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Leading Established Organizations

What makes a CEO successful? It would be too easy if there was a simple answer to that question. The difficulty is that there are CEOs for different types of organizations which may vary in nature, size, age and even the country of operations.

Skills and Expertise of a CEO

The typical competencies expected of a CEO fall into five categories. These are: thinking strategically, communicating, enhancing teamwork, motivating others, and developing others.¹ Very similar to the broad competencies mentioned here, Indra Nooyi, CEO of PepsiCo, articulated the leadership competencies required by a CEO as the five Cs at one of their conferences.²

These five Cs stand for:

1. Competency: The knowledge, skills and competence one brings to the table. You are respected for your ability to bring unique value.
2. Courage and confidence: The ability to give your opinions and decisions. Willingness to take a stand.
3. Communication: The written and oral articulation of your thoughts that can help align and motivate your team and other stakeholders.
4. Consistency: To have a clear view on matters and clarity on the principles that govern your work style.
5. Compass: Your values that will help you go on the right path.

Coming from a similar perspective to Indra Nooyi’s, three researchers,³ Modesto A. Maidique, Candace Atamanik, and Ruthann B. Perez, after interviewing twenty-five experienced and successful CEOs of multibillion-dollar businesses, found six competencies that are critical for success. These were self-awareness, having a moral compass, being an effective listener, possessing good judgement, being a persuasive communicator and leading with tenacity. They found that a successful CEO has to have a high level of self-awareness and the ability to be wise, persuasive and resilient.

These competencies can apply to other senior leaders as well. In an interesting study, Russell Reynolds, a leading executive search firm, looked at the attributes that differentiate CEOs from other executives.⁴ Of the sixty attributes they studied, nine were unique to CEOs.

Top three of the nine attributes	Willingness to take calculated risks Bias towards action Ability to efficiently read people
Other six attributes	Forward thinking Optimistic Constructively tough-minded Measured emotion Pragmatically inclusive Willingness to trust

The nine identified attributes showed paradoxes that CEOs go through: their ability to be decisive yet inclusive, being emotionally intelligent yet tough, and strategic yet having a bias towards action.

In an interview with IIM Bangalore students,⁵ Krishnakumar Natarajan (KK), co-founder and executive chairman of Mindtree, the multinational IT firm, described the qualities of a CEO, ‘I think that the answer to this question has changed over the years. Back in my time, a CEO had to be charismatic and tell people what needed to be done all the time [your communication skills]. In today’s world, I would say that a CEO needs to be more collaborative than earlier because he does not know everything. He also needs to be more humble because he does not know everything and has to listen to everyone’s input in a respectful manner. Also the CEO should be able to deal with moments of crisis. Be calm, do not lose the confidence, think about the solutions and do not break under the pressure.’ Here, KK mentions how inclusiveness and collaboration become critical behavioural traits of CEOs. He also stresses the ability to power through tough situations.

In most established organizations the ‘potential’ of a professional is seen as a key parameter for growth. While performance is an outcome of doing the current job effectively, potential is the individual’s ability to grow. An interesting research paper published in Harvard Business Review spoke about four ‘X’ factors that defined high potential.⁶ These were drive to excel, learning capability, enterprising spirit and dynamic sensors. People with high potential have a great drive to excel; this means delivering excellent results in good or bad conditions. They are willing to go the extra mile to make it happen. The second aspect is the learning ability—learning continuously and using requisite skills to put new ideas to productive use in the organization. The enterprising spirit looks at the willingness and skill to take up new opportunities and assignments in an organization. Their willingness to go beyond their comfort zone can help them garner richer experiences and prepare themselves for higher roles. This, along with dynamic sensors—the knack to sense the organizational climate in terms of potential challenges that might affect their career negatively—helps professionals navigate their path to the top.

So if we look at a pipeline approach towards growing into a CEO, the starting point would be right when an individual joins an organization. Evolved organizations are able to specify what competencies are critical for successful performers who can grow in an organization. Research shows that while intelligence and values are important, organizations need to evaluate potential candidates on the following competencies. These are strategic orientation, market insight, result orientation, customer impact, collaboration and influence, organization development (attracting and developing top talent), team leadership and change leadership.⁷

The body of thought leadership available gives an interesting landscape showing how certain competencies can define potential and growth of individuals to the very top of the organization. The generic model of this growth as a CEO is described in the figure above.

However, apart from the behavioural traits, a CEO has to handle a whole lot of responsibilities that require deep functional expertise and overall experience. Key responsibilities are best delivered by an individual who has high strategic and business thinking, and the ability to manage people, including internal and external stakeholders. It is also important to understand what makes CEOs successful.

It is quite certain that the job of a CEO is rather complex and requires above-average skills. From interviews with CEOs and other existing literature, we have identified key enabling skills of a CEO: communication and influencing skills, thinking strategically (big picture, taking calculated risks), execution skills (getting things done) and managing people (ability to read people, build a great team and keep them). We explore in detail here the multiple aspects of communication and decision-making as part of thinking strategically.

CEO Communication

Communication is often stated as one of the most critical skills that a CEO should possess for his/her success. Communication involves reaching out and influencing multiple stakeholders. CEOs need to communicate their vision and strategy across all levels of the organization, and influence key stakeholders, including board members, investors and shareholders, key team members, employees at large, and even society. Their verbal and written communication, and also non-verbal aspects like body language or attitudes, are often scrutinized and interpreted by stakeholders. CEOs of established organizations are also expected to face media and attend PR events on a regular basis.

Communication essentially happens at the following levels/forums:

1. One-on-one communication that is verbal or through emails
2. Public speaking at internal or external forums
3. Traditional media communication
4. Social media communication

The CEO of Starbucks, Howard Schultz, has fabulous communication skills and this is considered a major factor of his success.⁸ Schultz’s communication style emphasizes providing a vision to the business that others can connect with, aligning the team to the common goal, and providing a human touch through storytelling. Carmine Gallo, author of The Storyteller’s Secret: From TED Speakers to Business Legends describes it further through Schultz’s response to a business question: ‘I hear you talking about people, health insurance, customer service, and the experience in your stores, but I have yet to hear you say the word coffee. Aren’t you a coffee company?’

To which Schultz said, ‘We’re not in the coffee business. It’s what we sell as a product but we’re in the people business—hiring hundreds of employees a week, serving sixty million customers a week, it’s all human connection.’ In that moment Carmine realized that successful leaders and inspiring communicators do not talk about the product as much as they paint a picture of what the product stands for.⁹

Voice modulation, clarity of content and body language are techniques that CEOs learn over a period of time. Communication skills relevant for a CEO can also be developed with the right training. For example, Juan Ramón Alaix, the CEO of Zoetis, described a rigorous approach on how he would communicate with investors, media or the board as the CEO of a company that was getting ready for an initial public offering (IPO).¹⁰ Most CEOs have to give a number of interviews, make public appearances, address internal and external audiences, and even be active on social media. In their role, CEOs come across crisis situations and it is their responsibility to communicate on behalf of the organization. How a CEO communicates—spontaneous or planned—is a critical element in making his/her image. The CEO’s image also influences the reputation of the organization with internal and external stakeholders.

One of the most critical elements in the process of communication is how the CEO makes sure that he is understood in the proper sense by the larger audience. This involves a combination of techniques that could help in effective communication. Some of the best CEOs put in efforts to be understood and to determine how their message is communicated to the organization.¹¹ Alan Mulally, the CEO who is credited with the turnaround of Ford, emphasized the ‘unity of purpose’ in all his communication and relied on multiple channels to get the message through, transforming the way the organization worked—from silos to a more collaborative culture. Similarly, Jack Welch of General Electric (GE), though known to be very assertive and demanding, had excellent listening skills and ensured that he was understood and the messages that he was trying to get through to the senior leaders were well communicated. A few of the other communication skills that Jack Welch swears by are simplicity and clarity, frequency of communication, and the ability to persuade others to follow in his steps.¹² There are three aspects that sum up the essential communication skills of CEOs or top leaders.¹³ These are: ability to have two-way communication, repeating the communication keeping in mind clarity and the simplicity of the message, and the use of storytelling to connect with the audience.

The body language and the emotions that CEOs convey can have a major impact on the morale of the employees and other stakeholders. A negative impression about a topic or an individual, given without the right backing of data or without understanding the emotional impact of the statements made, can affect the organization in a big way. For example, in the case of United Airlines, a customer named Dan was forcibly removed from the aeroplane since the flight was overbooked. As the airline had to resort to force, the passenger sustained injuries. This led to a furore and the airline got negative publicity. Oscar Munoz, the chief executive of United Airlines, initially described the passenger who was forcibly removed from the plane as ‘disruptive and belligerent’, and told the airline’s employees that they ‘followed established procedures’. This led to further public reaction and the share prices of United Airlines went down. Oscar Munoz had to publicly apologize for the incident in many forums. Research also shows that high-performing CEOs have the ability to manage conflicts. They are able to manage multiple interests for the common goal of organizational success.

With the rise in popularity of social media, data shows that CEOs have begun to embrace it. The most popular social media platforms that CEOs use are LinkedIn and Twitter.¹⁴

Statistics on CEO Social Media Presence¹⁵

• * 61 per cent of CEOs have no social media presence whatsoever
• * Not one Fortune 500 CEO is active on all six major social platforms
• * Although not active on their own accounts, 41 per cent of all Fortune 500 CEOs were featured on their companies’ YouTube accounts
• * 70 per cent of the CEOs who are active on just one social network joined LinkedIn first
• * Only 60 per cent of the CEOs who have Twitter accounts are actually tweeting

There are multiple ways in which CEOs can use social media to make their role more effective in terms of communication. Social media can help CEOs reach out to larger audiences and help build their own or their organization’s brand. It can help to communicate key messages on specific aspects like the vision, new offerings, thought leadership, and even provide views of larger social issues. It also helps the CEOs to be in touch with ground realities. Many CEOs in India use Twitter extensively. For example, Vishal Sikka, the former CEO of Infosys, shares through his Twitter handle personal and official aspects of his life. Harsh Goenka, chairman of the RPG Group, tweets frequently and often comments on aspects beyond personal and organizational interests like society and politics. He often uses humour in his tweets and that generates a lot of interest. Anand Mahindra, who is the chairman of Mahindra & Mahindra, has a dedicated following on Twitter and his tweets are business related or pertaining to larger social matters.

Social media platforms like Twitter make it easy for CEOs to communicate effectively, but they also have a downside. Social platforms are open to interpretation and responses from a diverse group. Many organizations exercise caution and provide guidelines on communication on social media. For example, political views can lead to a lot of social media reactions. Meg Whitman, CEO of HP, who has in the past expressed her political views on Twitter has received a number of responses and reactions from individuals who might have different political inclinations. A Hillary Clinton supporter in the US elections, she has been vocal about her negative impressions of Donald Trump. Her views on the topic led to both positive and negative responses. Social media is definitely a key communication tool for CEOs. But it has to be used carefully as it can damage their personal image as well the organization’s. Many CEOs also choose not to use Twitter themselves, and communication on the website is directed through formal company announcements.

Illustrative Tweets from CEOs

Harsh Goenka @hvgoenka (Harsh Goenka, chairman of RPG Group, on humour)

IRONY: Hollywood actress said she eats 3 spoons of food to be slim. Indians eat 3 spoons just to check if meals are properly cooked or not!

Vishal Sikka @vsikka (Vishal Sikka, former CEO of Infosys Ltd, on Technology)

Another amazing, exhaustive effort! My standouts: insights on voice, wearables, India, China & entrepreneurship . . .

Ratan N. Tata @RNTata2000 (Ratan Tata, former chairman of Tata Sons, on government policies)

Demonetisation of old currency notes by the Modi govt is a bold act that will wipe out black money and corruption. It deserves our support.

Similarly, many CEOs are using Linkedin.com as a platform for expressing their ideas. Many top CEOs are ‘influencers’ on LinkedIn. ‘LinkedIn Influencers are selected by invitation only and comprise a global collective of 500+ of the world’s foremost thinkers, leaders and innovators. As leaders in their industries and geographies, they discuss newsy and trending topics such as the future of higher education, the workplace culture at Amazon, the plunge in oil prices, and the missteps of policymakers.’¹⁶ Many CEOs like Richard Branson and Bill Gates are listed as influencers. They write about topics that are of wider interest and shape thoughts about industry, society and global policies.

CEO Decision-Making

Decisions are made by CEOs on a daily basis and the critical ones shape the organizations they spearhead. Decision-making, especially taking calculated risks, is one of the most critical competencies of CEOs. Some decisions that are taken by CEOs shape the future of their organization or even an industry. Verne Harnish and editors of Fortune in their book, The Greatest Business Decisions of All Time, describe some of the most impactful decisions CEOs have made. This includes the decision of Apple CEO, Gil Amelio, to bring back Steve Jobs, who later transformed Apple through many key decisions. These included reconstituting the board, retrenchment to clean up Apple, working out a deal with Microsoft, and finding key talent that could help the company in its journey. Walter Isaacson, who wrote the biography of Steve Jobs, mentions that Jobs transformed Apple from a struggling enterprise to one of the world’s most innovative firms. It became the house of products like iMac, iPod, iPod Nano, iTunes Store, Apple Store, MacBook, iPhone, iPad, App Store, OS X Lion—all revolutionary ideas and concepts. Steve Jobs’ success has been attributed to his ability to focus, simplify and put products before profits.¹⁷

A CEO is expected to take multiple decisions that are strategic, business or people related. Quality and the speed of decision-making are critical for business success. In a ten-year study called the ‘CEO Genome Project’, researchers found deciding with speed and conviction as one of the four behaviours that set the high-performing CEOs apart from the rest. Those who were described as more decisive were almost twelve times more likely to be high-performing CEOs. The study found that high-performing CEOs understand that even a bad decision is better than no decision. They are willing to take a decision even if a reasonable amount of information is available. They do not delay due to lack of availability of all the information. Once the decision is made, the high-performing CEOs do not waver. They press on, making the decision work.¹⁸ A McKinsey study published in 2017 found some interesting aspects regarding exceptional CEOs. They were able to review the strategic direction of the company and clearly make choices early on in their role. Exceptional CEOs were able to make a higher number of calculated changes in the first two years of their role as a CEO. This study clearly indicates that the ability to make strategic choices and implementing them to bring in desired benefits is one of the key differences that effective CEOs bring to the table.¹⁹

Ajit Singh Chouhan, CEO, Weir India

Ajit Singh has had an illustrious career with organizations such as Ingersoll Rand, Emerson, RPG Transmission/KEC International, and as the CEO of Weir India. His journey to becoming the CEO of Weir India had multiple events of successful decision-making.

Below are some of the most relevant learnings from Ajit on how to become a CEO and turn organizations around, based on a session he presented at IIM Bangalore:

1. 1. Create a shared vision across the organization.
2. 2. Company strategy:

1. Develop key strategy pillars to drive growth.
2. Developing a strategy is not a differentiator for the organization, execution is.

1. 3. Company culture:

1. An organization needs a specific culture to execute its strategy.
2. As the saying goes ‘Culture eats strategy for breakfast’.
3. Identify the key culture pillars required in the organization to execute the strategy and communicate it widely across the organization till it becomes a part of it.

1. 4. Company structure: Build a customer-centric organization; remove tiers that don’t add any value; decentralize operations to make them more accessible.
2. 5. A company’s ambition to grow should be driven by belief in the market potential rather than incremental targets.
3. 6. Sharp focus on financial health, costs, pricing policies and cash flows.

Ajit mentioned that everyone is a leader in their own unique way. A CEO’s job is to make every employee feel empowered and bring out the best in them. A CEO should be a very good listener and communicator. Communication, truthfulness and honesty in approach are the top three traits of a successful leader. He also mentioned that he loves ‘murder meetings’ where a key idea or a decision area is attacked thoroughly by all before it is finalized.

—Inputs from Abhilash Soudarrajan and Pranav Kumar Mallick, participants of the course—‘The Making of a CEO’ at IIM Bangalore

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Age and experience may not matter if you look at CEOs in start-ups. However, becoming a CEO of an established organization demands a plethora of proven skills and experience. It is not uncommon to find somebody who joined as a management trainee and later became the CEO of the company. Arundhati Bhattacharya of State Bank of India is an interesting example of someone who joined as a management trainee at the bank and went on to become the chairperson and managing director. The famous chairman of GE, Jack Welch, is yet another example of somebody who started from the bottom of the career pyramid. Leading an established organization requires a proven record in most cases, and as research proves many of the CEOs tend to be insiders who have spent considerable time in an organization.

Krishnakumar Natarajan, Executive Chairman, Mindtree

Krishnakumar in his earlier role was the CEO and managing director of Mindtree. He had held multiple key top management roles before he became the CEO. Co-founder of the company, he is credited with making Mindtree a global IT player. ‘He was ranked amongst the most valuable CEOs in India by Businessworld and Forbes in 2016. He won Bloomberg UTV’s CEO of the Year award in 2010, Business Today’s CEO of the Year award in 2014 and was recognized by Chief Executive magazine as one of the twelve global leaders of tomorrow. EY [Ernst and Young] honoured him with the Entrepreneur of the Year award 2015.’²⁰ Below is an interview with Krishnakumar.

Tell us about your journey. You have an engineering background, did your MBA and then came into software. You have also been in several positions in marketing and HR at Wipro, and unlike many CEOs you are not a founder, but you took the long route through management positions.

Absolutely true. The transition from engineering to business was trendy at my time, but coming into IT happened rather accidentally. Even though IT wasn’t really known in 1979, it was one of the domains where engineering and business came together. So, I thought this was the way that I should go. And the best thing that could happen to me was getting into a start-up like Wipro, a company with which I could grow. And I was probably one of the first business school graduates in IT. The big advantage was that I could take several positions within a short time: selling computers, building software or even service engineering.

In particular, what did Wipro offer you?

I think a true leader pulls in other people. When they came to our campus to recruit, there was a very charismatic guy in charge of Wipro’s IT business. Before that he had been the youngest general manager of Tata Motors. I think he was a leader as he had clarity in his vision. This is one crucial capability of leaders and managers; make a beginning and make people follow you into a new field as it was for us at that time.

In the beginning of your career, did you ever think that you would become a CEO one day or lead a big company?

Become a CEO? Certainly not! This started much later. But as the company grew, they prepared me step by step. The initial grounding after working in many different jobs within the company and seeing it grow was very useful. And almost every time there was a new position due to the fact that the company was expanding, it was filled by an insider. Hence, they made me regional manager of Chennai and later Delhi, responsible for marketing, then HR and later e-commerce. So, it is very important to take on new roles, reinvent and adapt yourself for the upcoming challenges. But the fact that I knew the entire organization also helped. By this time, I realized that I could also run a much bigger company.

What led to your shift to Mindtree from Wipro?

I think, at that time, the question came up, ‘Is there an opportunity to create a next-generation service company?’ This along with the support that I got from Wipro helped me fund the venture.

If you have to list one key lesson you learnt at Wipro, what would it be?

One very important lesson was that if you are successful in what you do, then you tend to give yourself credit. But we forget that this success is also because of the organization you work with. The moment you step out and try to gain the same success, without this platform, it becomes very difficult.

What did you do in your first term as the CEO of your company?

You see this was well planned. I knew that I would take on the role of a CEO one day. Actually I became the CEO just after the company went public in 2007. So it was a lot of responsibility as I had to manage three key dimensions of the business: the stakeholders, the customers and the Mindtree minds [the employees of the company]. So you have to focus on the things that are in the best interest of the institution. I learnt a lot with this transition. Another key aspect is to deal with the investors because you need to give them information, a certain vision of the company’s future, where you will be. They know everything and are very well informed, so you have to be honest with them. Otherwise, you will break your reputation.

What would be your advice to young graduates? Should they start their own company directly or follow your example?

Actually, I feel like I am still learning, but what I always say to the people I meet is that the spirit of entrepreneurship and the passion to start something on your own is important. The most important thing, in fact, is the idea. You must have something that can solve a problem and that people are willing to pay money for. So if you have such an idea you can directly start your own company even after your graduation. If you don’t, you should just start somewhere, pick up some skills and experiences.

What are the two main characteristics any CEO should have?

I think that the answer to this question has changed over the years. In my time, a CEO had to be charismatic and constantly tell people what needed to be done [your communication skills]. In today’s word, I would say that a CEO needs to be more collaborative than before because he does not know about everything. He also needs to be more humble and listen to what people have to say with an open mind. Also a CEO should have the ability to deal with crisis situations. Be calm, do not lose your confidence, think about the solutions and do not break under pressure.

What are the differences between a CEO and a chairman according to you?

There is a huge difference. I think from the governance perspective, these two posts are very different. The CEO is ‘just’ responsible for running the business while a chairman can’t interfere in a CEO’s role. But the second important role of a chairman is that he is here to worry about the interests of all the stakeholders. So I must question myself if the things I am doing are right for the stakeholders.

How do you see the role of a CEO of a government-owned company? Is there a difference in the private and public sector?

I think that the role of a CEO in the public sector is much tougher. Because in the private sector, his role is very clear: you are answerable to the board and the stakeholders but in a public-sector organization, you have multiple stakeholders, even unknown or invisible ones that can come and ask you questions. So it is much more difficult.

How do you balance your life, work and family? Since you cannot have everything.

I think it is a state of mind. I think you can balance all three but don’t make the mistake of mixing them. You see most people have the tendency to check their e-mails when they are with their family, for instance. The e-mails can wait for one or two hours, so just spend quality time with your family and friends and then go back to your e-mails. You have to take out time for everything. I think it is an excuse to say you cannot have all of them. I would say that the discipline is important. If you cannot manage a healthy balance between work, health and family, how will you balance customers, stakeholders and employees? It is the same thing.

Any book which inspired you the most?

Stephen Covey’s Principle-Centered Leadership and The Rules to Break by Richard Templar.

You were forty-two when you co-founded a company. Do you think it was late?

In hindsight, it was probably late; it was possible then but not now. Now the complexity and velocity of business is so high that starting something at forty-five would be tough. There were no start-ups then. However, I joined Wipro when it was venturing into IT. The experience you get in start-ups is unique and brutal.

Did you ever have a coach or mentor; do you have one now?

Now I don’t think I have any. Ashok Narasimhan was someone I admired. The other person is Azim Premji, his work and personal discipline is very high. Narayana Murthy is amazing with his intellect, and I had the opportunity to work with him.

I see you spend time in NASSCOM [National Association of Software and Services Companies]. Do you see more people coming forward to act as mentors?

Absolutely, here we ask Mindtree minds what their individual social responsibility is. Some want to teach in their native government schools etc.; basically, the notion of giving back to the society is making a comeback. Even a company’s success comes with the responsibility to give back.

—Interview conducted by IIM Bangalore students: Vinay M.K., Gakiko Audry, Wachter Semjon and Ujjwal Tah

In his interview, KK mentions some of the key facets of being a CEO and how multiple experiences help an individual to get a 360-degree view of the business. One of the key aspects of the role is to build a sustainable culture. Successful CEOs are able to actively change or build a culture that is required for success. CEOs, by pulling different levers, bring out the cultural change that is required for sustaining the business. Alan Mulally, the CEO who helped turn Ford around, focused on increasing transparency and sharing information between the different business units. The shift from silos and lack of cooperation to a high level of collaboration helped Ford return to profitability and better growth.²¹ Another example of a CEO creating change is Indra Nooyi and how she enhanced the culture of innovation at PepsiCo through design thinking. Nooyi made concerted efforts to build a culture where employees started thinking about what could be done differently with their products from packaging to core product characteristics. The aim was to increase their portfolio of new, enhanced products which helped the company’s sustained growth.

Growing into a CEO

CEOs from within the organization have a variety of formative experiences that help them to understand the landscape of the organization very well. Becoming a part of the core operations, and at times running the largest business or the most critical business is the most common. This helps individuals reach the top. Many CEOs have a finance background; their canny ability to interact with external stakeholders is considered a big advantage.

Hiring a CEO is not an easy job. Organizations expect the CEO to sustain growth, turn the company around, or build a new culture. The expectations and focus from the board may differ depending on the organizational context. Many times, for bringing about major change, boards look at professionals from outside the company and expect them to deliver. However, an article published in Wall Street Journal²² mentions the critical aspects that a new CEO should be able to manage to create success. The article stresses aspects like appreciation of the culture, understanding of the personnel, clarity on strengths and weaknesses of the organization, and good understanding of what will work in the organization. Research also shows that executives who had formative experiences in tackling deep strategic issues and managing different and difficult stakeholders make the best CEOs.²³ A study covering Fortune 100 CEOs and 222 CEOs from eighteen companies that survived more than 100 years found some interesting generalizations on education and experiences that shape a CEO. Almost all of the 100 CEOs were degree holders and 40 per cent had an MBA. Of those, who had an MBA, 60 per cent were from top, Ivy League business schools. This study shows that it pays to get a higher education from top schools, especially if your goal is to reach the CEO position of big corporations. In terms of career choices it pays off to be an insider who has spent a long time in the organization. Seventy-nine per cent of CEOs in the list were insiders.²⁴

Srimanto Bhattacharya, Co-founder and Senior Partner, Spearhead Intersearch

Intersearch is one of the top international executive search alliance organizations in the world, with more than ninety offices in over fifty countries. Spearhead Intersearch is a partner firm of Intersearch. The following is an excerpt from an interview with Bhattacharya.

What are the major criteria that companies look for in a CEO?

Companies want forward-thinking people who are good at planning, with high team management experience. People who have helped a company grow in a dynamic environment with practicality are preferred. Strategy building and operational skills are also high on the list. Soft skills are very important. Finally, they want someone who would fit into the culture of the company.

What is an ideal CEO profile?

1. A CEO must have high EQ [emotional quotient] along with high IQ. Understanding people and handling teams is his/her main job. A CEO should be inclusive and know how to handle emotions of people well. That is why some companies even prefer female CEOs.
2. A CEO must know how to delegate well. Delegation is not as simple as it sounds. He/she must know how to plan well and know how to build the right teams for the right kind of job.
3. A CEO must know how to take calculated risks. A risk-averse CEO will not be good for a growing company. A risk-taking CEO may endanger the future of the company. A CEO who takes calculated risks will help the company grow and prosper.

In the Indian context, Infosys has been an interesting case of how founders became CEOs one after another and then transitioned out to larger board-level roles or exited the organization. Narayana Murthy, one of the key founders of Infosys, was also the first CEO. After he stepped down, Nandan Nilekani took over as the CEO in 2002. In 2006, Narayana Murthy retired from the services of the company after he turned sixty. The board of directors appointed him as the additional director. He continued as chairman and chief mentor of Infosys. In 2007, Kris Gopalakrishnan, who was the chief operating officer (COO), took over as CEO, and Nandan Nilekani was appointed the co-chairman of the board of directors. In 2011, S.D. Shibulal, then COO, took over as the CEO and managing director from Kris Gopalakrishnan. The latter was appointed the executive chairman. It is interesting to note that founding members went through multiple roles before becoming the CEO at Infosys. Nandan Nilekani, Kris Gopalakrishnan and S.D. Shibulal served as COOs before becoming CEOs. Finally in 2013, Infosys had a non-founding member as the CEO—Vishal Sikka. It is apparent that the founders saw value in insiders handling the key role for a long period of time. In 2017, in a major public altercation with the key founding member, Narayana Murthy, on issues related to corporate governance, Vishal Sikka resigned as the CEO of Infosys. This also saw the return of Nandan Nilekani as the executive chairman.

Exceptional CEOs

Harvard Business Review assesses best-performing CEOs from across the globe to list the top 100. Over a period of time, the parameters for assessing the performance have changed. From pure financial outcomes, the ratings have evolved to include environmental, social and governance parameters. Hence, for successful CEOs, apart from financial performance and sustainability, governance is an important aspect.²⁵ A CEO should be able to balance short-term returns and long-term sustainable practices.

Lars Sørensen, Ranked Best-performing CEO, 2015 and 2016, by Harvard Business Review

Lars Sørensen was appointed the CEO of Novo Nordisk, a leading pharma giant, in 2010. He remained the CEO till the end of 2016. He was also a member of the supervisory board of Thermo Fisher Scientific Inc., US, and of Bertelsmann AG, Germany. Lars Sørensen joined Novo Nordisk in 1982 and has broad international experience, having worked in China, Greece, France, the Middle East and the US. Sørensen was appointed a member of the Novo Nordisk corporate management in 1994 and the president and CEO in 2000. Sørensen has an MSc in forestry from the Royal Veterinary and Agricultural University, Denmark (now the Faculty of Life Sciences of the University of Copenhagen), and a BSc in international economics from the Copenhagen Business School. In 2007, he became an adjunct professor at the Faculty of Life Sciences of the University of Copenhagen. Sørensen has strong operational competencies and extensive knowledge within innovation, marketing and HR as well as substantial management experience.

In various interviews and articles published about Lars Sørensen, he talks about the importance of values and how they have impacted the way he runs the organization; he says they are critical elements for success. In an interview with Harvard Business Review, he mentioned how challenging it was to transition and transform from a specialist, focused on operations, to a CEO who had to have an exposure in management and the ability to supervise multiple areas. He also shares that it is important to have a long-term strategy and put together the efforts to create a sustainable organization. Sørensen is an interesting example of how an employee moved up the ladder through multiple assignments to become the CEO. In his interview, Sørensen mentions that an insider CEO works best if the organization has a long-term strategy that is working well. An outsider can help if the company wants to fundamentally change its direction and culture.

Sir Martin Sorrell, CEO, WPP plc

Martin Sorrell was ranked No. 2 by Harvard Business Review in the best-performing CEOs of 2016 list. A self-made entrepreneur and CEO, Martin Sorrell, over a period of three decades, built up WPP plc, a British multinational advertising and public relations firm, making it the largest globally. Sorrell is a graduate of the Harvard Business School. He built WPP through a series of acquisitions. Sorrell has built his career by consolidating the industry and heading one of the largest companies in it for many years. As he said in the interview with Harvard Business Review, growth to the top of an organization and remaining there depends on the professional’s interest in the industry that he/she has chosen.

Similar to the Harvard Business Review CEOs, ranking, Business Today, a leading business magazine in India, conducted a study on India’s best CEOs. The three key parameters that the study looked at were the compound annual growth rate, growth of market capitalization and return on equity (geometric mean)—all over a period of three years. These necessarily captured how a CEO helped the growth of the organization through a quantitative evaluation. Apart from the above, the shortlisted CEOs were also evaluated on how their strategic decisions had positively influenced the organization.

Arundhati Bhattacharya, Chairman and Managing Director, State Bank of India

Arundhati Bhattacharya has a bachelor’s degree in English literature from Lady Brabourne College and a master’s degree in English literature from Jadavpur University. It is interesting to note that she does not have an MBA degree but still heads India’s largest bank—State Bank of India (SBI). She joined SBI as a probationary officer (entry-level officer) in 1978 and managed many roles in her career before becoming the chairman and managing director (CMD). She has been a part of many strategic initiatives at SBI, including SBI General Insurance, SBI SG Global Securities Services and SBI Macquarie Infrastructure Fund. She is also the main force behind the technological evolution of the bank. When she was pronounced one of the best CEOs in India by Business Today, the main focus was her ability to change the face of the bank in the digital economy. She has been successful in making the bank social media savvy and invest in technology.

Arundhati Bhattacharya has worked across major domains of SBI. She has a balanced approach towards handling issues. Arundhati is also known to have built good rapport with trade unions.²⁶

In an interview with Aparna Piramal Raje, for a column in the Mint newspaper,²⁷ Arundhati mentioned how authenticity has helped her become a successful leader of India’s largest bank. Her refreshing candour and humour help her to be more approachable. This makes decision-making more effective as approachability helps her get a better view of the situation. This brings in more clarity and helps in communicating the situation to the team better. Authenticity, according to Arundhati, also helps in consistency. This ensures that the team has a clear idea of the leader’s expectations. It helps the employees be more productive as the communication and expectations from the leader are clear, consistent and open.

There are legendary CEOs who are much admired in the business community, and they have redefined the companies they have headed. General Electric saw an increase of almost 4000 per cent in the company’s value from 1981 to 2001 when Jack Welch was the chairman and CEO. Welch implemented strategies that majorly influenced how GE worked as an organization, and many of the practices that he implemented became examples for others to follow. Welch focused on the competitive advantage and market positioning of the companies in GE. The ones that were not No. 1 or No. 2 in their areas of operations were shut down or divested. The principle he rigorously followed was that if the business is not No. 1, or No. 2 in the industry, either you have to fix it, sell it or shut it down. He sold seventy-one businesses/product lines that were not the No. 1 or No. 2 in their areas of businesses or did not have future strategic relevance. However, taking the decision to divest is not easy with long-standing market relationships and loyal employees who have strong emotional connections with the company. An article²⁸ in Harvard Business Review written by three senior-level consultants from McKinsey, the management consulting company, states that ‘for executives, selling a business can sometimes seem like treason. When Welch sold off GE’s housewares unit, for instance, he got angry letters from employees accusing him of destroying the company’s heritage’. He also focused on going global and drove home the point that while companies are local, their businesses are global and the competitiveness should be seen from the global market’s perspective. He strengthened the businesses through focused acquisitions. Welch built in-house leadership talent through ‘GE Workout’ sessions that focused on succession planning for key roles and leadership development. The performance culture was reinforced—letting go of relative non-performers every year. Welch and his style continue to echo the essence of an ideal American global CEO. In an interview, he stated five key traits of leaders based on his experience: high positive energy, energizing others, ability to take tough calls and being passionate about what you believe in.²⁹ Welch also said that taking tough calls and focus on execution can be learnt over a period of time through training and experience. However, being positive and passionate are much deeper personality traits that are difficult to acquire. Welch said that the best strategy is to ‘hire for energy, the ability to energize and passion. Go full force in training and developing edge and execution.’ Much of Welch’s success as a CEO can be attributed to his leadership style, ability to drive a clear strategy, and build a winning and competitive culture.

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Y.C. Deveshwar served as the chairman of ITC for over twenty years. He is credited with much of the transformation of ITC over the years. He has successfully led diversification of the businesses, improved growth in the core sectors, built social relevance through a farmer-friendly approach and enabled last-mile effectiveness of the supply chain through e-Choupal, a conglomerate to link directly with farmers. In the list compiled by Harvard Business Review of the best CEOs in the world, Y.C. Deveshwar was ranked seventh globally. The business newspaper Mint published an interesting tribute with anecdotes from his top management colleagues³⁰ when Deveshwar moved to a non-executive role at ITC in 2017. The article observed the key qualities of Deveshwar as the chairman.

He has been able to successfully diversify ITC and reduce the risks of being exclusively in the tobacco/cigarette business. The food, lifestyle and stationery businesses were conceptualized directly under his leadership. He had the skill to think strategically, evaluate fresh ideas and incubate them to create new successes in diversification. He empowered his teams to go ahead and test the market even if there were risks involved. His high level of detail orientation and focus on execution ensured that businesses moved ahead at the desired pace. Deveshwar also created a highly effective corporate governance process that brought transparency to ITC.

A CEO’s role in large, established firms involves making key strategic decisions, influencing the culture, aligning the team including the top management with the organizational vision and direction, ensuring execution and achieving desired results, managing relationships outside the organization, and above all being a beacon for corporate governance and ethics. CEOs are also expected to deal with global changes and risks. These include aspects like geopolitical uncertainties (like conflicts, eurozone challenges with Brexit, growing nationalism and demand for more protective and conservative regimes), social changes, environment and climate change, jobs and talent availability, and technological changes.³¹

In a Nutshell

Based on the research and learning from the experiences of successful CEOs, here are some key takeaways on becoming a CEO in an established large organization:

1. Provide vision and strategic direction for the organization
2. Ability to take tough calls
3. Make things happen—ability to execute strategies and generate results
4. Align the team with organizational goals
5. Have the skills to communicate with clarity
6. Manage the overall operations of the firm
7. Manage different internal and external stakeholders, including the board
8. Lead corporate governance and create social relevance for the organization
9. Be the moral compass of the organization