Marina Cigarini
Managing Partner
McKinsey & Company, Mexico

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How To Be a Good CEO: Six Key Mindsets

By Marina Cigarini | Tue, 05/10/2022 - 10:00

The great uncertainty caused by the pandemic is not over, despite several rays of light to the contrary. Supply chain disruptions continue, labor shortages persist, geopolitical instability is growing more acute by the day, and the climate crisis is not budging an inch. Who have been the leaders in these troubled times? Interestingly, CEOs (locally, nationally or globally) have established themselves as the most trusted, according to Edelman's 2021 Trust Barometer —surpassing even political and religious leaders, and the media. It sounds crazy but it is not, and a lot of it has to do with how they managed their companies in the 24 months of this pandemic.

However, as in all contexts, there are leaders to leaders in companies as well. Thirty percent of the CEOs on the Fortune 500 ranking last less than three years in their positions and, of the new ones, two out of every five fail after just a year and a half. The chance of a CEO succeeding in making his or her company a benchmark in its industry is only 8 percent.

On the other hand, CEOs of organizations that are in the Top 20 percent in financial results generate 2.8 times more returns for their shareholders per year than their peers. How then to be a good CEO? What are the characteristics of the leaders who drive their businesses forward, spur their companies’ growth, and make the most of the capabilities of their employees?

Six Mindsets That Make the Difference

McKinsey’s senior partners, Carolyn Dewar, Scott Keller, and Vikram Malhotra, undertook the task of exhaustively evaluating 2,400 corporate leaders to identify the elite core of this level; subsequently, they sat down with 67 of them for several hours to learn their methods. The end result is the book, CEO Excellence: the Six Mindsets that Distinguish the Best Leaders from the Rest.

Their key findings (which are mentioned in the title) are the six key mindsets of the CEO in order to thrive: determine the direction to follow to make the business prosper and deliver; generate an environment of harmony in the organization and foster diversity; mobilize and delegate strategies through leaders and their teams; engage the management team constantly; interact with all parts of the organization (from entry level to shareholders); and manage the effectiveness of employees at all levels.

Several mindsets have to do with talent management, which involves having the natural ability we take for granted in CEOs but which is among the most delicate. An elite CEO must have sensitivity and executive wisdom for talent management and not let anything pass as "something easy." They do not consider people, company culture and other organizational matters as soft issues, and demand the same degree of rigor and discipline in these areas as they do in managing financial and operating results. They also know that if they are successful in these areas, they will generate the greatest competitive advantage.

A Lens for Building Companies ... and Purpose

Following this path, the best leaders also bring an analytical lens to organizational design: many of them tend to identify the 50 roles that create the most value in their company and ensure — some of them personally — that these positions are filled by the most suitable collaborators. Not only that: they ensure that they are properly motivated and that the lines of succession are solid.

The best CEOs also focus intensely on getting the dynamics of the team as a whole right. In the book, my colleagues recall the words of Fieke Sijbesma, CEO of the Dutch company DSM, which specializes in health and nutrition: "What makes the team successful is not just the players or the process, but the way they relate to each other. It's not just the bricks, but also the cement." Team dynamics are very important for everyone to feel comfortable and for individuals to see that their efforts serve a greater purpose.

Navigating the High Seas

Returning to the mindsets, for a CEO to have the best results, all six must be applied day after day, without respite. It is like sailing at sea: there are many elements to consider and, if one fails, the others fail (or, at least, the conditions are not taken advantage of in order to be faster or safer). All mindsets are co-dependent and must be managed simultaneously.

The best leadership lessons — and more so in times of pandemic and intense geopolitical instability — are forged in complex, high-level situations. It is as if we are facing a storm: If we must cross it in our sailboat, we have no choice but to remember the guidelines (in this case, the six mindsets), trust our team (human and structural) and go with our instincts. That is leadership.

Photo by:   Marina Cigarini

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