Category : 2021
In the rarefied air of executive suites, following a tough act is a daunting proposition. Equally formidable is the admission that it’s time to make a tough call—
- A board knows it’s time for an aging and revered CEO to retire.
- The venture capital company financing a start-up needs to tell the founder he isn’t equipped to run the business he birthed.
- A business recognizes a brilliant market expansion made in 2019 is a post-COVID albatross.
- A talented executive realizes the job of her dreams has become a nightmare that won’t end.
From aging CEOs to brilliant entrepreneurs to superstar executives, the toughest calls are those that involve people. From his investigation into 82 CEO failures, business advisor Ram Charan concluded the most prevalent root cause of failure was, “putting the wrong person in a job and then not dealing with the mismatch.” Charan noted, “It’s usually obvious who needs to go, and most of the time CEOs know it in their gut but don’t do anything. It’s hard to admit the error, or they have a psychological bond with the person or think they can coach him or her. Sometimes it’s a matter of misjudging performance, because they don’t dig into the causes.” (You Can’t Be a Wimp and Make the Tough Calls, HBR, https://hbr.org/2013/11/you-cant-be-a-wimp-make-the-tough-calls).
Unpredictable market forces notwithstanding, CEOS tell us that by their initiative, 2021 will be a year of change. PWC’s 24th annual Global CEO Survey states that, “Over half (57%) of US CEOs plan to pursue new mergers and acquisitions in the next 12 months, compared with 38% of CEOS globally.” The report also says, “Twenty-six percent of US respondents who ranked new M&A at the top of their list to drive growth said their primary motivation is to acquire capabilities, including different technologies . . . Innovation also drives growth, and most US CEOs plan to . . . [develop] new offerings: 63% said they plan to launch a new product or service in the next 12 months, compared with 56% of CEOs globally,” (https://www.pwc.com/gx/en/ceo-agenda/ceosurvey/2021.html).
The transitional nature of 2021 is forcing boards, CEOs, and individuals sitting in the executive suite to develop the acuity to see through uncertainty and determine whether the people in key roles possess the business acumen and interpersonal capabilities required to lead through the immediate transition and succeed in whatever evolutions are still ahead. A senior leader lacking the vision and appetite for authentic diversity and inclusion, broad-reaching digital transformation, innovative employee engagement in a hybrid workplace, and adjusting their sails through waves of adversity won’t succeed in the next 18 months.
Most often, tough calls become more difficult, not less, if circumstances calling for a decision are left to resolve themselves. Without regard for education, expertise, or history, our brains hesitate to revisit an initial assessment of and decision about a person or situation. We are uncomfortable with the feeling we are wrong, so all of us tend to stay with a decision well beyond when an outcome or results tell us the choice was not optimal.
A board, CEO, or individual can leverage a few critical actions to facilitate and accelerate making a tough call.
- Get an outside perspective.
The likelihood is extremely good that without something interrupting their thinking, five people sitting around a board table haven’t had any executive epiphanies to radically alter their current approach to a problem. An unbiased perspective from someone with nothing to gain or lose from the decision can be monumental in helping a board take desperately needed action. At a personal level, it is easy to rearrange earlier conclusions and call it thinking. An insightful and candid advisor that will tell the emperor he lost his shirt can help a struggling leader see through the fog of familiarity and take steps to make a change.
- Set aside egos and biases.
Ego is a natural part of personality and biases (fallacies in logic) often quietly sneak into our thought processes. An outside perspective can help reveal where fragile egos and unchecked biases are complicating a decision and delaying action. When facing a tough call, confirmation bias encourages us to draw conclusions from evidence that supports our existing beliefs or preconceptions, even when more glaring proof suggests another explanation. Confirmation bias directs how we search for information, what information we favor, how we interpret information, and what information we recall.
- Pursue explanations beyond what is visible.
Elite marathoners die of cancer. Three-decade marriages quietly dissolve into divorce. Successful companies become footnotes in B-school textbooks. CEOs give up the cover of Fortune to be the lead story of a tabloid. Data tells what is happening. It takes thorough analysis, asking questions no one wants to raise, and engaging in healthy conflict to get to why. Boards, C-suite teams, and executives at all levels easily get caught up in relieving symptoms while the underlying disease that is the root cause of failure remains undetected and unresolved.
- Make a decision, not the decision.
When the demand for a tough call lands on your desk, the aversion for a difficult decision perpetuates the pursuit of a perfect decision. Not wanting the scenario to repeat itself, you do everything possible to ensure the decision intended to resolve a problem doesn’t conceive another problem that emerges six months from now. While admirable, this approach confuses risk with uncertainty and the effort to make a perfect decision free of uncertainty causes you to take too long to act. You didn’t know the outcome of the last decision before you made it and you won’t know the outcome of this choice until after it is made. There is no perfect, so go for timely.
Theodore Roosevelt remains the youngest person to ever sit behind the Resolute Desk, becoming the 26th President of the United States at age 42, following the death of William McKinley. While many disagree about some of Roosevelt’s decisions, once can find wisdom in his insight that, “In any moment of decision, the best thing is to do the right thing, the next best thing is to do the wrong thing and the worst thing to do is nothing.”
If you’re looking for a fresh perspective as you consider the next chapter in your career, call Leapfrog Executive Services.