A CEO’s guide to reenergizing the senior team

A CEO’s guide to reenergizing the senior team (McKinsey & Co)

“Should you stay or should you go?”

In tough times, Boards ask this about CEOs and CEOs ask it about their teams. This article from McKinsey does a reasonably good job of framing the problems and pitfalls (e.g., getting rid of people too quickly) and the direction of a solution.

The direction, simply put, is for CEOs to manage, including managing their team’s emotional states. As much as we all hate to admit it, our states of mind are what lead to bad, blind or brilliant decision making. The idealized rational man –homo economicus– is as elusive as the mythical sasquatch, even in the halls of executive power.

Denial!

My favorite part of the article is a review of the “cognitive errors underlying denial…”

“We just got an order last week, so things are turning”—a classic example of the availability heuristic
“This feels just like the last downturn; we’ll come back eventually”—an anchoring error
“My team agrees this will resolve itself”—the bandwagon effect
“I found three different studies that support my view that this is a temporary downturn”—the confirmation bias
“We need to study this more before we act irrationally”—the information bias
“If we do the things we usually do in a downturn, everything will be OK”—the optimism bias

- A CEO’s guide to reenergizing the senior team, McKinsey & Co.

The example preceding this section discusses a semi-conductor company who’s executive team continued to view the world through Shangri-La tinted glasses…despite a 50% drop in revenue.

Please remain seated

If the corporate bus is heading downhill and the tour guides are still smiling, it is reasonable to question their sanity or at least their seating arrangements (“should you stay or should you go”). But, as this article points out, there is much the corporate bus driver (the CEO) can, should and–if s/he is a responsible professional–MUST do before kicking people off . Refilling those seats is almost never as easy, fast, or guaranteed to improve things as we’d like to think. Change is not always progress.

Referring back to the semi-conductor company, the article offers a simple, insightful place to start: the truth.

“To combat these symptoms of denial, the CEO sought to overwhelm his team with objective data and analysis: the conditions facing the company’s customers and end consumers across a variety of economic sectors around the world. Through a series of exhausting working sessions, he immersed the entire team in raw data and used peer pressure to keep the team honest and expose cognitive biases early.”

Where to start?

Starting at the beginning (“where are we, our customers and our markets NOW?”) is a good idea. Starting with the facts is a good idea. Starting right now is the best idea of all.

MichaelBannen.com