Tuesday, January 13, 2015

What If We’ve Misjudged CEOs?

In the 1950s, the US was responsible for approximately 30% of international trade. Today, the US accounts for only 10%. After WWII, much of the world was in shambles. They depended on the US to supply capital, labor, services and materials. In the 21st Century, those same countries that depended on us are our competitors.

The CEOs of the 1950s had it easy compared to CEOs of the past 20 years. Business was predictable back then. Market size and customer demand grew at a steady and manageable pace. In today’s global
market, third world countries have become our competitors and suppliers of raw materials, labor and finished products.

Furthermore, mega corporations like Wal-Mart qualify in size to be one of the top 15 largest countries in the world. Being the CEO of Wal-Mart can be more complex than being the President of a small country because Wal-Mart’s employees are all over the world, while the President of a country has its citizens in one central geographic location. From that aspect alone, the complexity of serving as CEO to a global enterprise in 2015 towers the challenges of a company from 60 years ago.

What am I getting at? The US has been on a witch-hunt for CEOs over the past 20 years. While CEOs are no different than other professions, in that, there are good doctors and bad doctors, good priests and bad priests, etc.  The knowledge, skills and competencies required to run a global company with hundreds of billions of dollars in revenue and hundreds of thousands of employees is unprecedented in recorded history.

Now, I ask you to consider that there may have been times when the CEO approved a brilliant new plan or service/product that had never been done. And it would give them a competitive advantage. In the beginning, things went well. However, as the success grew, there weren’t sufficient feedback loops to indicate there may be trouble on the horizon. In other cases, good intentions can have negative ripple effects with various stakeholders.

In addition, in a publicly traded company, these new opportunities can be positive on a short-term basis. Shareholders are happy and the stock price goes up. When a mistake happens, the reaction may be to sweep it under the rug, for the sake of keeping shareholders happy. Over time, the little mistakes become a dead elephant under the carpet. And you get Tyco, Enron or Worldcom.

The original intention most likely was benevolent. Except, the organization was not structured to handle unprecedented growth of new products/services. While the old organizational structures were great for business as usual, especially a company from the 1970s and before, they could not support the demands of the past 20 years.

Why does this matter? I ask you to consider that there may be much more benevolence in the intention of CEOs. From the outside, it appears they are greedy. When you are in the seat of the CEO, it appears you need knowledge, skills and competencies that have never been required to run a business. Since we have not had corporations of this size and complexity in world history, there is nowhere to acquire this knowledge. Therefore, it is made up and learned as on the job training. From that perspective, it is easy to see how good intentions can go wrong. In a world of short-term quarterly demands, CEOs are doing a great job of continuing to grow mega corporations and competing in the global marketplace. 

What do you think? I’m open to ideas. Or if you want to write me about a specific topic, let me know. 

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