CEO's and intuition

A few years ago a research company tried to find out what made a CEO successful or not. They interviewed a lot of CEO’s, young matured and just retired. The outcomes from the matured and just retired top-leaders was a bit of a surprise. One of the questions in the questionnaire was: when you could do it over, what would you do differently? The outcome for the mature and just retired CEO’s was in 80%: rely more on my intuition. When they had important decisions to make they had all kind of data available. But when they looked back they realized that they often were not satisfied with the decisions they made only based on facts and figures. Mainly because their intuition told them something different. And that intuition couldn’t be made factual. It was more a feeling they had. And in businesses feelings don’t count that much. A decision has to be made rational, not based on feelings. But when you look closer, that rational is not so rational anymore.

Imagine that you will be appointed as CEO. You had before your first working day in the new job already quite some interviews with the shareholders of the company. Maybe you met also already some board members. Probably your first working day will be filled with making acquaintance with all board members. Maybe, if there is time left, you have time to meet short other people in the organization. You get tons of information and your secretary fills your agenda with people who want to speak to you. And this goes on day by day. The agenda is living your life and actually your are not in the drivers seat of your own life. Others live you. And people in the organization and your board members have also expectations. They expect decisions from you. But there we have pitfall 1: you don’t really understand the market yet, you don’t really understand the organization. You didn’t get, and you didn’t take enough time to really understand the organization, their customers and the other stakeholders. If you are more or less forced to make decisions they will be based on the information you will get from others. But is that information based on facts or opinions? You can’ t judge that very well yet. So my advise is always to new appointed CEO’s. Take time to listen to people in the organization through all hierarchical layers. Take time to listen to customers and fill in the agenda yourselves with the priority you have in the first to months: understand the company and its customers by listening!

It’s your job as CEO to take decisions. Only when you have a deep understanding of the market and the place of the organization in that market you can make the right decisions. But most CEO’s don’ t have that deep understanding so they step in pitfall 2: We do what the competitor also does. An example: when you look to television you see quite some commercials from beer brewers. And suddenly one brand started with a campaign. Under the cap there was a code hidden. And with that code you could win nice prices. A way from the beer brewer to attract people to their brand. Four weeks later 2 competitors started the same campaign. They spend a lot of money, but the results were far from good. Only with a good understanding of the market you can come up with something new, something that attracts clients. But off course it is not only the task of the CEO to invent these campaigns. That is part of one or more board members. But are these team members sharp enough to make the difference? And there is pitfall number 3: In social psychology we call it the Abilene Paradox. The Abilene paradox is subscribed by professor Jerry Harvey. He describes a leisure trip which he and his wife and parents made in Texas in July, in his parents non-  airconditioned old Buick to a town called Abilene. It was a trip they all agreed to but, as it later turned out, none of them had wanted to go on. This happens also in business. Professor Jim Westphal uncovered evidence of the Abilene paradox among boards of directors. He collected data from 228 boards of companies. He found out that people didn’t speak up against the companies extant strategy, even they had serious concerns about it. As a consequence, underperforming companies undertook fewer initiatives to change their strategy, and they persisted with their falling course of action. That’ she Abilene paradox. Nobody may think we’ re sailing a good course, but if nobody is willing to rock the boat, thinking we’ll be the only one, they may end up continuing as is, until we all go under.

 

To avoid these pitfalls I quote Steve Jobs: stay hungry, stay foolish

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