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Leadership Lesson - How Do Great CEO’s Differ From Average Ones?


What Makes A Great CEO.jpgThere was an interesting HBR blog “How The Best CEO’s Differ From The Average Ones” by Dean Stamoulis of Russell Reynolds and Hogan Assessment Systems that attempts to get past the stereotypes of a typical “great CEO” (Extroversion, Charisma, Risk Taking) and look at the data that they collected from over 200 psychometric profiles of 200 global CEO’s using three different Hogan instruments (16PF, OPQ-32, and Hogan Development Survey) to determine what are the traits of a successful CEO and how these traits differentiate them from everyone else.

Based on their data analysis Hogan Assessment Systems and Russell Reynolds were able to show that successful CEO’s differ meaningfully from the overall executive population across eight personality attributes.

  1. Ability to embrace appropriate risks.
  2. Bias toward acting and capitalizing on opportunities.
  3. Drive and resilience
  4. Original thinking
  5. The ability to visualize the future
  6. Team building
  7. Being an active communicator
  8. The ability to catalyze others to action

 They went on further to say that a successful CEO is

“significantly less cautious and more likely to take action when compared to other senior executives. As for the stereotypes, while we confirmed that CEOs, in general, are more likely to be risk takers than other executives, we did not find that they are consistently extroverted or self-promoting.

“The results demonstrate that intensity, an ability to prioritize and focus on substance, and an ability to know what one doesn’t know (and utilize the best in what others do know) are more strongly related to best-in-class CEO leadership than traditional traits like extroversion or self-promotion”.

Hogan and Russell Reynolds made three key insights after putting all of the data together:

Successful CEO’s have a greater sense of purpose and mission and are able to instill a passion and sense of urgency within their organizations. As Stamoulis states”

The best-performing CEOs “move boldly and swiftly to transform their companies.” We don’t advocate decisions and actions that are overly spontaneous or impulsive, but we do value efficiency and speed in analyses and when acting on strategy.

Successful CEO’s are able to separate the signal from the noise.

The study showed that great CEO’s have the ability to get past the details and zero in on the core issues. They instinctively are able to identify what are the most important issues, challenges, threats, and opportunities facing their organization. Stamoulis references what is currently going on in the retail channel:

We are seeing this play out right now, for example, in the retail space, where forces are creating tremendous complexity for CEOs. As retail is increasingly omnichannel, online, digital, and global, CEOs need to be thinking about consumer demand fluidity, globalization, regulations, and exchange-rate volatility, to name a few issues that barely scratch the surface of what retail CEOs are juggling.

Great CEO’s place greater focus on the organization, outcomes, and results than on themselves. 

Stamoulis points out that smart CEO’s “know what they don’t know” and have an ability to be open-minded, seek additional information, and actively learn. They bring  a modesty and humility to the role that keeps them grounded but does not interfere with their ability to strong-willed and decisive. Stamoulis cites the example of Warrant Buffet:

Warren Buffett is a wonderful example of how this set of traits can play out in a leader: Despite overseeing what could be considered one of the most successful companies ever founded, Buffett estimates that he spends 80% of his day learning in an effort to understand businesses, markets, and opportunities. We summarize, of course, that great CEOs need to have the capacity to act boldly in difficult and uncertain situations; to be able to develop and articulate a strong point of view, and to be highly determined. The additional point here is that 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.

In summary, the Hogan and Russell Reynold joint analysis showed that there is no single profile for the successful chief executive. Boards have to do a thorough examination of the business challenges and culture in order to determine who will be the best candidate.

The joint analysis does point out though that “at the top of the list should always be the ability to embrace effective and appropriate risks and the ability to act on opportunities in high-stakes situations — especially when the “right” action is not initially clear. These are the headlining traits that separate CEOs from other senior executives”.

Stamoulis concludes:

When a board wants to increase their odds of hiring a successful leader, it should interview and assess candidates for intensity and impatience, find those who focus on core issues, and search for a leader with the ability to have a point of view while still being open-minded and recognizing the power of the organization around him or her. These characteristics of our best-in-class CEOs will benefit almost every business, as they are clear markers for the ability to act quickly, draw non-obvious and nonlinear conclusions, connect thoughtfully across a wide variety of channels, and take advantage of digital and market disruption — all essential in today’s dynamic markets.

About Dean Stamoulis:

Dean Stamoulis leads Russell Reynolds Associates’ Center for Leadership Insight. He provides guidance to boards and chief executive officers on how to build excellent leadership teams. This advisory work includes optimizing hiring, promotion, and succession decisions, and contributing to the development of promising senior executives. He is based in Atlanta.