How Must A CEO Think?
If a CEO’s role were that simple, anyone with a net connection and a computer could have become a Jeff Bezos. This is, of course, not one of the best opening sentences ever written, but you got to give it to Bezos for being one of the most striking and charismatic CEOs ever seen.
“The truth is that I’ve watched Amazon from the start and I think what Jeff Bezos has done is something close to a miracle, and the problem is if I think something is going to be a miracle I tend not to bet on it,” Warren Buffett said of Jeff Bezos at the recent Berkshire Hathaway annual meet in Omaha.
But is it really a miracle? While Amazon’s amazing growth may seem like a miracle, Bezos has worked relentlessly to pull through what appears like surreal growth. Amazon was founded in 1994 and its market value is now $766 billion, making Bezos the first billionaire passing the $100-billion club. But Amazon went through its toughest phase in the early 2000s as the company almost went bankrupt. Bezos took a series of tough decisions, laid off 14 percent of Amazon staff, and rebounded to $400 million in profitability in 2003. Since then, there has been no looking back as Amazon added more and more segments, Kindle, and cloud-computing services.
Truth is, most CEOs are faced with such decisions. Many witness at least one major blowup that ends a career or proves extremely costly for the business. The job of a CEO is not easy. You might have done great in the interview with the board, but that might not prove useful in the long run. A CEO may show high performance through the interview, but that won’t help him/her in surviving the role.
So what are the key traits that sets great CEOs apart?
You might think that it’s financial or people management. But these are table stakes, ie you have to know these if you have to stay in the game. A CEO has to look far beyond those. Most might say that the formula for effective decision making is combing emotions with logic. But making a decision is not about just this and that, it includes a lot more to fulfill the role of the leader, to inspire and motivate others, etc.
Adapting to change
Researchers have shown that CEOs who are excellent in adapting to change are 6.7 times more successful. To master this skill is not that easy as it may seem. Several leaders have stated this.
While CEOs have to look at all alternatives, the more successful ones have to devote more than 50 percent of their time thinking about long-term goals.
Collective growth
It might sound clichéd, but CEOs have to be able to carry all stakeholders, employees and customers. Strong CEOs need to balance shareholder priorities and a company’s goals. Look at Bajaj Finance. Under its Managing Director Rajeev Jain, it has delivered a compounding 40 per cent growth in assets under management, and 62 percent profit growth in the last 11 years. And it has achieved this keeping an eye on the needs of its customers — rural, urban and all stakeholders.
Set a high bar
A CEO has to set a high bar of results. Some of the CEOs in the BW Businessworld’s list of high performing CEOs have delivered consistent results year after year. For instance, HDFC Bank’s Managing Director and CEO Aditya Puri, has delivered consistent profit growth year after year, of 20 percent plus, with no stress on the balance sheet. HDFC Bank is the largest private bank in India, with a market capitalisation that’s 10x the market capitalisation of the next bank.
Challenge the status quo
Lastly, CEOs need to challenge the status quo. You can’t be a great CEO by accepting the same things; the results will be the same. One has to set aside the normal, and accept larger results. As Jeff Bezos puts it: “If you double the number of experiments you do per year you’re going to double your inventiveness.”
Lastly, being a leader is not a formula, where you know the exact mix of the ingredients, like adaptability, decisiveness, intellect, aggressiveness, strategy.
You have to give space to your people. Says Keki Mistry, Vice Chairman and CEO, HDFC, “If you tell people specifically everything that they are supposed to do, then that will kill creativity. You have to realise decisions can be tricky. Every decision may not go right. If they go wrong, acknowledge it. That’s the way to show transparency and ownership. Be lavish in your praise. But when you have to pull up some one, be discreet. A leader must be patient because you don’t get success every moment. So you have to persevere. Above all, it is utmost important to have integrity.”
Says Vaidyanathan, Executive Chairman, Capital First: “Inputs can come from many sources. To synthesise those inputs and to convert them into an actionable decision is the responsibility of a leader.”
That said, in this year’s list of BW Businessworld’s Most Valuable CEOs, one thing that is common among the winners is — the Mindset of Achievement. All the CEOs have what is called a ‘winner’s mindset, always thinking about winning and adapting and creating the environment or business conditions for achievement. The BW Businessworld Most Valuable CEOs also have, as you will see, what is called a strong foundation, so essential for a shot at success.
If your foundation is not strong, there’s little chance of success in the modern world of business. In this year’s list, we at Businessworld have gone a step further and incorporate more success stories so you can imbibe the lessons of some of the great CEOs in your business. We have included 40 of the most valuable CEOs from businesses of all sizes as against a normal practice of 25 top CEOs. Through the stories in the following pages, we hope you soak in the inspiration and success mindsets of the most valuable CEOs.
