Thinking Like a CEO

Skills that get you to the top spot are often not ones that will keep you there


Imagine that you’re an NBA star instead of a stellar MBA. In fact, you’re more than a star; you’re one of the top players. Then you make a dramatic career move, accepting a lucrative offer to be a head coach in the league.  

Suddenly, your job is to lead and motivate others who excel in the very skills you had mastered earlier. Your job no longer involves shooting, passing, rebounding, dribbling and playing defense. Instead, you’re responsible for putting the right talent on the floor in the right situations. You have to manage a lineup of inflated egos while keeping everyone focused on working together. You have to map out winning strategies for every game and then communicate them effectively so your players can execute them. You’re also the most public face of the organization, with corresponding responsibilities in handling the media. Few of the skills that took you so far as a player will serve you in this new role. Now you feel all alone.  

Professor Michael Burcham uses the NBA analogy to explain the thinking behind a new program at Owen, Thinking Like a CEO, that he helps lead. Like star players turned coaches, CEOs—especially those who are newly promoted into the position or who have grown an entrepreneurial venture into a more substantive, structured enterprise—often struggle in their new roles and make common mistakes that, to outside observers, seem to violate common sense.

The course is the creation of three Vanderbilt professors: Burcham, David Furse and Kimberly Pace. They recognized an under-fulfilled market need for CEO preparation based not on research but on their extensive, hands-on involvement in the world of corporate executives.

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Burcham has started and led three health care companies. (He carefully balanced the operation of one, in New Jersey, with his teaching duties at Vanderbilt.) Furse was an entrepreneurial CEO with two decades of experience before joining the ranks of academia. Pace, who directed marketing and communications for two international firms, continues to coach and advise CEOs on managing their “personal brands.” All three professors consult regularly with C-level corporate executives.

Even experienced executives make monumental errors. But basic mistakes, the professors observe, are especially common among CEOs who came into their position through growing a small start-up company or through excelling in one area of an established organization. “Some chief executives, for example, came up through a particular area of a company, such as marketing, and have a less than thorough understanding of the rest of the organization,” says Furse. “So they may starve the parts of the organization they don’t understand.” Others, who were “stars” in sales or operations or finance, struggle to learn that “they don’t get to be the star player anymore.” The job, rather, is about empowering everyone else in the company.

“Some CEOs are phenomenal at strategy but not execution,” notes Pace. “Some are good at execution but not strategy. If you’re an elite organization, you have to be great at both. You need the whole package.”  

Younger entrepreneurs, in particular, says Furse, set a trap for themselves by trying to be everywhere. Once the organization grows, these start-up executives fall prey to their own success. “You can’t directly manage the whole company anymore. You have to develop people and build a management team. A lot of the work we do is helping CEOs develop their senior management teams. No CEO can do it all.”

Burcham recalls one successful technology entrepreneur who was still trying to run his 500-person company the way he did “when it was just him and 15 software programmers.” It didn’t work.

“Few schools teach people to be a CEO,” Burcham observes. “People are promoted into the role. They get there through different skills, and these aren’t necessarily the same skills they will need as a CEO. If you bring a VP’s skills to the position of CEO, you’ll probably make a lot of the same classic mistakes that other CEOs have made.”

The prevalence of such high-level blunders, and the general lack of opportunities for CEOs to learn (or even recognize) the skills that would make them more effective in their roles, led Professors Burcham, Furse and Pace to an idea: start a class for CEOs.

So the three put together a curriculum that would at once be meaningful to C-level executives yet manageable as a short program for business leaders with limited time. Furse summarizes, “We interviewed CEOs who are Owen alumni to get their sense of what tasks take the largest amount of their time and where the needs are.”

And they began testing approaches on their own MBA students—an experience that, as Furse discovered, accentuated the need for training geared specifically to a CEO’s responsibilities. “I was teaching a strategy projects class,” he recalls, “and students kept asking ‘What strategy can we recommend that will make the client happy?’ I had to tell them, ‘No, no, no! If you want to develop strategy, you have to think like the CEO!’”

That bit of coaching gave its name to the two-day program, Thinking Like a CEO, that Professors Burcham, Furse and Pace began jointly teaching spring 2008. In that relatively brief time, about 50 executives have completed the course.

“There are a lot of leadership programs out there,” Furse says. “But we hadn’t really seen any that are structured quite like ours.”

The professors have distilled their years of experience and insights into a compact, fast-moving program. “We focus on what is (and isn’t) in the CEO’s job description,” says Furse. “There are just three things: (1) crafting strategy; (2) building an organization that can execute the strategy; and (3) enlisting the board and other stakeholders to support it. If you’re not spending at least 75 percent of your time on these tasks, you need to reevaluate what you’re doing.”

The professors also examine what they have identified as five essential skills that set successful CEOs apart from the rest:
  1. Motivating others and creating a shared vision for the company
  2. Bringing insights to guide problem solving and prioritizing
  3. Developing essential strengths in themselves and others
  4. Communicating (especially active listening)
  5. Projecting “A.U.R.A.”—a sort of “it” factor that combines authenticity, uniqueness, reality and authority, which is much more than charisma
The opportunity for CEOs to discuss actual challenges, dilemmas and difficult decisions, the professors find, has been one of the strongest sources of positive feedback from CEOs, who often feel not just lonely at the top but unsure of where to turn when they need advice.

According to Pace, CEOs feel isolated because it’s difficult to find honest sources of feedback and counsel. Even the nation’s top “CEO,” the president of the United States, has a select group of close advisors in whom he can confide. But corporate CEOs may risk appearing weak and indecisive if they share their struggles with their boards or with senior managers. Pace recommends that CEOs recruit their own informal advisors whom they trust for honest feedback.

“For CEOs, our course offers a safe environment where they can express things they worry about, peer to peer,” Burcham explains. “It’s one of the few places they can feel safe in opening up and being a little vulnerable. It creates new opportunities for learning.

“That opportunity meets a real business need. Back in their companies, CEOs generally don’t have anybody to bounce things off of. But when they talk about their challenges with their peers in a classroom, they may hear six or seven different ideas that could work. That is really empowering.”

It’s a common and dangerous misperception, the professors point out, that good CEOs don’t make mistakes—a misperception sometimes fueled by well-publicized examples of celebrity CEOs (think Jack Welch of GE) who seem to have a Midas touch. That erroneous view, in turn, places added pressure on CEOs who think they must “be like Jack” or another role model CEO and are frustrated when they fall short. “Successful CEOs must be themselves,” advises Pace.

“The world thinks CEOs have to be superheroes,” Burcham says. “But you’re going to make mistakes. Fortunately, I made more good decisions than bad over the years. But I could fill novels with the stupid stuff I did as a CEO. David and I realized that some of the most powerful learning opportunities come from relating our own struggles. Understanding their mistakes helps young CEOs get better.”

Adds Furse: “If you don’t make mistakes as a CEO, it means you’re probably just sitting on your hands.” And that, of course, is also a big mistake.
Published Apr 1, 2009 in Vanderbilt Business Intelligence
Contact: vbintelligence@owen.vanderbilt.edu
Copyright 2009 Vanderbilt Owen Graduate School of Management