(( FOREWORD: I draw the attention of readers that this posting is specially tailored for pertinent contemplation by major owners and board members of corporations. Although they are not normally involved in the customary course of running the business, yet they still hold a vital mandate - i.e. to decide on the appointment of the chief executive officer (CEO ........some entities use alternative titles like managing director, country manager, president etc.) to represent them. The contents are presented as food for their thought in relation to such a decision. To other readers, among who may be top flight executives already in the No. 1 position or those aspiring to reach high up the corporate ladder, the article also serves as food for reflecting what it really takes to become an outstanding CEO. ))
I begin the article by asking the following questions to owners and board members of corporations:
1) Do you know the acumen of your current chief executive ........ whether leaned more to the businessman mind-set or administrator mind-set?
2) Notwithstanding the present CEO's leaning traits, is he at least strong in his attributes to stand out as an astute "businessman" or "administrator"?
3) In event you wish to make a change of protagonist, would you prefer the businessman or the administrator type? Or would you opt for the "hybrid" - someone who has a blend of the businessman mentality and administrator mentality?
4) Have you analysed the business structure and prevailing environment of your corporation in relation to the type of CEO (listed in 2 and 3) most suitable to take the helm?
I know these are uncommon questions hardly delved at by owners and board members. My point is, as the pivot committee laying the framework of the corporation's business, they should be awakened to recognise the fundamental practicalities which pave the foundation how the corporation will be run with the CEO as its appointed leader.
The businessman type has its pros, so does the administrator type. But their respective strengths are opposite poles far apart. Strong business-minded CEOs rarely come by as stellar administrators too. Likewise, administration prone CEOs are unlikely astute in driving business promotions.
What about the hybrid type? Perhaps he could be deemed the ideal pick. But in actuality, he may be a generalist in both aspects but master of none. Unless he has gone through years of seasoned exposure to both marketing/sales and administration roles, he cannot be expected to outstandingly direct business drives and administration efficiency by himself. Moreover, a dynamic hybrid type is not easy to find in the market.
Before delving further regarding the preferred CEO type for a corporation in the later segment of this article, let us now view a juxtaposition identifying the signals indicating the businessman mentality (BM) vs the administrator mentality (AM).
BM: Focuses on business expansion.
AM: Focuses on business conservation.
BM: Keen on marketing/business promotion/sales initiatives.
AM: Keen on service/administration initiatives.
BM: Likes to communicate more with sales people and customers. Less preference for paper work.
AM: Likes to communicate more with customer service/processing/administrative support staff and review documents/reports.
BM: Places importance to revenue and profit.
AM: Places importance to smooth administration and work flow.
BM: Involvement in public relations activities as part of the role.
AM: Personal involvement in strategic planning activities as an important aspect of the role.
BM: Sociable - likes to attend social functions.
AM: Homely - a private person.
BM: Prefers to articulate out thoughts verbally.
AM: Prefers to articulate via written messages.
BM: Mobile.Frequently takes official travels.
AM: Static. Mostly in the office.
BM: Takes broad overviews and zooms in at key pointers, especially business figures.
AM: Meticulous - takes careful note of all relevant details.
BM: Delegates implementation tasks to subordinates.
AM: Personally oversees and supervises on implementation.
BM: Holds frequent discussions and meetings.
AM: Indulges in writing out instructions and updates.
BM: Creative/innovative. Explores new avenues for business expansion.
AM: Analytical. Dissects facts/reports/events pertaining to prevailing situations for corrective actions from present base.
BM: Not so structured - acts ad hoc. Flexible. Time management is not important.
AM: Orderly. Goes according to set priorities. Strict time management adherence.
Now, we come to the board members' prime decision with regard to selecting their CEO. Should a businessman type be preferred over the administrator type, or the other way round, or to seek for one who is a mix of both?
My response: It depends on the nature of the business of the corporation concerned and/or its circumstances.
Few Examples:
NATURE OF BUSINESS: BEVERAGES SOLD VIA RETAIL OUTLETS TO CONSUMERS
The business does not entail much after sales service other than delivering regular supplies to retail outlets according to orders. The befitting CEO in this industry is one who knows how to give cues on initiatives for captivating the attention of targeted consumers, like campaigns on branding, advertising and marketing events. In short, the businessman type has the upper hand over the administrator type to take the CEO chair.
Let me share a classic example of effective video commercial deployed by the manufacturer of a fizzy cola (American product) drink to the global market, including Malaysia, in the early 70's. That media promotion was the topic of my project paper for my advertising subject when I was a mass communication student in a university.
The fizzy drink's video was incorporated a bouncy melodious theme song in folk rock tempo, with tagline "It's The Real Thing". It came on with a band opening the melody with a bottle of the drink in hand. Then, it zoomed to a group of more than 100 youngsters selected from different nations who completed the song in beautiful unison while holding the same bottled drink each. The ending lines of the lyrics, which made the song meaningful, went like this: "I'd like to teach the world to sing in perfect harmony. I'd like to buy the world a ........ (name of the drink) and keep it company. It's the real thing, .......... (name of the drink) is what the world wants today. "
Many of the young participants from nations non-conversant in English underwent rounds of coaching rehearsal before they could sing the song. That commercial stint captivated the targeted age group because of the universal and young branding appeal (represented by the youngsters of different nationalities). The song and tagline greatly pushed up the sales of the drink. I, too, was captivated by the song. Whenever my friends and I wanted a cold refreshing fizzy drink, we asked for "the real thing". So did my varsity mates, according to a survey interview conducted by me and my project buddy.
A reputable advertising agency conceived the video, yet it would not have taken place without the involvement of the No. 1 in the beverage corporation, especially so when a sizable advertising cost was required. I do not know who the No. 1 in charge at the time was, but my bet is that he must be leaned more to the business or marketing aspects of the business than administration. What do you think? Of course, as CEO, he should also off and on take a look at the supply flow to retail outlets to ensure hiccups did not crop up from the service perspective.
NATURE OF BUSINESS: GLOBAL COURIER SERVICE
Although some branding, advertising, promotion and customer acquisition initiatives are necessary from time to time, the crux of the business is service centric. Factors like service charges, speed of consignment delivery, international network delivery links, reliability, pickup convenience, special accommodation to urgent delivery requests etc. contribute to the courier firm's extra mileage over competitors. Being striking in marketing dynamics but slack in meeting customer service expectations will not sustain the business, much less expanding it.
A person who can re-model the service structure to roll out excellent service deliverables while still rendering overview advice to the marketing team will be the perfect candidate for the top post. Only a chief who understands fully the service level expectations of various customer segments is able to meet the various requirements. Needless to say, he is invariably an administration minded person.
NATURE OF BUSINESS: LIFE INSURANCE
Every life insurer depends on robust business promotion efforts plus reliable after sales policyholder services as the fulcrum for getting bigger slices of the market share. Design of innovative products with attractive benefits boosts its branding permeation. Programmes to upgrade the knowledge cum selling skills of distribution channels propel new business revenue. Implementation of service enhancement modules leads to higher customer retention ratios, thereby consolidating renewal premium revenue in the book.
Life insurers hinge on total premium growth, i.e. new business premiums together with renewal premiums increase. In addition, they also aspire to safeguard - better still, elevate - their profit scores. Functions like ensuring sound return of investment and expense control represent important inherent administrative scopes.
Based on this landscape, obviously the suitable candidate to sit on the CEO chair of a life insurer should be someone with proven performance in both business and administrative scores. He may be leaned more to one aspect, but yet still able to cast an advisory influence on the other. However, according to my observations, the ideal pick seldom occurs in reality. Most CEOs are either business centric (marketing or agency management experience) or administration centric (actuarial, finance or operations experience).
(In my next posting, I shall share regarding the scenarios of real examples which had top management officers directing focus mainly on one aspect without paying equal attention to the other. Invariably, some shortcomings emerged, which could have been avoided if the CEOs were proactively attentive to ensure wholesome progress in entirety.)
SPECIFIC SCENARIO OF A CORPORATION: A REAL CASE STUDY
This is an actual case relating to a national airline in South East Asia which was facing financial losses consecutively over some years (same case cited in my previous article posted on Sept. 21, 2015). High unabated expense overrun plus inefficiencies posed the risk of the national carrier having to wind up - as the government of the country could not support it for long - unless a constructive major operations overhaul was done to turn the scenario around positively.
In December 2014, the board - with the blessings of the government - appointed a new chief who had been known to successfully "rescue" a couple of ailing airlines via operations restructuring. The new chief, an expatriate, immediately embarked on drastic curtailment of excesses and redundancy, including manpower reduction by more than 30 per cent. Re-negotiation of contracts with outsourced suppliers of ancillary services for drastic reduction of their charges was administered. For the manpower optimisation, dealings with employee unions had to be worked out intricately. Mutual separation schemes, coupled with assistance in other alternative forms, paved the way for amicable settlement. Now, the airline is running normal without further upheavals. The CEO has set 2018 as the year to see financial break-even.
The situation warranted actions to save the airline rather than scaling up business campaigns at this stage. A candidate with seasoned experience in handling such operations issue, not a robust business promotion leader, was needed for the revamp. In other words, an administration maestro instead of an aggressive marketer would be the befitting No. 1 for the moment.
CONCLUSION
The corporate world generally perceives the notion that business promotion is the ultimate force behind any business thrive. Yes, I agree from the superficial perspective business must be bolstered via some promotion activities. However, from the fundamentally practical perspective, the crux of the consideration is whether the promotional approach should be via marketing platforms, or service excellence platforms, or a combination of both. As I said earlier, it depends on the nature of the business and/or the existing circumstances being faced by the corporation concerned.
In industries which rightly lay equal emphasis on new business acquisitions on one hand and service quality on the other hand, the third type of chief executive may be the ideal choice. But sourcing a hybrid candidate could be a tall order. This type is not many in the market. The alternative solution is: Get a No. 2 who manifests eminently on the other side of the same coin to work with the No. 1. If the chief executive's strength is on marketing and sales, then he needs a strong administrator-type chief operating officer (COO) to complement him by overseeing the service areas. If he is a prominent administrator type, a strong chief marketing officer (CMO) from the industry should serve as the No. 2 to complement him in the business aspects.
In the midst of the business orientated type and the administration orientated type, some industries may need chief executives who exhibit slight variations.
For example, the newspaper line needs to secure enough advertisement contracts to cover overall recurring costs as the charge for 1 copy (in Malaysia, English newspapers are priced at RM1.20 to RM1.50) could barely meet the costs of newsprint material and ink - this is the business promotion aspect. Then, timeline for machines to roll out the daily copies must be promptly executed for delivery to reach vendors early in the morning - this is the administration aspect. Amid the two aspects, a newspaper must house a resourceful editorial team comprising editors, sub-editors, reporters, special columnists, feature writers etc. to produce good news and side articles - this is the special skills segment, but I would classify them as the "technical flair" services segment, which still relate to the administration category. Similarly, copywriters in the advertising line (those who write advertisement scripts) are in this segment.
Astute CEOs of newsprint media or advertising agencies possess the balancing prowess of business promotion, administration and technical flair services. The top English daily in a South East Asian nation is doing very well because of the all-round involvement of its CEO. He regularly writes his views on different contemporary subjects in his own column, frequently participates in promotion campaigns and keeps in touch with the administration side when time permits.
Taken that in many actual scenarios, the situation is imperfect. Some chief executives and key officers are figures of "political" appointments - especially in government-linked companies (GLCs) - or nepotism (family members/relatives of major shareholders), or favouritism (close friends, associates of prominent stake holders). Such appointments are based on relationship, not on merits. And unless the appointees are of some levels of capability for demonstrating reasonable performance, the corporations they serve will not make headway.
Most inept top officers resemble bureaucrats acting as "armchair critics" without giving any guidance to subordinates regarding the right path to tread on. No wonder why some GLCs and family controlled corporations are not in good shape, or worse, end up in doldrums.
The right appointment of a right CEO is the responsibility of the board. The right appointment of the right key officers is the responsibility of the right CEO. The right appointments materialise from the basis of merits, not sentiments. Only the right appointments will set the right growth strides.
(Note: The contents of this article are emanations of my personal opinions formed from personal observations during my former years as a corporate officer and contracted consultant. No established management principles or management materials from other sources are perused. Hence, readers are free to either dispute or agree with my comments. I welcome responses from readers.)
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