DEVELOPING SUPPLY CHAIN ROOTED CEOS
Is your organization creating great leaders? Here are fi ve attributes of great CEOs, 10 questions you should ask about your organization, 10 reasons to invest in internal leadership talent – and 10 key areas to focus on if you want to become a great leader yourself. By SHEKAR NATARAJAN and RON HAMM
July 1, 2011
Does your organization believe that a CEO can only come from sales and marketing, fi nance, legal or senior administration mainstream functions? Is technical, logistics, manufacturing operations or supply chain-based candidates told they are inappropriately experienced to be tapped for such a senior position? Is this all too familiar? The practice of drawing top leadership from a narrow, traditional band of functions is a common problem that constrains the talent pool of executives available for CEO slots. This antiquated practice also weakens the supply chain by reinforcing the notion that this function does not off er a viable path to the top job. We believe an executive’s experience in “getting their hands dirty” as an engineer, plant manager, chemist or similar position should place them several steps up the ladder from their sales, marketing, legal, fi nance and administrative competitors for the top spots in global industry. While research has indicated that the number of supply chain-based C-level executive searches has doubled in the last four years, the number of newly appointed CEOs emanating from a supply chain background was less than a handful. This apparent topping out makes the profession less attractive to top students, thereby creating a defi cit in the incoming talent pool. Left to the current devices of less forward-thinking HR managers, supply chain can become a fi eld littered with accidentals and functional castoff s rather than dedicated operations minded professionals. Without conscious recognition and active intervention to correct the situation, we don’t foresee a signifi cant shift in current practices. To ensure that your supply chain generates top leadership candidates, the status-quo methodology of executive development (or lack thereof) within the supply chain organization cannot be applied. We submit that in order for you to groom, mentor and coach supply chain talent toward eventually leading an organization, it is imperative that you understand the characteristics of most successful top-level executives, why development of talent is important, where is your organization is today with respect to development, and what the players should be expected to bring to the party if they want to track towards the role of CEO. First, defi ne the target by revisiting the defi ning characteristics of great CEOs. FIVE CHARACTERISTICS OF GREAT CEOS 1. Wisdom CEOs that excel are great people leaders. They are self-aware with a strong set of values. They are fair, impartial and adroit problem solvers. Their opinions are solicited and their guidance sought based on the deep respect of those around them. Their maturity allows them to suff er disappointment more gracefully than others and to give others abundant credit for their achievements. Their top priority is the welfare of the company and its employees versus titles and the trappings of power. They score high on integrity and, as such, are considered trustworthy. They prioritize people and the value of relationships higher than they do money, and people witness that daily. Always in search of personal feedback, great CEOs seek greater understanding of themselves and how they are perceived. 2. Vibrancy High performing CEOs exhibit what seems to others as boundless energy. They work with great enthusiasm, consistently fi nding ways to reenergize themselves and, consequently, those around them. They are physically and emotionally in good shape. They are net givers, putting much more into the organization each day than they take. Quitting is not in their vocabulary. Assigning blame is unimportant versus fi nding and embedding solutions. 3. Courage There is no tougher job in the business world than that of a CEO. Whether it is the loneliness of a startup or the relentlessness of keeping the company going and growing, the CEO carries the greatest weight. As the organization’s value system will only be as strong that of the CEO, he or she must do what is right consistently, no matter how hard or distasteful that may be at times. Firing a longtime friend who no longer performs or shutting down a plant aff ecting the lives of people who have worked to build the company can be gut-wrenching. Avoiding hard decisions that require decisive action or exercising poor moral judgment jeopardizes a CEO’s leadership position as she loses integrity and the trust of her employees. 4. Pragmatic optimism Great CEOs are always optimistic about the opportunities they have their company pursue; how could they deploy resources otherwise? They also realize that bad things happen and, as such, they always develop a “Plan B” that addresses those “worst-case” scenarios. Loss of a key customer, economic downturns, government regulations or competitive market actions can all be catastrophic for Plan A. Unwillingness to recognize risk and plan for the worst has undone many a company. Great CEOs won’t let that happen on their watch. 5. Prescience The best CEOs seemingly have the uncanny ability to see into the future. This is sometimes driven by luck, but more often by a deep understanding of the customers and markets they serve, coupled with a deep understanding of the people and resources they have at their disposal. This allows them to act on opportunities and make the deals that bring those opportunities into reality. They ensure that there is a constant fl ow of new products that allows sales to maintain and grow the company’s customer base. This prescience often extends itself to people, hiring talent for the future versus the present. The next question is whether your organization is fertile ground for developing a CEO with supply chain roots. 10 QUESTIONS TO ASK 1. Are you experiencing issues fi nding and/or retaining good talent? Are there issues with your company’s reputation in the market? Do you compensate fairly and appropriately? 2. Do you have a consistent performance appraisal system? 3. Do the senior leaders of your organization value supply chain appropriately? Does supply chain sit on the leadership team? 4. Do supply chain managers have broad and varied personal development opportunities? Are talented managers standing in line waiting for a specifi c job to open up before they can progress? 5. Do senior leadership jobs appear to have a functional prerequisite? 6. Is your company’s experience with supply chain immature? 7. Is development of the individual a priority in your organization, as evidenced by investment of both time and money? 8. Does your organization have a dynamic, balanced and reliable system of leadership assessment? 9. Does your organization give promising leaders challenging assignments outside their area of expertise and/or their function? 10. Do senior leaders pool their insights to generate a development plan and personally mentor high-potential leaders? With the economy being global in nature, every product is subject to a rapid fall towards commoditization. Profi t margins are under constant attack, and competition routinely springs up from unforeseen places. A key competitive advantage and long-term defense is your organization’s leadership pipeline. Developing the leaders necessary to exploit gaps in the external landscape and build new business models that exploit them profi tably are keys to longterm organizational success. 10 REASONS FOR GOING INTERNAL 1. The only true sustainable competitive advantage that your company can create in the new economy is its leaders and the company’s ability to develop them – not the products you carry or the customers you serve. 2. Key attributes of great leaders within an organization are loyalty, strong relationships and in-depth knowledge – things that are hard or impossible to buy (recruit for) on the outside market. 3. Leaders sift, sort and leverage the discontinuities of the external landscape, fueling the creation of value-added products – the greater your leadership capacity, the greater the organization’s capacity to meet or anticipate market needs. 4. Time effi ciency is key in leadership development. The time spent recruiting and on-boarding top talent, when coupled with even a modest failure rate, will show that recruiting for talent is always less time-effi cient and less cost-eff ective than a robust leadership development program. 5. Design beats evolution. A planned set of challenges and experiences designed to cultivate strong leaders wins every time in both quantity and quality of output against a program targeted solely at building leadership with a “survival of the fi ttest” mindset. 6. Think fortress and silo. Are you building leaders with a stronghold of talent, ready to take on all comers? Or are you focusing only on functional skill expertise, driving a silo mentality throughout your leadership? 7. Creation of talent “pull” in the market requires a reputation of investment in people as well as business success. In the social networking world we live in, your company’s reputation is driven by your current employee base; they become your talent marketers. What are your leaders and infl uencers thinking – and saying – about the investment your company is making in them? 8. A robust organization/leadership development eff ort ferrets out blockers (people who can’t or won’t move on to new challenges or roles). The presence of too many blockers in an organization hampers leadership development due to a lack of development opportunities. 9. The multiplier eff ect. Good leaders build good leaders. Hence, the more you have, the more you get, with less eff ort and investment. 10. Ultimately, investing in internal leadership talent results in a healthier culture and more successful organization, one where people realize that their work is rewarded and that they are personally valued. 10 AREAS TO DEVELOP If you or someone you coach/mentor is set on being a CEO with supply chain roots, following are key areas to focus on developing with that goal in mind. 1. Business acumen: Fundamental to everything else that follows. Do you: • Understand the fundamentals of how money is made within your company and industry? • Understand the wants and needs of both customers and stakeholders? • Understand what the customer values and why? • Understand competitive and market dynamics that drive change and opportunity? 2. Work ethic: If you want to make the climb, are you willing to do the time? • Are you willing to spend the time at your company to ensure that you are ready for the next step up the ladder, or does your impatience drive you to “job hop” between companies in search of advancement? • Are you willing to put in the extra eff ort required to stand out, even if it means imposing on otherwise personal time? • Is “good enough” just not good enough when it comes to your work product? 3. Networking skills: Great leaders lay down a network of supporters and infl uencers as they climb the corporate ladder as opposed to laying down footprints on the backs of others as you climb. • Do you give more than you get? • Do you make an eff ort to stay connected to those who help you? • Do you reach out for help and advice in times of need? • Do you build both internal and external advocacy? 4. Earning your stripes: Talk is cheap, and there is nothing as silent as yesterday’s applause. Capability is interesting, but it is the credibility driven by consistently delivering results that drives the respect and recognition of others. • Are you willing to stay in a position long enough to lap your own results, proving you can improve your own game? • Are your eff orts and results widely recognized? Internally? Externally? 5. Permeability: This implies multidirectional data collection and synthesis across critical domains – or, for those of us over 50, being curious enough to solicit, listen and hear information from key constituents. • Great leaders are always learning and, as such, value that dimension in others. Do you? • Great leaders also foster an environment of knowledge sharing, going so far as to invest in systems that enable rapid and easy access to information. Would you? • Learning extends to the external – fully understanding the value chain and customer requirements. Is your decision-making business-centric or customer-centric? 6. People skills: There is no “I” in “team,” but there is in “win”! Getting the most out of people is critical to a leader’s success. Aligning and motivating others comes from a defi ned set of skills that must be honed over time. Some of those skills are basic and fundamental: • Do you have a strong set of values that allow team members to trust you? • Do you give and take feedback appropriately? Do you solicit feedback? • Do you exercise good judgment, especially in the people you choose to work with or hire? • Do you set goals appropriately? Do you have goals yourself? • Are you tough but fair? Can you make hard calls and execute them personally? 7. Decision making: You need to be cool under fi re versus running around like your head is on fi re. • A leader’s decision-making ability is critical to developing strong followership. No one falls in behind a leader whose course of action is illogical, overly emotional and/or not well thought out; indecision is always viewed as weakness. • Do you allow emotion to take precedence over planning? • Do you fi nd yourself always requiring more and more data before a decision can be made? • Do decisions end up being made by default because timely action was not taken? • Do your teams agree to take action but not follow through? 8. Lateral development: The breadth of the base almost always determines the height of the tower. To become a C-level leader, one must at times take lateral assignments in other functions to improve understanding and perspective. • Are you open to lateral moves? • Do your compensation requirements take into consideration the investment the company is making in you by giving you a lateral assignment? 9. Continuous learning: “It’s what you learn after you know it all that counts.” – John Wooden, late UCLA basketball coach. Continuous learning is evidenced by a persistent dissatisfaction with the status quo coupled with a constant quest for new perspectives and approaches aimed at improved business results. As we’ve read elsewhere, “good” is the enemy of “great.” A leader satisfi ed with good enough on a personal or organizational front sacrifi ces the opportunity for greatness on both fronts – hardly a strategy that will land you in the executive suite. • Do you demonstrate the ability to learn continuously? • Does your organization or team practice it? 10. Leaving a legacy: Great leaders leave a legacy of great organizations. While all of us are dispensable in terms of the broader organization, some of us develop the ability to transform an organization while we are there. As such, the mark and measure of a leader is the quality of the organization she leaves behind coupled with the indelibility of impact. The transformation that great leaders always strive for is cultural – changing the way people think, act and work in such a way that it allows them to operate at a level of performance previously thought impossible. Cultural changes of this magnitude have a level of permanence, as they become part of the organizational DNA. If taking on the organizational culture seems a bit daunting at this point, try mentoring someone. Helping drive personal transformation in someone less experienced is a great way to develop the skills required to drive transformation on a broader scale. JOURNEY FROM PERFORMER TO LEADER The opposite diagram depicts the evolution of an executive from an individual who is developing his base of skills (technical, managerial, interpersonal, etc) while earning a reputation as a performer to an individual who leads and sets the agenda for the rest of the organization to follow. Depicted in the concentric circle approach of evolution, each layer represents the increasing level of responsibility and maturity in key business skills necessary to successfully transform into a supply chain rooted CEO. There are fi ve stages of evolution – managing oneself, leading others, leading functions, leading businesses, leading the enterprise. While in the fi rst two stages the executive transitions from inward focused (gaining/seeking personal depth in expertise) to outward focused (leading team based performance). Through a progression of challenges and successes, the executive becomes increasingly outward focused, moving from an individual performer to a leader, setting agendas of diverse and ever increasing scope and scale and motivating teams to achieve them. This practice of visioning, communicating, gaining alignment, motivating and delivering results must be played out over and over throughout one’s career and is the key to moving into a C-level role. Deciding “how to decide” objectively whether to take one career opportunity or another is key to keeping on track toward your CEO goal. Emotions rarely work in your favor when considering job moves, and many a young manager is lured by a few more dollars that eventually leads them to be pigeon holed in a dead-end role. Using the DNA Skills Matrix developed by Natarajan and Hammond, odds of making the right move are improved greatly. Positions that serve to Develop existing skills in a similar environment are weighted lightly, positions that serve to add New skills to your portfolio are given a heavier weighting while those that require Adapting known skills to a new and challenging environment are given moderate weight. The examples shown compare two diff erent opportunities being presented to a senior manager of network planning. The more customary progression to director of network planning actually provides lower career value than a move to customer service logistics manager. The scores developed through DNA method generate 38.25 points for customer service logistics manager versus 26 for the director of network planning role. This requires the candidate to think of his/her career in the long term… but that is what a CEO is expected to do!