To rise to the top of your chosen field requires dedication, hard work and good luck. As much as we would all like to believe that “we make our own luck”, there is overwhelming statistical support for the role of randomness in an outcome. We can plan perfectly, execute impeccably and attempt to mitigate all conceivable downside in any situation, and still not win. Being at the right place at the right time is not often credited in business textbooks. That is the definition of a confirmation bias. The rest of us unlucky fellows have not been asked to write books on our failures.
Executive leadership
As a corporate CEO or business owner, we are asked to make the best possible decisions with the information that is available to us. The information will never be perfect and so the decision will always require an element of intuition. In successful businesses, it is often the case that the leadership team will have a developed sense of these variables and way in which to mitigate potential risk to the organisation. Success, in the executive environment, is usually calculated in terms of increased turnover and profitability. Additionally, corporations will often incentivise executives based on achieving these agreed upon targets.
Success is a confidence game. If I second guess myself too often, I lose that edge. I am not agile enough to take advantage of an opportunity. I am not ruthless enough to stay at the top of the corporate ladder. That is why I always need a board. I must have non-executive directors, or an advisor in a startup, who I trust to critically evaluate my decisions and tell me when they think I am wrong. This isn’t a “nice to have” when my business can afford it. This is the difference between success and failure.
Board leadership
There is an insidious practice in corporate or when founders are at retirement age to appoint the outgoing CEO to the chairperson role. As I have explained, you must be able to think critically as a board member. There is no point in grooming a successor in your way of thinking and then moving into a role where you believe that you are entitled to tell them how to run the business every three months.
An “executive chairperson” should be a flashing red light to any investor or stakeholder. Without the benefit of being in the business from day to day, this is a recipe for failure. I can almost hear the analysts reading this turning to their search engines to find examples of where I am wrong. And I am. In some cases, the outgoing CEO or the founder can suspend their ego and add enormous value. It isn’t the rule though; it is the exception.
Success at board level isn’t measured in increased turnover and profitability. It is measured by sustainability. The board oversees setting medium- and long-term strategy. You can use your search engine to search for the three most popular business books. There you will find 50 companies that are held out to be the paragon of business leadership. It may surprise you to know that of those 50, only 11 of them are still trading today. Is this because the lessons were incorrect? No. Is it because the hardworking leadership of those enterprises fell asleep at the wheel? No.
Humble leadership
The difference between success and failure is so difficult to measure across industries and with macro-economic variables that at best we draw convenient parallels between what we believe are admirable qualities and the statistical business success.
All the research that I have conducted shows what no leader wants to admit: We don’t matter. The best that we can hope for is that we make going to work a little bit more bearable. A little bit more exciting. We cannot be all things to all people. We can’t simultaneously be at the cutting edge of innovation and sustainability. We must make a profit. If we don’t, we can’t do all those wonderful things that make everyone feel good. Like donating 80% of our profits to the environment.
It is difficult to be humble when we are also trying to survive. When we have debt covenants, unlimited personal sureties, EBITDA targets, quick ratios and month end. Wages, taxes, PAYE and rent. It is easier when we share the load. A board can help. Advisors and non-executives have usually been where you are. They didn’t read about your sleepless night in a textbook.
Skin in the game
After the global financial collapse in 2009, there were a few business authors who collected some lessons together and published various books with advice on how to survive, how to profit from adversity, and how to identify trouble in your business. Most of this advice is recycled. I have studied business books from the 1970s to date. Barbarians, Snowballs, Oceans, Skies, Cheese….
While there are some great books out there, my feeling is that you don’t know until you try. The essence of committing to something, or having skin in the game, is that you should try to do it and you should get the best advice possible in doing it. Set up a board. Get some advice. Let the people advising you invest in time or money. Mostly, be humble. You may win. You may not. The people who you lead will remember how you made them feel either way.
