leadership pyramid with responsibility for captaining the ship and overseeing strategic direction. But what exactly does it mean to be a CEO in a small, growth-led business?
In this first of an article series dissecting and demystifying the SME C-Suite, we will break down the anatomy of the CEO by delving deeper into 3 key dimensions associated with the role:
- The Behavioural Archetype
- Key Relationships
- Key Activities
1. The Behavioural Archetype:
In their recent study ‘The CEO Next Door’, Elena Botelho and Kim Powell interviewed more than 2,500 leaders and identified four key traits which all CEOs need to be successful. They were:
- Engaging for impact
- Relentless reliability
- Adapting boldly
Of those four, relentless reliability was singled out as the most important trait, way ahead of any stereotypical notions of extroversion and risk readiness (in fact a related study by Harvard Business Review found that Introverted CEOs were slightly more likely to meet and surpass expectation than extroverted ones). Indeed, Botelho and Powell’s research suggested that reliable CEOs are 15x more likely to be high-performing, than those deemed not reliable.
Internally, reliability is a sense of calm created by the CEO that the steps the team has taken to date have been the correct ones, and that key strategic considerations concerning future prosperity have been arrived at methodically, ensuring a strong probability of success. Externally, the CEO must play the role of chief publicist, demonstrating to end users, investors and potential counterplayers the efficacy of the product/technology, instilling the idea of minimal risk in backing the venture. The research suggests that these external players must have confidence in the CEO’s reliability to deliver to consider any collaboration.
Tolerance for Ambiguity
Between securing and finalising Seed through to Series funding, overseeing clinical trials, obtaining international accreditation, setting up and optimising manufacturing processes as well as continually engaging KOLs and drumming up interest for the product, it’s clear that a CEO must have visibility and knowledge of an almost incomprehensibly complex web of inputs and outputs to the business.
The CEO must be prepared for and indeed thrive within an environment where these concepts and milestones exist in a state of tension and the correct route and prioritisation are at the mercy of uncontrollable transience. The CEO must have the drive and self-belief to plot a course through this landscape and retain the ability to continually assess its correctness, entertaining alternative views, shifting and reassessing as necessary.
Taking risks and acting fast are both traits immediately associated with the modern CEO in any business size or industry. These are truths often held in and of themselves to be reasons for CEO success, but how doe taking risks and acting quickly translate into competent performance?
The study by Harvard Business Review found that more successful CEOs tended to make decisions ‘earlier, faster, and with greater conviction’, than those who were more inclined to deliberate in search of greater precision. To maintain momentum, CEOs need to make decisions based on imperfect information and prioritise the relative exposure that they have to different subject areas in the business, and then they need to fully believe in their decisions.
Deliberating CEOs with a capacity for complexity were found to be guilty of intellectually-driven ‘bottle-necking’ with not enough decisions being made. This bottle-necking was found to be contagious within some organisations as senior leaders and line managers mirrored the CEO’s pursuit of accuracy, leading to organisational stagnation.
2. Key Relationships:
The multi-faceted role of the CEO lends itself to an equally diverse web of relationships with both internal and external stakeholders. But which relationships are typically most important and how are these cultivated and sustained?
CEO and Chair of the Board
The CEO is charged with turning ideas into strategy and strategy into action, and whilst they can consult other senior leaders or even subordinates, very often the CEO is the only individual within the organisation with the foresight to direct these processes and so advice is limited. One of the key duties of the Chair of the board is to fill this knowledge gap and provide the mentorship that the CEO is expected to provide to the rest of the organisation. It is essential for the viability of this dynamic that the CEO and chair communicate early and often. Both parties must develop an intimate understanding of the other’s skills, intentions, successes and challenges in order to maximise the effectiveness of the relationship, and ultimately act as one and work with unified purpose.
CEO & CFO
Underneath the blue sky, helicopter, 10,000 or 30,000 foot thinking that is expected of the CEO as they drive the business into the future, is the bottom line. The company must make progress and make financial sense for investors and shareholders and it is the CFO’s task to provide an unequivocal, unbiased depiction of the business’ financial state. The CFO is the individual ultimately responsible for establishing the financial viability of all company initiatives and a close CEO/CFO relationship means that strategy can grow within a framework of reality and practicality. The CEO is responsible for investor relations and the acquisition of funds, by working closely with the chief allocator of the fund the CEO can understand how and where to focus efforts in the obtaining of funds, producing unique strategies and targeting investors who can best support specific business needs.
3. Key Activities:
Hopefully, this article has demonstrated that the work of a CEO is multifaceted and variable, based on the particular circumstances, objectives and goals a business is pursuing. That being said, however, there are some core activities and responsibilities which almost all small business CEOs must engage in to keep the wolves from the door.
Defining and Championing the Vision
This is not just about establishing plans for future financial success and then ensuring that this is carried out. It is about energising and inspiring the entire organisation to get behind a unified purpose and work as one indivisible entity towards achieving greatness. Doubtless, the CEO can draw on various sources in the creation of the vision, but the eventual manifestation must come directly from them for it to achieve the desired effect.
By 2020, half of the world’s workforce will be millennial and this has a large bearing on CEOs and the need for clearly defined vision. A recent study found that 72% of Millennials desired the autonomy to be their own boss, whether that is as an entrepreneur or within a company which fosters such behaviours. Developments in access to previously hidden or unknowable information has made this generation and those that will follow increasingly mistrusting of doing any work without a clearly defined, impactful vision. This in turn makes it increasingly imperative for CEOs to define their vision, in terms of both talent attraction and retention.
Human Capital Investment
Hiring is sometimes about replacing skills the business has lost, and sometimes about recognising that a certain skill is yielding great results and hiring more people with those skills to meet demand. These represent downstream hiring practices where the need has been established and the recruitment is based on finding an individual to match what is a known quantity for the business. For the CEO however, the recruitment question is altogether more forward-looking and often based on imperfect information. To achieve growth, CEOs must look to identify talent and acquire skills based on upstream principles regarding what the business will need to remain competitive and prosper well into the future, and not simply satisfy short term requirements.
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