I am particularly interested in what Ram Charan, the world’s most influential consultant, has to say about opportunities and problems laid before a new CEO.
Why do CEOs fail in the first 100 days? I differ with Ram Charan when he declares that there is no concept as ‘Renaissance CEO’. There are organizations reaching their level of incompetency, not necessarily due to lack of skills in them, but due to not being able to address the opportunities in the market. Of course, as taught in management schools, a new CEO does not get a clean slate to evolve systems to meet targeted growth. The legacy system and the variables are already existing – may be valued or not! Most of the time, the task is to undo ( what is done by others) instead of doing!
The legacy system is not lacking in only technology but in being a obstacle to accept new ideas too. I do not agree that the plans are lacking in execution. Rather they are not executed out of indifference or by having a closed mind. When a new CEO is recruited, naturally, the whole canvass is not presented to him ( lest he may run away) by the employers. Only the expectations ( from him) and detailed responsibilities are mentioned in bold letters in his contract. Now this does not ever mention of what is lacking in the present! I have learned that it is important to study the present and relate them with expectations from me so that I can conclude what is achievable and what is not. Are the prevailing conditions favorable to bring forth a change?
Another task is taking the manpower ( critical ones) into confidence! Is their plain politics/ favoritism in the situation? Do all the members on the board agree to relinquishing their ‘some’ responsibilities to the new CEO? Quite often, we realize that there are other considerations (not relevant to business) to be met. It becomes difficult to the new CEO to function, if the past is not revealed to him. Intentionally or otherwise! As an effective CEO, he will bring about policies, changes that may not be acceptable to the board. So, I learned that it is better to discuss and go slow on these aspects though the ‘sword of Damocles’ of performance may hang over his head.
That means..a right fit is very important. Is it the right company? Is he the right employee? Such thoughts come to mind if there is friction…that may prove unhealthy.
So, what is the approach to take in corporate governance? Here, I agree with Ram Charan when he says that there are two ways to look at corporate governance: fixing what is measurable and focusing on what really matters. Fixing what is measurable…I think… are like bringing new customers or retaining old ones, put in practice the systems pertaining to sales report, market analysis, adding or removing manpower essential to meet targets in revenue/ profit, to restrict to expenditure budgeted, to quantify what board expects in results, time frame to define lead time (with Gantt chart, if possible).
Focusing on what really matters: understanding market size/ territorial demarcation, bottom-up approach in Sales budget vs actual achievement tabulation and reasons for the gap with detailed gap analysis, methods to evaluate/ quantify expense patterns, New markets’ identification, product development, competition analysis, to name a few.
Ram Rajya or Perfection – where there is only consensus/ happiness and no regret – is achievable if we learn to manage perfectly the given situation and agree to achieve what is achievable.
( Please note that these views are of the author and in no way connected with Ram Charan’s views. Only the article motivated me to write on the problems faced by a new recruit CEO )