This is an important read for all in leadership and governance who are responsible to make those difficult decisions. It addresses decisions that all companies face ….. there is a caution against the same innovation that succeeded may not be the best today or even tomorrow.
Excerpt: In the mid-90s as CEO of Medtronic, I was concerned about whether we could sustain the remarkable success in innovation that we had enjoyed during the previous 10 years. As we grew, I knew it would be very difficult to continue to create the breakthrough innovations that had led to Medtronic’s high growth rate, which had exceeded 18% per annum for a decade. Then I read Clay Christensen and Joe Bower’s 1995 article “Disruptive Technologies: Catching the Wave” in HBR.
Read full article via The Idea That Led to 10 Years of Double-Digit Growth – Bill George – HBS Faculty – Harvard Business Review.
Small business takeaways, of-interest and need-to-know.
Excerpt: In our paper, Managerial Overconfidence and Accounting Conservatism, forthcoming at the Journal of Accounting Research, we provide evidence on the relation between CEO overconfidence, an important managerial trait, and the aggressiveness of financial reporting. Building on a growing literature in finance which shows that overconfidence can distort investment, financing, and dividend policies, we demonstrate that firms with overconfident CEOs make more aggressive financial reporting choices than other firms.
Overconfident managers are defined as managers who overestimate future returns from their firms’ investments and systematically overestimate the probability of good performance
Read full article via Managerial Overconfidence and Accounting Conservatism — The Harvard Law School Forum on Corporate Governance and Financial Regulation.
For all CEOs, great read. The tidbits and advice are coming from some of your peers.
Excerpt: The higher up the chain of command you go, the more balls people are juggling. So forget staring out that corner office window thinking big, strategic thoughts while your underlings insulate you from the chaos. CEOs of the hottest start-ups fret about how to tame the e-mail monster and squeeze a few more checked to-do items into each day.
They use various tricks and tools to get more work done in less time, and a recent discussion thread on Q&A site Quora illuminates exactly how they do it all. One curious poster wondered what tricks CEOs use to hack their productivity, and some surprisingly high-profile folks responded with useful, down-to-earth answers that any founder or business owner could put to use.
Here’s how they weighed in.
Read full article via 4 Productivity Hacks From Start-up CEOs | Inc.com.
Interesting read. Thought provoking. Leadership and management — and everyone
Excerpt: Our thirst for leader control arises from a need to believe that someone has a firm hand on the tiller. We usually know that it isn’t us and so we look to someone in whom we perceive greater wisdom or power. The adulation of the master-of-the-universe CEO springs from the same well.
Read full article via Are Leaders Really in Control? – Eric McNulty – Harvard Business Review.
Small business of-interest. Good read
Excerpt: PwC commissioned independent research firm BSI Global Research Inc. to interview 243 chief executive officers (CEOs/CFOs) of leading privately held US businesses in the second quarter of 2012. The interviewees were asked about their current business performance, the state of the economy, and their expectations for business growth over the next 12 months. We then compared their responses with the prior quarter’s results to see how the outlook has changed.
Read full article via Trendsetter Barometer — Business Outlook Report — The Harvard Law School Forum on Corporate Governance and Financial Regulation.
Here is CEO advice from a coach — using his years in the field to give you expert advice.
Excerpt: Business coach and consultant Jim Schleckser has spent years trying to understand how start-up and small business CEOs budget their time. Not suprisingly, the best CEOs–the ones that are able to build highly profitable, fast-growing companies–had a lot in common.
As part of the CEO Project, a boot camp for entrepreneurs, Schleckser advises CEOs and company founders on the most important areas of their business to focus on. At the core of his advice, Schleckser believes CEOs need to put the blinders on and focus on what truly drives growth. Here are the core components Schleckser says you should focus on.
Read full article via What High-Growth CEOs Do Differently | Inc. 5000.
Good read. If you are struggling or feeling somehow not up to the tasks before you — read this article and know everyone goes there!
Excerpt: If you are a founder CEO and you feel awkward or incompetent when doing some of these things and believe there is no way that you’ll be able to do it when your company is 100 or 1,000 people, welcome to the club. That’s exactly how I felt. So did every CEO that I’ve ever met. This is the process. This is how you get made.
— Ben Horowitz is co-founder and general partner of Andreessen Horowitz, a venture capital firm created to support the needs of today’s technology-focused entrepreneurs through angel investments to large-scale funding. Ben currently serves on the board of Okta, Nicira, Proferi and Skype.
Read full article via Making yourself a CEO – Fortune Tech.
Interesting read for all leadership and management. If you are a CEO, are you taking advantage of the network opportunities with positions on other boards? What are other issues when CEO and founder is one and the same?
Excerpt: Firms in serious decline are more likely to rebound and avoid bankruptcy if their CEOs hold appointments on other companies’ boards, according to this paper. The more numerous a CEO’s posts, the more likely it is that the firm will recover, lending credence to the argument that external board positions for corporate leaders provide more value than just social ties. Especially for the CEOs of struggling companies, board posts can be used to access outside expertise, advice, and resources that aid in developing and executing an effective turnaround strategy.
Unfortunately, according to this paper, the same is not true for a founder’s status. Having the original founder as CEO does not make it more likely that a company can recover from trouble.
Despite intense interest, especially in times of economic strain, in the factors that can turn a struggling company around, little research has been done on these two potentially important elements — whether the firm’s CEO holds posts on other boards and whether the CEO is a founder.
Read full article via Bettering the Odds for a Turnaround. From Strategy + Business
This is an interesting article about board of directors; written from an Australia reference, it also holds value for all small business development of boards and the accountability / responsibility that should and should not be expected.
Excerpt: Our findings are a challenge to the ASX and ASIC, which discourage outside directors from owning shares in companies they hold board roles on for fear it undermines their independence. Ownership can be a tool to help align shareholder and manager interests and is linked to a firm’s positive performance. It is only likely to be fully effective if the board size is restricted to no more than about five or six. If management needs advice then it should simply hire consultants, not create large unwieldy structures made up of so-called ‘advisors’ kowtowing to management.
Before accepting a board role, a prospective director needs to signal his believe in the board’s monitoring role either by substantial personal shareholdings or taking his pay in the form of escrowed shares during his tenure. He may also need to negotiate funds set aside to assist board members in their monitoring role as boards need access to resources independent of day- to-day managerial control, especially when dissatisfied with the CEO’s performance.
Read full article via Knowledge Today – Shareholders Short-Changed by Big Boards. From Australian School of Business Knowledge Today
Are you aware of which skills are prime in today’s CEO market? Do you know how your skills are measured? Which skillsets are most likely to garner bigger compensation packages?
Excerpt: …… we show that boards’ compensation decisions reward several reputational, career, and educational credentials of CEOs using a panel of S&P 1,500 firms between 1993 and 2005.
Our study is motivated by anecdotal accounts of executive search consultants, recent empirical evidence, and a growing theoretical literature that point to an increased importance of the labor market for CEOs over the last two decades. The central message of these studies is that there are fundamental differences in CEOs’ skill sets and that these differences are an increasingly important determinant of CEO pay. However, we still have scant direct evidence on whether differences in CEO skills matter for their pay. Even less is known about which CEO skills actually carry a premium in CEO pay and whether skill pay premia can help to explain key stylized facts of CEO pay, such as its dramatic rising trend and the increasing gap between the most and the least paid CEOs. In order to fill this gap, we use new hand-collected biographical data on a large sample of CEOs to examine whether there is a credentials premium in CEO pay—i.e., do firms make inferences about otherwise difficult to observe CEO skills from readily available facts that can be gathered from CEO resumes and professional career track records? If so, is the relation between CEO pay and credentials consistent with market-based theories?
Read full article via Which Skills Matter in the Market for CEOs? — The Harvard Law School Forum on Corporate Governance and Financial Regulation.
A good read on some important ingredients to include in your innovation tasks. It is innovation with issues uppermost in today’s world.
Excerpt: CEOs of large companies face a conundrum: they are confronted with a growing number of frugal consumers clamoring for affordable solutions, yet their existing corporate culture and incentive systems are designed to support a “bigger is better” business model — not to deliver more with less. As the Age of Austerity dawns, however, corporate leaders will have no choice: they will have to bite the bullet and infuse their organizations with a frugal mindset. In sum, CEOs need a frugal innovation agenda.
Frugal innovation is the ability to innovate cost-effectively and sustainably under severe resource constraints.
Read full article via The CEO’s Frugal Innovation Agenda – Navi Radjou, Jaideep Prabhu, Simone Ahuja – Harvard Business Review.
Small business of-interest, news-to-watch and need-to-know — revealing the results of say on pay to date and what is next.
Excerpt: Whether the pay of a company’s CEO and other executive officers is aligned with the company’s performance has been the single most important and controversial executive pay issue for U.S. public companies since the advent of mandatory say-on-pay votes under the Dodd-Frank Act, which applied to most U.S. public companies in 2011; smaller reporting companies will face these votes and issues in 2013. As we wrote in our Director Notes “Proxy Season 2012: The Year of Pay for Performance,” 2012 was indeed the year of “pay for performance.” This has been proven by the over 2,000 say-on-pay vote results reported through September 5, 2012.
The stage for the 2012 pay-for-performance debate was set in 2011, when Institutional Shareholder Services Proxy Advisory Services (ISS), which is widely regarded as the most influential U.S. proxy adviser, applied a crude two-step test to assess pay for performance in making its say-on-pay voting recommendations.
Generally, under its 2011 test, ISS concluded that a pay-for-performance “disconnect” existed if:
Read full article via Defining Pay in Pay for Performance — The Harvard Law School Forum on Corporate Governance and Financial Regulation.
Here is good basic advice that most CEOs do know but in case you need a reminder or a heads up — read this article.
Excerpt: Over the years I’ve met more than a few CEOs who did little more than pay lip service to their board of directors, only to find themselves wondering what went wrong as they were being ushered out the door prior to the expiration of their employment agreement.
As a CEO, your board can be one of your greatest allies. Conversely, and just as easily, they can be a significant contributor to your undoing resulting in an early and unnecessary demise. In today’s column I’ll deal with a skill set that all successful CEOs excel at—managing board relations.
Read full article via Managing The Board – What Every CEO Must Know | CEO.com.
So you want to be a CEO? This is a short but impact article on author’s assessments from experience in coaching for success.
Excerpt: I am able to confidently help executives determine if they are personally ready for the role of CEO.
That determination can be reached by testing the person’s contiguous mastery of at least six fundamentals from the field of leadership studies. They are: ..
Read full article via The Six CEO Fundamentals | Wharton Magazine.