Leader's Digest #14 (15 August 2018)

LEADERS ISSUE 14

15 August 2018

DIGEST

What Great CEOs Do

Differently

This fortnightly publication is dedicated to advancing civil service leadership and putting it into practice contemporary leadership principles.

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PUBLICATION TEAM EDITORIAL

Editor-in-Chief Segaren Assistant Editor Yvonne Lee Diana Marie Capel Graphic Designer Awang Ismail bin Awang Hambali Abdul Rani Haji Adenan

CONTENTS

ISSUE 14 I 15 AUGUST 2018

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THE VITAL HABITS THAT ALL CEOS MUST OBSERVE

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WANT TO BE A GREAT CEO? BE A GREAT PRODUCT MANAGER FIRST

08

SORRY? CEOS AND EVERYONE NEED TO LEARN TO APOLOGISE

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FINANCE: A MUST ON THE PATH TO CEO

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“No man can be successful, unless he first loves his work” – David Sarnoff, CEO of RCA

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The Vital Habits That All CEOs Must Observe

BY PETER LAM

Before we get into the behaviours, actions and practices necessary to stay ahead of the game, let’s examine the context, issues and challenges a chief executive officer (CEO) faces today. Just a couple of weeks ago, a client of mine saw a two-minute video of Alibaba’s latest venture into offline retailing. This was the opening of Tao Café in Hangzhou, China – an unstaffed convenience store!

To gain entry into the store, shoppers just need to download Alibaba’s Taobao App and scan their personal QR codes at the entrance gate – similar to those found at our LRT/MRT stations.

Customers can enter (50 people at a time) and browse the shelves.

After selecting their food, beverages and snacks, they simply exit the store via passages that are equipped with facial recognition scanners. Shoppers are automatically charged for their purchases via their mobile Alipay App. Even items that are kept in sling bags or trousers’ pockets cannot escape detection. Welcome to shopping in the near future!

Imagine if you are the CEO of a “traditional” retail/convenience store chain. Disruption is coming!

Re-defining the role of a CEO today As seen in the example above, the best leaders today need to drive innovation or risk being left behind. In addition to mental agility and acuity (i.e. intelligence quotient or IQ) and social/ interpersonal or people skills (i.e. emotional quotient or EQ), leaders’ grasp of how to tap into digitalisation and modern platforms (i.e. digital quotient or DQ) are equally essential.

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Hence, leaders today need more than just IQ + EQ, one must add DQ to the equation:

Leadership = IQ + EQ + DQ While CEOs are still expected to have credibility, competence and care, they now need to be abreast of digital developments as well e.g. e-commerce, FinTech solutions or the autonomous car and how Big Data has created new careers e.g. data scientists, database managers, data architects, data analysts, etc.

CEOs also need to be conversant and familiar (preferably fluent) in social media to engage younger stakeholders and collaborators.

Being a CEO today is harder than ever.

With the advent of the digital era, the digital CEO’s job involves engaging with more stakeholders and to do so at a rapid pace.

Leaders who are able to skilfully transform old processes with automation of digital models to create a vision for the future, will be in high demand.

As for data management, the focus today is unique utilisation of data rather than just simply sourcing data. Our role as a digital CEO is to boldly expand in this area, where millennials are leading the march.

The digital CEO also has to help and drive the workplace to continuously improve themselves. So, what are the implications for CEOs today?

Every CEO is trying to gain competitive advantage in the face of these disruptive market conditions.

There is often a lot of hype about being agile and unable to move quickly when a situation arises. Yes, by all means, be proactive but, more importantly, take the time to work out the big strategic choices.

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Strategic questions

The vital habits

Here are a few questions to consider when building sustained advantages for your company:

The three Ds – digital, data, disruption – can indeed make anyone’s head spin. Yet, there is no overdraft facility for time. We all have only 24 hours in a day. So, how we spend and prioritise our time becomes even more critical.

• How can I build an identity for my company (or stay true to it) and use it to drive growth? Every business needs to grow. When all cost-saving and down-sizing initiatives have been implemented, CEOs still need to deliver growth in both the long term and short term.

• How can I get in front of market trends to craft or structure the wants and needs of my customers and clients? Think different.

Apple Inc does not have to be the only one. How are we interpreting our data? What new insights have we derived?

• How can I translate the company’s strategy into everyday operations? Are our current systems impeding execution? Are there business processes that need to be updated, modified, enhanced or buried? What new skills or training are needed? Can these solutions be developed internally or sourced externally?

• How can I build a culture that allows the organisation’s talents to embrace new risks and opportunities; a culture that works together, to see possibilities arising from change and not as a threat? Are we building capabilities that will differentiate us in the market? How are we leveraging our people to be unique and distinctive?

How can we allocate or re-allocate our resources? In the early 1980s, when Jack Welch became the chairman and CEO of General Electric (GE), he started making massive changes.

Here are seven habits that may help:

1. Focus on energy, not time management Energy management today is far more important than time management. Today, executives are like corporate athletes. You need all the energy you can muster to not only last the pace but thrive. Time is finite, energy is a different story - it is renewable.

We are human beings, not meant to run at high speeds continuously, for long periods of time, unlike computers.

The book The Power of Full Engagement, by James E. Loehr and Tony Schwartz, describes the Ultradian Rhythm cycle which repeats itself many times a day.

Basically, for about 90 minutes, you are in high performance mode.

Your alertness, concentration, creativity, emotional resilience and mental stamina are all in top gear.

Then, for about 20 minutes, your body needs time to rest and renew its energy storage.

One such change was cutting down the bureaucracy within GE at the time (it is commonly known that GE had about 400,000 employees in 1981. But in 2001, when Welch retired, it had only about 200,000 employees. However, the company’s value had risen 4,000% during that period.)

So, to get the most out of your day, go full-out for 90-120 minutes (i.e. fully engage) and then take a 15 - 20 minutes’ break (i.e. strategically disengage). Make a couple of phone calls, walk around the office, take a few sips of water, get an update from your PA, etc. Replenish your energy and fully engage again.

Nonetheless, amid all the hard-hitting cost-saving initiatives, Welch invested US$30mil (a lot of money back then) into a stateof- the-art management training campus in Crotonville, New York.

Full engagement requires drawing from four separate but related sources of energy – physical, emotional, mental and spiritual.

This decision met with a lot of internal misgivings and complaints but Welch drove it through, driven by his vision to build an army of leaders in GE.

“To be fully engaged, we must be physically energised, emotionally connected, mentally focused and spiritually aligned with a purpose beyond an immediate interest”, say the authors.

Our fuel tank, so to speak, consists of four different sources of energy that help us fuel performance: Physical: How’s your body doing? How’s your muscle-to-fat ratio?

What does your nutrition look like? Are you drinking enough water? Are you getting enough quality sleep? Are you exercising regularly?

Emotional: How well are you regulating your emotions? Do you feel positive emotions on a regular basis? Are you emotionally resilient? Or are your negative emotions (anger, impatience, frustration, etc) running the show?

Mental: How’s your brain doing? Are you able to focus and concentrate for sustained periods of times? Or are you quickly

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losing focus and easily distracted?

3. Culture is everything – Keep building it!

Spiritual: How’s your motivation doing? Do you have a life purpose? And a clear set of values that drive your actions?

Culture is the set of shared attitudes, goals, behaviours and values that characterise a group. It adds up to how things get done at a company and influences the entirety of the employee experience and thus the customer experience.

Don’t get me wrong. You still need to plan your time and organise your priorities, but tackling them with full engagement makes a whole lot of difference.

2. Communicate your 20/20 vision

Every organised group of individuals develops a culture - whether it’s explicitly recognised or not - and, contrary to popular belief, the CEO, not just human resources, must constantly observe and be involved to achieve the desired culture.

The most critical part of culture is values - the CEO ensures that they are applied consistently from top to bottom, across all departments. A good culture makes people feel safe and respected, enabling them to perform at their best.

Today’s businesses understand the value diverse leadership brings in driving innovation and business results. Senior executive teams and boards need to be reflective of society and the customers their companies serve.

Take Unilever for example. When I left the company 20 years ago, the board of directors were all Europeans and had only two women. Over the years, an American and an Asian or two joined the board.

The term “20/20 vision” is used to express normal visual acuity (the clarity or sharpness of vision) measured at a distance of 20 feet. If you have 20/20 vision, you can see clearly at 20 feet what should normally be seen at that distance.

Your team needs to continually feel clear and excited about where the company is headed. It is your responsibility to regularly refine your company’s vision.

A CEO should determine and relentlessly communicate the organisation’s strategic direction. Until that’s settled, making decisions about anything else at the business is difficult. And without this, the company is merely a collection of people pursuing individual goals, guided by their own values.

While other people may help shape the strategic vision, the CEO must be able to describe it in a clear, engaging and exciting way for all stakeholders. All the players in the organisation should understand how this direction affects their job and daily responsibilities.

Everything the CEO does should support this vision. Too many CEOs have allowed the strategic vision to be nothing more than slogans on a company T-shirt or a banner outside the factory.

Employees tend to need at least a few months of clarity – and at least a year or two of general “direction” – to remain psyched about their job.

Remember, a huge amount of people’s job satisfaction is derived from the perception that their work will provide a strong contribution to the company’s or team’s objectives.

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Today, the board includes Americans, Africans and Asians. And half of them are women. Same goes for their global executive management team. Hurray for them.

4. Obsession for growth Let’s face it, the CEO is ultimately responsible for a company’s performance. To be successful, he or she must take an active role in driving that performance. You have to hit the numbers.

Quarterly!

The cost-cutting emphasis of recent years is no longer enough.

Shareholders and boards want to see growth. Today’s CEO needs to be a growth hacker.

Where do the earnings and cash come from? What are the growth drivers? Are you allocating proper resources (capital and people) to drive short-term and long-term growth and profitability?

The CEO also serves as the interface between internal operations and external stakeholders.

He or she needs to ascertain how different stakeholders expect the company to perform, interpret this for internal teams and then be sure the proper metrics accurately gauge performance.

As the saying goes, “you get what you measure”. The CEO sets the bar for the level of performance to be reached, regardless of the company’s size, type, circumstances or stakeholders.

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5. Always get the best people on the bus

the end of each day.

Putting the right people in the right positions with the right training is probably the single most important thing a CEO can do.

With the right team, all things are possible.

Take five minutes to ask yourself three questions:

With the wrong team, nothing else matters. Develop the habit of always looking out for and spotting great talent, internally and externally.

Digital technology, artificial intelligence, and robotics are all changing how we do business.

Developing digital natives to enter the leadership ranks must be a priority today. Determine what your unique employment brand is in order to attract the best and brightest.

• Was I at peak energy today? Physically, emotionally, mentally, spiritually?

• What did I achieve today? Did I have at least one or two coaching conversations with my key people today?

• What one thing will I do better tomorrow?

A 1% improvement a week is 50% in a year. This is the secret to success.

Getting great talent on board is half the game. Getting them (especially your C-suite) to act as a cohesive team is the other half.

Whether it’s a regular golf outing, bowling night, a Sunday barbeque or durian party, you have to build an open, transparent and inclusive culture. You and your team are the purveyors, the models and examples of organisational culture for the rest of the company.

6. Evolving leadership This is a natural corollary from all the digital transformation, social media and growing number of millennials in the workforce.

This could include reorganising the company regularly as a way to induce efficiencies, jettison unnecessary activities and revitalise managers. I recall a previous client, Graeme Murray who was managing director of Colgate-Palmolive in Malaysia, he reorganised the entire marketing department introducing category management and focusing on new product development, putting his best marketing manager to head that unit.

The result was the introduction of two successful new brands: Axion, the first dishwashing paste in the market and Ajax floor and hard-surface cleaners within a year.

7. Always practice kaizen The Japanese word kaizen simply means “change for better” with no inherent meaning of either continuous or philosophy. CEOs by nature are curious, competitive and continuous learners.

I’ve known some who devour two books a week – in addition to numerous reports and journals. You have to stay updated and knowledgeable.

A CEO is a generalist specialist – you specialise in the general, are well rounded and know enough about most things to ask the smart questions and make good decisions.

But we’re all human, imperfect. So, in addition to learning agility, I always encourage clients to do a daily review or examination at

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LET’S FACE IT, THE CEO IS ULTIMATELY RESPONSIBLE FOR A COMPANY’S PERFORMANCE. TO BE SUCCESSFUL, HE OR SHE MUST TAKE AN ACTIVE ROLE IN DRIVING THAT PERFORMANCE. YOU HAVE TO HIT THE NUMBERS. QUARTERLY!

”

Peter Lam has been coaching business leaders since 2003 and is the author of ProfitMAX Your Business. Labelled a good listener by his clients, Peter enjoys cappuccino conversations as much as coaching conversations.

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SORRY? CEOS AND EVERYONE NEED TO LEARN TO APOLOGISE

BY ROSHAN THIRAN

A few years ago, I witnessed a scary sight. I was walking by the side of a road when a car suddenly cut out from nowhere into the main road, almost killing a motorcyclist. The motorcyclist was amazingly alert and miraculously swerved away. The car stopped and the motorcyclist immediately went over to the driver and started screaming.

The driver was a young lady who was obviously shaken by the whole incident. The motorcyclist was furious and yelled in extreme anger at her and she tried to explain that she really did not see him. Finally, she burst out in tears and exclaimed:

For the first time in about five minutes, there was silence. The motorcyclist was lost for words. I started thinking about a similar situation that occurred to me when a reckless driver almost hit me.

I never got to meet him and I only remember yelling inside the car in rage. I wondered if this same question was posed to me, how would I respond?

Obviously the “sin” had already been committed. The reckless driver could not go back in time to rewind the “deed.” Neither could this driver in the situation in front of me change history.

So, what did the motorcyclist want from all his yelling and ranting?

After the strange momentary silence, the motorcyclist said:

“ What do you want from me? ”

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“ I want you to apologise. ”

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The woman apologised to him. He nodded, got on his bike and rode off. His anger had resided. As this scene ended, I realised, that was also exactly what I would have wanted from the reckless driver - an apology.

The magical apology

and what steps were being taken to remedy the issues.

Instead of getting more lawsuits and legal claims, there was a reduction in the number of compensation claims and lawsuits and a significant reduction in overall legal costs.

A few years ago, I met up with Marshall Goldsmith, the world’s foremost executive coach, whom I interviewed for our The Leaderonomics Show. One of the sidebar discussions we had was on the power of an apology.

Apologies work. Authentic, heartfelt empathy diffuses anger and builds relationships and drives business profitability.

Alternatively, being defensive or refusing to admit mistakes creates anger and resentment.

He wrote that “I regard apologising as the most magical, healing, restorative gesture human beings can make.” Marshall goes on to suggest that “a person’s refusal to express regret and to apologise” as one of the top 20 transactional flaws in business.

Another study by the Nottingham School of Economics’ Centre for Decision Research and Experimental Economics clearly proves that an apology proved much more powerful than monetary compensation.

There is a lot of anger in the world of business today from frustrated employees, enraged customers, upset citizens and business leaders with pent-up anger from non-performing organisations.

The study found that “people are more than twice as likely to forgive a company that says sorry than one that instead offers them cash.”

Loads of anger everywhere, yet no one is apologising. No one is trying to douse the flame of anger.

The study co-author Johannes Abeler added that the results proved apologies were both powerful and cheap.

Instead, everyone is triggering new flames by being defensive, argumentative and self-absorbed. And this is happening in many businesses today.

He said:

The power of an apology

About a decade ago, a large local bank made a mistake on my transaction. I tried to rectify the mistake by phone, but to no avail. I went over to the bank to resolve it, but instead of having a conversation, an argument ensued.

I was livid as I thought it would be simple to clear up the issue.

Instead, the people at the bank became defensive and insisted that I had to go through a bureaucratic nightmare for what was simply a mistake made by the bank. And as this ensued, the hostility and anger grew.

After reflecting on the whole episode, I resolved to never do more banking with them. Till today, I refuse to even entertain any personal banking request with this group. If only they had been sympathetic to my plight and apologised, things would be very different.

“ You might think that if the apology is costless then customers would ignore it as nothing but cheap talk – which is what it is.

But this research shows apologies

really do influence customers’ behaviour – surprisingly, much more so than a cash sweetener.

It might be that saying sorry triggers in the customer an instinct to forgive – an instinct that’s

hard

to

rationally. ”

overcome

The same scenario plays out daily in many businesses. Many times, customers are lost in the process. Leaders play a huge role in setting the tone of being sympathetic and apologising.

Instead, we worry about liability. We finger-point, become defensive and avoid acknowledging our mistakes and thus never apologise. This resistance to apologising leads to deeper resentment and ultimately causes much friction and pain.

There are huge financial benefits to saying sorry. In 2001, University of Michigan Health System encouraged health workers to report medical mistakes.

As part of the programme rollout, doctors had to tell patients and their families about errors made, beginning with a sincere apology followed by explaining in detail how the error occurred

Research shows that apologies can result in better outcomes for wrongdoers in a number of legal settings. A further study shows that judges in courtrooms are influenced by offenders who say sorry. A landmark study by the Law professors from the University of Illinois, Jennifer Robbennolt and Robert Lawless, showed that in bankcruptcy cases, saying sorry often resulted in judges being more lenient.

So what does this mean for you as a leader in your organisation?

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Want To Be A Great CEO?

Be A Great Product Manager First

BY JEFF HADEN

There are many paths to becoming a chief executive officer (CEO), some more beneficial than others. After all, getting there is important, but once you are in charge, what you do – and how you do it – is what matters the most.

One guy who knows this is Gregg Johnson, the CEO of Invoca, a call intelligence company that capture data from incoming phone calls to provide marketing, sales, and customer insights.

Last year, Gregg moved from an executive role at Salesforce to lead a company for the first time.

HERE’S GREGG:

Last October, I joined Invoca as CEO after spending 10 years in product management and product marketing at Salesforce.

A few weeks after starting my job, a former colleague asked me, “So how is it being the boss of the company? Isn’t it fun being able to tell everyone what to do?”

Meanwhile at home, my 10-year-old son struggled to understand what “exactly” my new role entailed, so he boiled it down to two words, “big boss,” and explained to his younger brother that the job of the “big boss” was to order people around.

Fittingly enough, the word “boss” is derived from the Dutch “baas,” which means master.

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And while it certainly fits with the traditional stereotype of the CEO – the boss as the highest-ranking executive, the person in charge – it certainly doesn’t fit with my paradigm of the modern CEO, and my own business and leadership experience, and the leaders I respect and admire.

In fact, I’ve concluded that the most valuable training for my current role as CEO was the time I spent being “the boss of no one” – more specifically, being a product manager.

In technology companies, product management is the domain with the most narrow span of direct control and the widest range of management by influence. Your job is to bring a diverse group of people together to execute, yet you do not have much formal authority.

If you do not work in technology, you may not be familiar with the role of the product manager (PM). As a PM, you’re responsible for a lot of different things, including: • Building products with designers and engineers.

• Defining positioning, pricing, and go-to-market strategy with product marketing.

• Driving leads with demand-generation teams.

• Creating awareness of a product among analysts and media with brand-marketing teams.

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• Delivering quarter-to-quarter commercial results with the sales team.

• Ensuring current customers are happy with customer-success and support teams.

Essentially, you interact with every function in the company – yet none of them report to you.

In a typical software company of 500 people, there might be 20 product managers. So, even if you’re responsible for “all of product management,” you need 480 out of 500 employees, none of whom “work for you,” to execute your strategy and vision.

That’s exactly why I think product management is a great training ground for becoming a CEO. The very nature of the PM role requires building the skills you need to be a successful executive, namely:

One of my favourite examples is from my time at Salesforce. A colleague, Adam Torman, wanted to simplify the user profile, which in his mind had become unnecessarily complex.

To motivate the design and engineering team, he wanted to portray the problem in more realistic, tangible terms.

So, he printed out all the screens and associated data that the user profile required, taped it on the wall for his engineering team to see, and illustrated how it was equivalent to multiple stories in our building headquarters.

Adam no longer needed to instruct his engineering colleagues on every detail – they had internalised their mission and could bring their own ideas to the table on how to achieve it. That is the foremost responsibility of any CEO. 2. Make the hard investment decisions Once you formulate a vision, your role as CEO is to prioritise where the company should focus limited resources, time, and capital.

You need to ensure employees have the context to make tradeoff decisions on their own, operating quickly and in alignment with the company’s strategy.

“ It’s also about removing roadblocks in executing the company’s vision.

Prioritisation is at the heart of product management. ” 1. Create a compelling vision for your teams and company The No.1 responsibility of any CEO is to align the company around a vision, and help every employee “see the future” so they can be successful in making that future become reality.

“ The more clearly you can paint that vision, the more effectively you can harness the intellectual and creative horsepower of the organisation to achieve it – rather than being “the boss” and having to micromanage every detail of an operational plan. ”

Product managers are constantly communicating strategic vision with their design and engineering counterparts, and great PMs can bring the vision to life without needing to prescribe how to achieve it.

Another example from Salesforce comes to mind. In 2009, as Twitter and Facebook were gaining traction, Marc Benioff asked the product and engineering teams at Salesforce to build social and collaboration into the heart of the product. We had to decide what other projects we would put “on hold” to make this happen.

And when we went back to Marc with our first plan, he challenged us in his response: “You’re not being aggressive enough.

This social layer (which would ultimately become Salesforce Chatter) is the number one priority, so you need to make the tough decisions on what can wait.”

We ramped up the investment even more by putting additional projects on hold, and delivered a feature set in nine months.

These features helped to strategically differentiate the company for years to come.

We achieved that result only because we followed the CEO’s lead in making hard tradeoff and investment decisions.

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3. Navigate between the 30-day and three-year levels One of my favourite parts of being a CEO is the intellectual challenge of shifting between a 30-day timeframe and a threeyear perspective.

You need to ensure the company is executing against its monthly and quarterly targets, and has the processes and analytics to identify issues and course-correct.

“ Simultaneously, you need to align your business with the right industry trends, so you can capture new sources of growth. ”

PMs, in a similar fashion, have to shift between multiple modes of thinking. A key requirement of the job is to meet with the engineering team on a daily basis, reviewing the most minute details of the product as it takes shape.

“ In my mind, the best training ground for that type of leadership is not a traditional command-andcontrol environment, where leaders become accustomed to management through formal authority. Rather, it’s in the experience of managing through influence, crystallising a vision, motivating people to pursue it, and relying only minimally on the title everyone thinks bestows more power than anything else. ”

That’s why the discipline of product management – where you have almost no direct authority – is one of the most effective training grounds for future CEOs.

Just a few hours later, you might be brainstorming ideas about new product concepts that are a year or more into the future.

Steve Jobs epitomised this ability to move between a strategic, multi-year view and the most nuanced detail of a product.

Few CEOs have ever transformed the path of a company as profoundly as Jobs did upon his return to Apple in 1997.

He had an ability to “see the future,” and positioned Apple to transform not just personal computing, but mobile devices, music, entertainment and television.

To complement the big-picture view, Jobs was also fanatical about subtle but important elements of the consumer experience, down to the packaging of the products.

He was personally involved in selecting the colours and design of the Macintosh box in 1984, and later helped design the unique packaging for iPods and iPhones.

No product detail was too inconsequential for him, and that level of attention helped inspire and instil a focus on design that is core to Apple’s culture and success today.

Not everyone can (or should) be Steve Jobs or Marc Benioff. There are many ways to be a successful executive or CEO, and many paths to get there.

But in today’s world, where companies must quickly respond to changes in technology and the marketplace, leaders need to enable employees to make decisions autonomously in a way that benefits the company.

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Jeff Haden Jeff Haden is a speaker, ghostwriter, and author of The Motivation Myth: How Highly Successful People Really Set Themselves Up to Win.

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Finance: A Must On The Path To CEO

BY ROB WYSE

The majority of key leaders in top organisations did not have a finance degree nor held Chief Financial Officer (CFO) positions before they were appointed to head their organisations.

Tim Cook (CEO of Apple) has a Bachelor of Science in Industrial Engineering from Auburn University and an MBA from Duke University. His first job was at IBM and in his 12-year career there, he rose to become the Director of North American Fulfillment.

Then, he was hired as the Chief Operating Officer (COO) of the Reseller Division at Intelligent Electronics. Later, he became the Vice President of Corporate Materials at Compaq before joining Apple.

Mark Parker (Chairman, President & CEO of Nike) graduated with a Bachelor of Arts in Political Science from Penn State University.

He joined Nike in 1979 as a footwear designer in its research and design facility. He became Vice President in charge of development in 1987, General Manager in 1992, and Vice President of Global Footwear in 1998. He was named co-president of the Nike brand in March 2001 and in 2006 was appointed as CEO of the company.

Toby Cosgrove M.D., the recently retired president and CEO of The Cleveland Clinic Foundation, earned his medical degree at The

University of Virginia. Before assuming the title of CEO in 2004, he was a cardiac surgeon for nearly 30 years. (Cleveland Clinic requires for their CEOs to be a physician).

“

All three of these successful leaders rose through the ranks – but started as specialists. None of them have CFO in their backgrounds.

“

As the sands of time pass during your career, has it been preparing you to become a Chief Executive Officer (CEO), or to be a C-suite member? Unless you have gained a good grasp of financial acumen along the way, chances are, you need to be more business savvy to rise to the top.

Scanning through the backgrounds of a number of top CEOS, many have risen through the ranks as experts in their respective fields, but not specifically in Finance. In the field of technology for example, their leaders come from a wide-range of educational Issue 14 I August 2018 13

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backgrounds – from Computer Science, Economics, English, History and Physics.

How did these executives broaden their skills to grow beyond being a designer, industrial engineer and medical doctor to become leaders of complex organisations, delivering on Profit and Loss (P&L) without a background in finance?

How did these executives broaden their skills to grow beyond being a designer, industrial engineer and medical doctor to become leaders of complex organisations, delivering on Profit and Loss (P&L) without a background in finance?

Giella underscored that finance has become front and centre in running an organisation. Two key issues that have driven this heightened need: 1) Increased business complexity, and, 2) Understanding the implications of strategic initiatives.

Strategic Initiatives The area of finance heavily impacts the strategic initiatives that an organization can undertake, or any type of purchasing, for that matter. He said: “In large, complex health systems, the supplies budget (which is virtually all non-people related expenses) will be in the billions of dollars. If you are in a business like provider healthcare, where margins are tight, managing the supply chain can be the difference between profit and loss. For example if a health system spends a billion on supplies (materials, technology, construction, etc) annually, and it can save just a percent on these purchases, it is USD$10 million savings to its bottom line.”

So, how do you prepare?

The Hourglass Path to The Top Giella described a successful career path as an hourglass. “As you start out in your career, you can be broad and try several different functions, but as your career develops, you need to focus on a specialty where you can make your mark.

That’s where the hourglass narrows. Then, when you move to the senior management level, where critical decisions are discussed at executive leadership meetings, the best people learn from their colleagues and get skilled in all functional areas of an organisation – that is where the hour glass widens again.”

Giella said if you are the finance person, have to also be wellversed in human resources, marketing, operations, information technology (IT) and more. So, you go from really wide learning early in your career, to becoming an expert in a narrower area, to becoming a broad thinker at the executive management level where group dynamics and decision-making are critical.

Mr Thomas Giella, Chairman, Healthcare Services, Korn Ferry International

Business Complexity Business is increasingly becoming more complex. Giella gave an example from the healthcare industry, which he was overseeing. He said, “In healthcare for example, before DRGs (diagnosis-related groups) came out, healthcare was a cost plus reimbursement business – it was pretty simple to run financially.

Now the deals are huge and complex. You need to understand not only finance, but also the implications of the technology, supply chain, people and systems. The deals are seven, eight or nine-digit types of investments and critical thinking, and financial acumen is a must – a miscalculation on one of these projects could be detrimental.”

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Issue 14 I August 2018

He said, “In order to get to the top, you have to have run something. For credibility purposes, you have to have some type of operational experience somewhere in an organisation. For health systems, it does not have to be running inpatient units.

It could be on the outpatient level, major service lines, or an ancillary business. Bottom line though is you need some kind of significant P&L experience.”

Giella commented that for an employee who has never run anything, it would be less likely that they would be given a higher appointment.

So time is ticking. Niccolò Machiavelli summarised the perspective on time in this famous quote: “The more sand has escaped from the hourglass of our life, the clearer we should see through it.”

As your career develops, look back, broaden your perspective, and make sure you understand the numbers. That may be able to land you at the number one spot.

LEADERS

DIGEST

HAPPY NATIONAL DAY

2018

31ST AUGUST Issue 14 I August 2018 15

Building Leaders of Excellence

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