I’ve seen various lists of things that most CEOs supposedly worry about more than anything else. At face value, these lists are always convincing because everything they include looks important. Here are some typical examples:
- Talent retention
- Operating in a global market
- Compliance
- Cost efficiencies
- Performance
- Productivity
Usually, one item is missing, although it’s really at the top of the list for most CEOs. It is the elephant in the room. Everyone can see it and nobody wants to talk about it.
So, I will. I’ll tell you what the elephant is.
It’s next quarter’s or this year’s financial results.
In any event, short-term thinking with its focus on reported profits and the analysis of balance sheets drives CEOs of private and publically listed companies alike. They are concerned about their bonuses, as are their bankers or – in the case of public companies – the interfering, influential fund managers they must keep happy.
The public herd follows them, accepting the conventional rotten wisdom that ‘shareholder value’ matters most and financial incentives work, despite scientific proof they are useless for work involving deeper thinking.
It’s true, shareholders want maximum returns and want them now.
However, most shareholders are uninformed gullible owners of lazy money who seek maximum return for least effort or risk, or are forced to invest by superannuation law. They make share-buying decisions because of the financial rewards their advisers and the media commentators promise them.
It’s status quo thinking: a combination of fear, habits and ignorance that manifests as greed.
Meanwhile, the real long-term results are obvious to anyone who looks for them beneath the camouflage those incentive-driven spin doctors create.
A few smart CEOs, the ones who perform best over the long term, have the independence of mind to resist the pressure.
Instead of the next quarter and their bonuses, they focus on sustainability. They ask these questions:
- How can we deliver sustainable growth and profit over the longer term?
- What really drives our capability to do that?
- What must we do to ensure we build and maintain that capability?
- How does the current climate of increasing change impact on all the above?
These smart CEOs, their directors and hopefully their investors, worry most about the following:
- How can we develop a creative, collaborative culture that delivers our desired results?
- How can we stay tuned to, and adapt to, the changes that are occurring?
- How can we use the above to deliver sustainable growth and profitability?
- What risks are we willing to take to be sustainable?
When companies effectively address these concerns, they naturally resolve all the others including those I listed at the beginning of this article.
Transforming leadership to act on what really matters most is neither rocket science nor expensive. However, it requires courage, better practice and continuous learning at all levels. It’s an example of the age-old battle between ego and one’s better self, and it plays out individually and collectively across the business world.
Although we have well-proven evidence for the merit of abandoning the conventional approach, most CEOs and shareholders prefer to keep living with the elephant in the room. Or perhaps they simply find it easier.
It’s also a reflection of their true values.
If you belong to the herd of short-term thinkers, what would convince you to leave it?
