Provocative Propositions

In the hyperactive and challenging world in which we all live, it is becoming harder and harder for business leaders to find time to read, reflect and gain insight from the many valuable sources at our disposal.

In "Provocative Propositions", The Beacon Group attempts to fill that void by offering our opinion, often rather pointed, on a wide array of issues we believe are relevant to leading a modern organization.

The articles are catalogued into 12 categories so you can quickly and easily find a topic of particular interest. We then offer three easy steps under the heading "In Our Opinion" to help business leaders take action on the key themes.

Simply click on the category and read away.

Failure of Leadership
More than two thirds of the "top companies" in 1990 companies that were on Fortune's most admired lists, darlings of Wall Street were gone by 2004.

What happened?

Rapid changes in technology, a wave of globalization and economic downturns contributed their share to the destruction of these companies.

But what really happened?

What should we be focusing on here? The changes in the business environment, or the way leaders have adapted to those changes?

Would you pick your next CEO with the hope that no major economic shake-ups will challenge his or her tenure? Will it be OK that your next leader understands the ins-and-outs of your company, but can't challenge the business?

Will you ensure that your next selection of talent will be ready to challenge, innovate and initiate change, even at the height of success?

The Fact is companies who have fallen from their perch at the top of their industries, failed to recognize change and failed to adapt to a new business environment. That's a fairly obvious statement.

The Problem is a bit more complex. We're talking about a failure in leadership. The seeming inability for corporate leaders to understand their organization from within, while objectively assessing their business model from the outside.

The Outcome is a constant trade-off between internal leadership candidates who suffer from limited outlooks on organizational practices and outside candidates who can't connect with a delicate corporate culture.

The Solution is In his book Joseph L. Bower "The CEO Within" suggests the solution is to finding leaders with three instinctive elements, the ability to: 1) Judge where the world and business is heading. 2) Identify talent, and 3) Engage talent.

Did you know?
  • The average tenure of a CEOs is dropping.
  • More and more companies are going outside to find their next leader.

To author Joseph Bower that means:
  • The CEO's job is critical to the success of a company.
  • A number of candidates who end up in this position are underperforming. Most companies cannot even find comparable talent within their ranks, so they look to the outside.
  • The way most organizations hire CEOs doesn't suit the increasingly rapid pace of change. They're getting the wrong people.

The importance of leadership

Amidst these trends, some people will still question how important a CEO is to the overall health and direction of a company. In an organization with hundreds of thousands of employees, the impact may not always be clear.

GE's sales grew from $450 million in 1940 to $150 billion six decades later. Microsoft, born in 1975, had a market cap of $500 billion at the turn of the century.

In this context, growth may appear to be inexorable. It doesn't matter what leaders do, growth will follow the economy or the industry. Similarly, when a product segment dies, companies go down with it.

Or so conventional wisdom says.

Outsiders and Insiders

When Lou Gerstner arrived at IBM in 1993, he was, no doubt, an outsider. He had worked in management consulting, financial services, tobacco and cookies. Not quite a computer or technology guy.

Conventional wisdom, at the time, said that the IT field was going to evolve into "distributed computing" environment where information would be accessible easily through a variety of low-cost technologies.

IBM was written off as a dinosaur that needed to be broken up into individual IT component manufacturers.

Gerstner didn't have any specific IT experience, but was well versed on how technology was actually applied at companies that would be IBM customers. He saw the future for IBM in integrating systems with a service-oriented mindset.

Outsiders have a remarkable ability to incite change in a corporation. But does it always have to be that way?

Not really. Jack Welch at GE is living proof that an insider can make controversial decisions and initiate change. As well, Carly Fiorina at HP may not be a shining example of the potential of outsiders.

But, that's Bower's point: Outsiders who think like Insiders and Insiders who think like Outsiders are key. Choose your flavour, but make sure they can see the other side.

As Bower says: "A CEO can turn around a floundering company based on professional executive skills, but they cannot lead growth without understanding the product."

In Our Opinion
The Beacon Group's Advice on finding the CEO Within

In our experience, Inside Outsiders display a set of key personality traits that should be observed in the workplace:

They have the ability to take complex corporate challenges that stretch into the long-term future and clearly explain how these challenges will affect the company in ways that the entire organization can understand.

They have a deep understanding of how the business works and where it is heading.

They may specialize in a certain area or skill set, but they are able to apply specific and concentrated knowledge to larger situations. Their experience is crucial to their methodology, but it doesn't restrain their organizational perspectives in any way.
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