It’s Not a Dictatorship: CEOs Report to Everyone

When my youngest son was a teenager, he informed me he wanted to be a CEO when he grew up. That way, he explained, he “wouldn’t have to report to anyone.” If only it were so.

Any CEO would laugh at this notion of what it means to be in charge. My son (now a 30-year-old consultant for McKinsey) has since learned that no one has a tougher, more varied set of reporting relationships than a CEO. Yet the worst leaders don’t realize this business truth – instead, they deal with issues as dictators. It’s a style that especially doesn’t work with today’s information workers.

Indeed, the best CEOs realize they serve many constituents: shareholders, customers, employees, suppliers, lenders and communities. They do more strategic tacking than those who simply power directly toward the distant shore, unaware that shifting winds demand course corrections. They realize their constituents likely have interests that are at odds with each other – and it’s among a CEO’s tasks to make the best all-things-considered trade-offs.

For example, it would be easy to make customers happy by giving them free goods and services, but that would be hard on shareholders and lenders. Likewise, it would be easy to increase profit margins by abusing suppliers, but that would be the undoing of any business in the long run.

So, great CEOs are great jugglers. They hire and fire appropriately. They build teams. They reward what helps an organization win – in the short-, medium- andlong-term. They remove obstacles. They communicate lavishly – bad news as well as good. What they say and what they do are tightly connected. They’re politically savvy, but they’re not politicians.

Having hired, coached and replaced various CEOs over the years – and having been replaced myself – I know that succession can be a sensitive issue. That’s why the primary duty of the board of directors of any company is to hire the CEO, provide feedback, and set up a thoughtful succession plan even when dealing with a brand-new CEO. These steps constitute responsible governance, but they also serve as a reminder to the CEO: You work with others, you work for others, and someday there will be another you.

The most important job of the CEO of course is to have vision. Think back to the early 2000s, when Blockbuster could have bought Netflix for a song. But boardroom fighting and excessive turnover – six CEOs in three years, all of whom largely saw Blockbuster merely as a group of retail stores rather than as an entertainment business – landed the company in bankruptcy. The right CEO working with the right board could have made the difference. Not because he didn’t have to report to anyone, but because he would have been able to navigate the marketplace, listen to all constituencies, and “see around corners.”

With all of its dynamism and vagaries, the marketplace is the ultimate master of the CEO. Great business leaders have a sense of what customers want, what the value proposition is, and where the market is headed. They’re like hockey Hall of Famer Wayne Gretzky. He was called “The Great One” not because of his remarkable scoring prowess, but because, as he famously observed, he skated to where the puck was going to be. Though a CEO serves many constituents, that doesn’t mean you simply do what they want. Instead, you have to persuade constituents to follow you to the ideal spot – which often is a place where the puck has yet to arrive.

It’s not a matter only of brains or analysis. Certainly, after Steve Jobs left Apple in 1985, his successors – first John Sculley, then Michael Spindler and Gil Amelio – were brilliant individuals. But none appreciated the secret Applesauce that satisfied Apple fans. Until the company decided to bring Jobs back, Apple was on the brink of going under. He was the essence of the Apple brand – and even in death his shadow remains. A great CEO is the embodiment of a brand’s promise. For Apple, it was THINK DIFFERENT – and Jobs was its perfect ambassador.

Nobody thinks of Steve Jobs as a CEO who reported to anyone. He was a leader who didn’t attempt to follow the market, but to lead it – to skate to where consumers were heading. But in surrounding himself with great people (who largely remain at Apple even today), and, in his own unusual way, listening to them when it most counted, he demonstrated the essence of working with others. In the end, no CEO in any business ecosystem is an island.

By Joel Peterson