The longer I’m a student of our industry, the more firms we observe outperforming and underperforming, and the more clients we engage with (several recently) on the issue of leadership succession planning, the more firmly I believe that leadership matters. Really matters.
But “leadership,” like “value,” is easy to say and hard to define. It can be the classic empty vessel, or Rorschach test, inviting anyone and everyone to read into it whatever they’d prefer. Surely we can do better.
Actually, we can.
Two current articles in the Harvard Business Review address this very issue, from different perspectives. The prolific Ram Charan published The Secrets of Great CEO Selection (December 2016) and Dean Stamoulis How the Best CEOs Differ from Average Ones (November 2016).
Let’s start with Ram Charan.
Inevitably and appropriately, his article covers not just indisputably “great” CEO choices (Steve Jobs returning to Apple is surely the one that will go down in history, although Lou Gerstner—a deeply improbable dark horse—being brought in to IBM in 1993 should be equally celebrated), but also disastrous or certainly disappointing choices, like HP’s revolving door pre Meg Whitman or Yahoo since, well, since forever.
Here’s the thematic heart to Charan’s thinking:
In my experience, board members who are adept at picking CEOs do four things others don’t: They work painstakingly to clarify the essential qualities needed to succeed in the job; they keep an open mind about where the best candidate will come from; they go deep to understand which candidate is the best fit; and they allow for imperfections in the chosen candidate.
The first key criterion—the essential qualities needed—is really a different way of identifying what the organization needs at that specific juncture. Has it been exhausted and overextended by growth? Maybe it needs a period of consolidation and retrenchment, and indeed Charan provides an example of an unidentified Chinese real estate conglomerate that found itself so overextended it had a vast surplus of empty properties it coudn’t unload and lenders breathing down its neck; fortunately the founder, an instinctive and relentless builder, had the sense to bring in someone who could rapidly execute on rapid downsizing and restore the company to solvency and stability.
Similarly, we know from the turnover at high-profile retailers such as Lands End, the Gap, and (you name it) department store, that the CEO of a retailer today has to be ready to go up against Jeff Bezos and Amazon and have a deep understanding of how brick and mortar stores and online complement each other and interact.
How might Charan’s four guiding principles apply to Law Land?
- What are the essential qualities needed to succeed for this firm here and now? This is not only the first step but probably the hardest emotionally and intellectually. It requires unblinking honesty about the firm’s true market position and how it’s perceived by clients, as well as clarity about what might be the greatest threats posed to the firm and how they can be countered.Using the Gerstner/IBM example may aid understanding. At the time of IBM’s CEO search (1993), the outgoing CEO had proposed splitting IBM up. Conventional wisdom was that IBM had lost its way in terms of technology so a technologist would be required to right the ship: John Sculley of Apple, Ben Rosen of Compaq, and George Fisher of Motorola were names that came up all the time. The New York Times even ran a story on the search, “Help Wanted: Computer Skills a Must.”
Two directors decided to go through the botherment of testing the conventional wisdom and spent a month traveling talking to customers. They came back convinced IBM’s core problems were in its b usiness operations, not its technology. When Gerstner—who otherwise wouldn’t have been in the consideration set, as a marketing veteran and star—came in, he quickly concluded that splitting up IBM was the last thing they should do; customers strongly appreciated being able to go to IBM for a single access point to a mix of offerings. But its cost structure had bloated up out of control and its mainframe pricing was uncompetitive and irrational.
He decided to move from hardware towards software and services, cut costs by $7-billion and prices by 30%. Within 12 months IBM swung from an $8 billion loss to a $3 billion profit and solvency was no longer a question.
- Be open-minded about where the next leader might come from. I said the first criterion was probably the hardest, but come to think of it this one is equally tough in its own way. Just for instance—I’m just saying, understand—imagine if a law firm permitted itself to look at candidates for leader from outside the firm. You are at liberty to tell me that would be the most hare-brained idea ever for your firm right now, but I challenge you to explain why it’s inconceivable for all law firms under all circumstances.Perhaps more realistically given the (im)maturity of our leadership selection processes ca. 2016, you might at least consider candidates who weren’t a direct report to the outgoing chair, from deeper down in the ranks of the firm. When Bryan Cave selected Terry Pritchard to succeed Don Lents a couple of years ago, there was as much ink spilled on the fact that she was not from the St. Louis office as that she is a she. Really?, I recall thinking.
- Go deep to understand each candidate. Charan provides the example of the deep-dive process engaged in at an un-named “large midwestern insurance company” when the selection process came down to the finals. Having identified two internal and three external candidates as contenders, the six search committee members broke into two teams and spent an entire weekend exhaustively interviewing each candidate. At the end of the weekend they compared notes and found that even though each team had taken a quite different approach to talking with the candidates, they had reached remarkably parallel conclusions. One outsider, for example, had truly imaginative ideas for taking the company into new areas, but they weren’t confident he could execute. Another had always built via acquisition and had no track record with organic growth. Etc.You can see where this is going: They ended up rejecting all five and starting over.
That’s what it means to “go deep.”
- This brings us to allowing imperfections: Horrors. Now, of course there are imperfections and there are imperfections. If an individual scores highly on everything we’ve just discussed but would benefit, say, from some executive coaching? Shouldn’t be a dealbreaker. If your CEO-in-waiting is strong on strategy and communication but weak on finance or operations, make sure your CFO and COO are world-class and that your CEO is ready to be trained. Frankly, this happens all the time, especially in venture capital land, where investors often require the entrepreneur/founder to step down or step into a dual role so “an adult” can help navigate the rapids.
The Stamoulis article, equally valuable, takes a different approach: It goes quantitative.
They created “detailed psychometric profiles” of 200 global CEOs using three time-tested psychometric instruments measuring traits such as leadership style, interpersonal skills, resiliency, independence in thinking and decision-making style. They then validated the “CEO-like” characteristics by comparing those profiles to the profiles of non-CEO senior executives in a database of 9,000 leaders.
As luck would have it, CEO’s are different. The bottom line:
Our analysis revealed that CEOs differ meaningfully from the overall executive population across many personality attributes. Two traits in particular stand out: an ability to embrace appropriate risks and a bias toward acting and capitalizing on opportunities. We consider these traits the “essence” of the CEO personality. In other words, a CEO is significantly less cautious and more likely to take action when compared to other senior executives.
They also found six other statistically significant traits on which CEOs differed:
- resilience and drive
- originality and creativity in thinking
- an ability to visualize the future
- team building
- being an active communicator
- and a facility for catalyzing others into action.
Now the bad news.
Do any of these traits—any of them—strike you as typical of lawyers? No, me neither. Shall we rehearse some of them quickly?
“Embracing risks?”
“A bias toward [seizing] opportunities?”
“Resilience?”
“Originality and creativity?”
“Visualizing the unknown?”
Searching for your firm’s next leader may not be for the faint of heart.
On the other hand, there is some good news here. CEO-types are driven by purpose, passion, and urgency; Lord knows lawyers can fill that bill. The worst thing a CEO can do is to sit on their hands.
Also, CEO-types want to go straight to the core of the issue. Putting aside the details to understand the larger context, or what engineers would call pulling the signal out of the noise. Yes, CEOs want to, should, and do draw on a myriad of sources and voices as they contemplate major decisions, but in the end they make the tough calls independently and follow their own sense of which are the critical priorities.
Finally, they are resoundingly “firm first” in approach and attitude. They care only for the organization and outcomes and results, not on how any of it might reflect on them personally. The best CEOs, contrary to much business literature, and resoundingly contrary to most popular coverage of business, are humble: They know what they don’t know, are open-minded, constantly learn, and readily seek advice. (Think Warren Buffett.)
But of all the gems in these two articles combined—and there are many and I again commend them to you—my favorite, since I passionately try to practice it in my own life and career, was this:
The most-successful CEOs also need to believe that the best idea wins and that they often obtain the best ideas based largely on how they work with others in a collaborative way.
Amen.
Do note, however, that this approach to the world is 180° to the lawyer’s default position, which is more to the effect of, “I know the position we have to come out at, so I’m going to reason and argue backward from there to get to it.” That may be sound advocacy; it’s dreadful leadership.
It’s not about me and it’s not about you; this isn’t personal, it’s just business. May the best idea out in the end.
