Adam Bryant on The CEO Test

Adam Bryant’s Corner Office interviews with CEOs included some of the most innovative, practical, and often surprising insights into the challenges and strategies of leaders I have ever read. So it is not surprising that his latest book, The CEO Test: Master the Challenges That Make or Break All Leaders, co-written with former Amgen CEO Kevin Sharer, has great advice for anyone who wants to accomplish anything, whether it’s running a big public company or working with other people on any significant project. The book’s excellent advice about making and communicating goals and about making sure the people around you communicate well with you is as important in a family as it is in a boardroom. Bryant was kind enough to take the time to answer my questions.

Years ago, there was a popular book called The Peter Principle, which argued that people rise to the level of their incompetence, so that, for example, a superb teacher might be promoted to principal but find that it requires a different set of skills entirely. Do you think that is a valid description? How can boards of directors determine how the skills that make someone a very capable number two or three translate to being a CEO?

I agree with the notion that people often rise to positions for which they are not well-suited, but I think explaining it in terms of incompetence is oversimplifying the phenomenon. It’s not always just a matter of what you can and can’t do; sometimes people might be able to do the work but they simply would prefer to do something else. That requires a level of self-awareness, of course, and a personal value system that enables people to turn down the status and pay jumps that often come with big promotions.

That said, many executives are wired to want to become CEO, and their ambition may overwhelm any kind of reality check on what the job actually entails. All the external stakeholders that require energy and time. The list of responsibilities that grows exponentially. The relentless second-guessing and criticism. The 24/7 demands that require extraordinary stamina. 

And so the challenge for boards is to try to understand whether someone will be able to thrive in the role of CEO. Boards use various assessment tools to get a sense of whether someone will succeed in that job, but just because someone has certain qualities — strategic thinking, executive presence — doesn’t necessarily mean they will perform well. To draw an analogy, there are football players who do incredibly well on the various tests and drills in the NFL “combine,” but their performance in that environment is not always a reliable predictor of whether they will succeed during actual games. 

This is one reason we wrote our book. Rather than studying CEOs or CEOs in terms of the qualities they possess, we framed leadership in terms of the real-world tests that determine why people succeed or fail in these roles. We also provide a playbook to help leaders at all levels navigate those challenges. 

How can boards of directors, still in large part selected by the CEO, who controls the quantity, quality, and timing of the information they receive, plus their compensation (including incentive metrics) and committee assignments, provide effective oversight of a CEO? How can shareholders evaluate that oversight? How can CEOs make better use of their boards?

The nature of board service has shifted dramatically over the last several years. Boards used to be much more clubby – handpicked by the CEO, as you say, and many directors didn’t probe too deeply. But as shareholder capitalism has given way to stakeholder capitalism, boards are facing greater scrutiny from many quarters, and not just institutional investors. With calls for more forceful commitment by companies to increase diversity, directors are facing more questions about their role in making sure the topic is given more than just lip service. 

For shareholders, companies and their boards will set themselves apart by the level and quality of the detail in their answers. Everyone says they are committed to diversity, but then it’s fair game to keep double-clicking on statements to demand more details. If leadership says they are committed to promoting women and people of color, what are they doing to make that happen? What are the specific goals? How are they being measured? How does that tie into how executives are rewarded or penalized? 

And on how CEOs can best use their boards, I’ll defer to you as the expert, Nell. But from all my interviews with leaders, a lot of it comes down to mindset and how CEOs view their boards. Are they a group to be managed so that they show up and don’t ask too many questions? Or do they see them as a valued group of advisors who can help work their blindspots and add a lot of value?

There’s a lot of conversation about shifting priorities for CEOs away from quarterly stock price, including the Business Roundtable’s statement that their members would be taking a more stakeholder-focused approach. How does that affect your guidance on the challenges CEOs face?

The CEO role has changed, as more stakeholders, both inside and outside the company, feel like they should have a voice and a vote in the company’s policies and who should be included among their customers. Because the tone is set at the top at any organization, the CEO has to be, in effect the chief diversity office, the head of ESG, the culture champion… the list goes on. Perhaps the CEO title should be changed to Chief Everything Officer. 

They used to have to prepare for Q&As that were likely to be about strategy and financial results. Now they have to prepare as if they were politicians, ready for questions about what the company is doing to address broader societal challenges. Many CEOs have learned that it is better to get out in front of this dynamic and declare the, say, three broader issues that matter to the company and for which it will advocate, rather than being barraged with an endless series of “What about…?” questions. 

4) You emphasize the importance of excellent communication skills, both being able to convey a clear, actionable strategy and being able to listen. How is that affected by changes in technology, including social media? How do CEOs make the best use of those opportunities and avoid the risks?

I agree that social media and technology bring both opportunities and risks. On the opportunity side, CEOs have many more avenues for communicating with employees and the world at large. And that also places an even greater premium on sharp and concise communications, especially on platforms like Twitter where there is a hard cap on character counts. 

Social media channels also provide a more robust ecosystem for listening and understanding what employees at all levels are thinking. Leaders can easily get trapped in bubbles, where the  information they are getting is often massaged and managed because people don’t want to share bad news with the boss. And maybe the boss sends subtle or not-so-subtle signals that they don’t want to hear bad news — a point that you have made, Nell, based on what you saw first-hand from your days of running LENS. 

The risk, of course, is that social media can both amplify and distort messaging in ways that can damage the leader and the company. So the message to leaders with social media is, yes, you have to engage, but handle with care. 

You say that simplifying complexity is an essential skill for CEOs. How can they be sure they have simplified for clarity and not missed any of the essential factors or become too inflexible?

This is why simplifying complexity for CEOs is such a tricky art form. Your question highlights the sweet spot they have to hit – specific enough to provide clarity about what people should be focusing on and how they will help the company win, yet broad enough to accommodate some of the inevitable short-term zigs and zags. 

We share many examples of strategies in our book by CEOs who do this well. One of them is Bob Iger at Disney, who from the day he got the CEO job has repeated the three core pillars of the company’s strategy: great content, global expansion, and embracing technology in all its forms. And those three areas have indeed been the through-line of Disney’s growth during his time in the chair. 

One of the hallmarks of an effective strategy, to me, is that you may think that something so simple sounds obvious. But when simple plans are done well, that’s where the magic is. People understand their role and the plan to win, and it’s simple enough to be memorable. Some companies make their strategies so general that don’t provide direction and focus; others are too detailed and complex. Without a clear strategy, companies aren’t likely to succeed, because every employee will be defining success for themselves. 

The last year has given leaders of all kinds some of the most unprecedented challenges in decades. How can CEOs prepare to pivot quickly and decisively for unanticipated risks? Can they do a better job of anticipating risk?

It has been a transformative time for leadership, and I think it’s safe to call the death of command-and-control leadership, because any leader who tries to suggest that they have all the answers will lose credibility in a hurry. This is one of the reasons why diversity is so important — you need people with different perspectives and backgrounds to be able to see around more corners to spot both opportunities and challenges. And you need to set a tone that different perspectives and opinions are welcome. I like the point that Jim Whitehurst at IBM made in our interview that he wants to lower the “cost of disagreement” in the company’s culture. That’s a universal challenge. 

I also think that effective leaders have to state explicitly and often to their organizations that change is going to be constant. The status quo is such a powerful force, and it can take so much energy for leaders just to make everybody open to the idea of change. So it’s a much better strategy to tell people that adapting to change is part of their jobs and to be ready for it.  

What pandemic-era changes in business operations do you think will persist in a “back to better” time after masks and social distancing?  Will businesses continue to use more remote, Zoom-based functioning? How will that change the way CEOs manage?

Though there are companies that have gone either fully remote or are going to require everybody to be back at the office, we will see much more of a blend of office and remote work, and less travel for in-person meetings overall. I think many people are recognizing that Zoom calls are an effective use of time, and that they reduce the wear and tear from business travel. 

This new way of working will put much more responsibility on leaders to be crystal clear about the strategy, so that there is a cascading effect throughout the organization that helps people understand what they should be working on and why. In years past, maybe some leaders saw a full office as a proxy for productivity. They can’t do that anymore, so they need to be more intentional about setting clear goals and workstreams and scoreboards for measuring progress.

How has working on this book changed the way you work or communicate?

After spending about a dozen years thinking about leadership — including the 600+ interviews I’ve done with CEOs, and through the consulting work I’m doing now at Merryck — I feel like I’ve landed on some important framing insights about this sprawling field of leadership that inform this book. For example, we wanted to focus on what leaders do, not on the qualities that leaders have or theories of leadership. We wanted to set aside all the table-stakes qualities and requirements of leadership, and focus instead on what we felt were true insights. 

We set ourselves a high bar of trying to simplify the field of leadership by winnowing the endless list of challenges down to the seven ones that matter most. Our goal was to create a kind of shared language around leadership, in which there is some agreement on the skills of leadership that will provide the greatest return on investment of time, energy and focus. Ultimately, readers of the book will decide whether we cleared that bar. 

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