Strategy

18th July 2019

“Can you differentiate between fact and fiction?'”

The Seven Attributes of The CEO

#3

Like any master of any craft the great CEO will have access to and complete mastery of a great set of tools. A CEO is a craftsman, although the craft she is master of is distinctly different from many other who bear the name.

The great set of tools will include precision measurement tools so they can see what is working and what is not. Obvious measurements will be financial but not all will be. Some will be lagging indicators, but not all will be. Some must be leading indicators and the great CEO will have enough of each but not too many of either. Just enough to be able to differentiate between fact and fiction and to allow decisions to be informed by what is rather than what we might wish it were. It is important that the CEO lives in the world of reality not the world of fantasy.

Mental models

Alongside a great set of tools the CEO should possess a great set of mental models. Mental models are ways of understanding the world of business, how things work. I have heard it said that Charlie Munger, who has been Warren Buffett’s business partner for decades, is able to access hundreds of accurate mental models instantly which clearly enhances his understanding and decision making accuracy.

Sometimes we get unquestioningly welded to an idea or a set of ideas that are neither accurate nor helpful and they can lead us down paths that don’t help. A simple example of that might be the idea that people are only motivated by money and that nothing else matters. An idea that is too simplistic, too black and white and not at all helpful but one that is still fervently held by a surprising amount of people. Mark Twain once observed “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so”

Understanding business

It is important to understand business and the world and a set of accurate and useful mental models is invaluable in this, although as someone once observed, “All models are wrong, but some are useful”. We can add to our library of mental models and ‘stuff what works’ through a constant process of learning and reading and developing ourselves.

It is in this area of mastering a great set of tools and mental models that the CEO must apply themselves continuously. Verne Harnish, author of ‘Scaling Up’ and ‘Mastering the Rockefeller Habits’ has said that successful people are those who have an insatiable desire to learn coupled with an unquenchable bias for action.

Mastery implies learning and application of what we have learned and the way to get better is through deliberate practice. Deliberate practice is the conscious plan to improve through repetition and depends upon prompt and accurate feedback to be effective.

Like all seven of the attributes of the CEO that I am writing about this can be learned, developed and coached. It is possible for us all to be better, more efficient and effective CEO’s and achieve better results with less personal stress.