In 1997, the average annual CEO turnover was 5%, and the average CEO duration was about 9 years. In 2009, the average annual CEO turnover was 15%, and the average CEO duration was less than 5 years. That is an astounding trend! The primary reason is that as the cycle speeds of everything else – innovation, technology, globalization – have increased, the cycle of leadership has increased in corresponding fashion. Today, a CEO simply has to succeed quickly, or he or she will be replaced. Stakeholders cannot afford to wait. And if the CEO happens to be the primary stakeholder, he or she is not off the hook. While he or she may keep his or her job, the victory may be Pyrrhic in that his or her company will fail in the high velocity, highly complex competitive environment in which it operates.
I coach CEOs across the nation, across industries, and my advice for them is the following:
1. Continuously assess. Build systems for continual information flow from your employees and your customers so that you know precisely – at any given moment – your strengths, weaknesses, opportunities, and threats (“SWOTs)”.
2. Continuously plan. The value is not in the plan anymore, it’s in the planning process that ensures a leader and his or her organization are right on top of their SWOTs at any given moment.
3. Demand accountability. The only organization that survives today is one that (i) clearly articulates expectations down to the last person, (ii) demands that those expectations be met, (iii) accurately measures progress toward meeting those expectations, (iv) fairly rewards those that meet expectations, and (v) quickly addresses situations where an employee is not meeting expectations by, in order, coaching him or her into acceptable performance, transitioning him or her to a position where he or she can meet expectations, or humanely terminating him or her. (The lack of systems and tools to enable this have been lacking historically, but we are aware of at least one system that is phenomenal, and backed by Jack Welch himself.)
4. Manage talent flow intensively. The advice for being “slow to hire and fast to fire” has never been more prescient, but the absolute requirement of firing quickly means there must be much greater emphasis on building an incoming pool of high quality talent. Companies have to use every means possible (e.g., cutting edge culture, highly evolved benefits programs, search firms, social media) to make themselves a magnet for talent.
5. Get the executive team firing on all cylinders immediately. A well functioning executive team is the most powerful competitive advantage an organization can have in the face of a brutal external environment and, yet, it is the one that is most ignored. Don’t do it through non-contextual exercises like ropes courses or softball games, but through a focused, in-context effort. (The Chicago Bulls didn’t build teamwork in an executive board room; executive teams can’t be expected to build it on a basketball court.)
6. Get help. Virtually every successful company is investing in third-party help with executive coaching, strategic planning, strategic execution, executive team building, and talent management. While in generations past, a CEO might feel this this help means he or she is lacking as a leader, today the successful leaders know this is actually their means to success.
Per this article, private equity is flowing heavily into real estate funds again. Investors missed the sky-high returns – we’re talking 50%, sometimes over 100%, IRRs – they would have harvested if they bought anywhere near the bottom in 2009 and 2010, but it’s a meaningful statement about the health of real estate for the next couple of years. And good for the economy. Just keep your eye open for the ridiculous cap rates of 2005 and 2006, and short, short, short!
Not terribly surprising that it occurred, but more how quickly we reached this point. With the relative shutdown in new home production since the crash, and only recent resurgence of homebuilding, the U.S. is fast approaching a “sold out” situation. Obviously, this has broad implications socially, but economically, there are clearly investment plays forming. Our sources tell us private equity is gearing up to depl0y some its dry powder, a lot of which has to find a home before 2014, in these plays.
Good advice if you’re looking to raise any kind of capital in a private placement: http://venturebeat.com/2013/02/19/ditch-the-pitch/
22 Feb 2013
In reading this article last week on 5 Underrated Habits of Great Leaders, I recalled a column written by Rich Karlgaard in the April 23, 2007 issue of Forbes. It actually is a story told to him by Nancy Ortberg, who once was an emergency room nurse and went on to work under the great leader, Max De Pree, former CEO of Herman Miller. Late one night in the emergency room she witnessed something that astonished her. The room was a mess and she was finishing up some work on her chart before going home. The doctor with whom she loved working was debriefing a new doctor, who had done a very respectable, competent job, telling him what he’d done well and what he could have done differently. Then he put his hand on the young doctor’s shoulder and said, “When you finished, did you notice the young man from housekeeping who came in to clean the room?” There was a completely blank look on the young doctor’s face. The older doctor said, “His name is Carlos. He’s been here for three years. He does a fabulous job. When he comes in he gets the room turned around so fast that you and I can get our next patients in quickly. His wife’s name is Maria. They have four children. Then he named each of the four children and gave each child’s age.” The older doctor went on to say, “He lives in a rented house about three blocks from here, in Santa Ana. They’ve been up from Mexico for about five years.” Then he said, “Next week I would like you to tell me something about Carlos that I don’t already know. Okay? Now, let’s go check on the rest of the patients.” Ortberg recalls, “I remember standing there writing my nursing notes—stunned—and thinking, I have just witnessed breathtaking leadership.”
The shelf lives of strategic plans and unrefrigerated milk, it seems nowadays, are about the same. Our high velocity, highly complex world just plain outdates plans very quickly. Success comes to the best business athletes, those who can adjust to rapidly changing dynamics. Three points about this, though. First, as President Dwight Eisenhower noted in a variant years ago, while strategic plans aren’t worth much, strategic planning is indispensable. Just as the elite athlete constantly plans, prepares, and visualizes to better prepare himself or herself for the reality he or she will confront come game time, the successful company constantly plans, prepares, and visualizes a path to organizational success through a dynamic playing field. The company that dispenses with strategic planning because it doesn’t see the value in plans is missing the point. And it’s going to hurt them. It’s the planning that matters. Second, execution of the plan, short-lived as it is – clearly articulating objectives and action steps and holding team members individually accountable – is perhaps more critical than ever. There simply isn’t time to slack. Finally, companies must realize that staffing is a whole new game. Largely gone are the days of staffing with specialists with long-term track records in a given field. Chances are they don’t have the business athleticism required to adapt to your competitive environment. Look for business athletes with a number of diverse 12-t0-24 month stints where they had quantifiable impact.