tex: This discussion got me thinking about the larger and frequently unexplored question of what a CEO is and what he does. In this vein, I found this thoughtful review of a worthy piece written by Proctor & Gamble CEO A.G. Lafley and published in the May 2009 issue of Harvard Business Review. Within that periodical, Lafely presents his vision of a meritorious CEO which vision was focused by the influential management-consultant and "social ecologist" Peter Drucker (1909-2005). Anyhow, it's a pretty good read.
(The Inside <-> The Outside)
Lafely considers a quote from Drucker’s unfinished work: “The CEO is the link between the Inside that is ‘the organization,’ and the Outside of society, economy, technology, markets, and customers. Inside there are only costs. Results are only on the outside.” [...] It’s the job of the CEO, Lafely says, to be the one who see the opportunities that others can’t see and who makes the “tough calls” others can’t make. The CEO is one who has to direct the inside work of the company to meet the demands of the Outside.
The Four Tasks of a Chief Executive Officer: Resolving Inside and Outside Interests Key to Executive Leadership
Author: Marianne Lepa Published: May 15, 2009
In the May 2009 Harvard Business Review, Procter & Gamble Chief Executive Officer (CEO), A.G. Lafley, reflects on four important tasks of executive leadership.
Peter Drucker, the developer of some of America's best known executive leadership programs, died in November 2005, leaving behind an unfinished work on the business leadership of America’s CEOs. Lafely was one of the corporate leaders from whom Drucker was developing his research at the time of his death.
Lafely joined Proctor & Gamble as CEO in June 2000, just as the company’s stock went on a massive slide. Procter & Gamble stock fell $14 in just one day and a further 11% during Lafely’s first week of work. But, under Lafely’s guidance, the company has been able to restore the confidence of its shareholders and expand its market share into new and innovative products.
In this Harvard Business Review article, Lafely considers a quote from Drucker’s unfinished work: “The CEO is the link between the Inside that is ‘the organization,’ and the Outside of society, economy, technology, markets, and customers. Inside there are only costs. Results are only on the outside.”
“Over time I’ve come to see the power in Drucker’s words about linking the outside to the inside,” says Lafely. “It’s a job that only CEOs can do because everybody else in the organization is focused much more narrowly and, for the most part, in one direction…inwardly….”
It’s the job of the CEO, Lafely says, to be the one who see the opportunities that others can’t see and who makes the “tough calls” others can’t make. The CEO is one who has to direct the inside work of the company to meet the demands of the Outside.
Drawing further on Drucker’s unfinished research on developing executive leadership, Lafely identifies four key tasks of the CEO: defining and interpreting the Outside, deciding what is and is not the business of the company, balancing yield with sufficient reinvestment for the future, and shaping the values and standards of the company.
The CEO Interprets a Meaningful Outside
Without consumers, there is no company. Without executive oversight, this surprisingly simple equation can get lost because employees are naturally focused inward on the work of the company, says Lafely. It’s the job of the CEO to ensure that the organization’s relationship with the consumer and other external stakeholders – suppliers, investors and shareholders – remains the top priority of the company.
Leadership is Deciding What Business You Are In
Because other corporate leaders are motivated by growth opportunities, it’s up to the CEO to decide where the company stands its best chance to win. Only the CEO has the perspective of the Outside and the Inside to make these choices, Lafley says.
A CEO Will Balance Present Demands With Future Potential
An ever-present challenge to corporate leaders is the tension between immediate priorities and investing in the future. Determining the balance between them, says Lafely, is among the riskiest decisions a CEO will make. But, in developing executive leadership ability, the CEO finds that this is the only role in the company that has the exposure to the external and internal interests of the company.
The Executive Leader Shapes Corporate Values and Standards
Interpreting the company’s values and developing the standards that are necessary to uphold those values is the fourth task of the CEO, according to Lafely. It is the CEO who provides the leadership to ensure the values and standards of the company are represented.
“The CEO can and must make the interventions necessary to keep purpose and values focused on the outside, Lafely says in the conclusion of the Harvard Business Review article. “To sustain competitive advantage and growth, he or she must create standards to ensure that the company wins with those who matter most and against its very best competitors.”
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