In the face of a treacherous and ever-changing environment, corporate transformation has become a way to maintain competitiveness. How to avoid losing focus on strategy? "CEO Excellence: The Six Mindsets That Distinguish the Best Leaders from the Rest" shares 3 things that top CEOs will pay attention to.
The book "CEO Excellence" is a McKinsey consultant's inventory of top 1,000 CEOs of listed companies. After analyzing multiple indicators such as shareholder return rate, tenure, industry, etc., 67 CEOs were selected and learned through interviews. How top CEOs set directions, allocate resources, and lead their companies to win in the competition.
Do you have a CEO mindset? McKinsey teaches 3 thinking to help enterprises successfully transform
1. Find the intersection between market demand and company capabilities and grasp the key to profitability
If companies want to keep up with the rapidly changing market, they need to set business goals that amplify the company's advantages. In this regard, "CEO Excellence" recommends finding the intersection of four aspects, including market demand, corporate capabilities, passion, and profitability.
The book uses the Danish pharmaceutical company Novo Nordisk as an example. Novo Nordisk holds nearly 50% of the world's insulin market. It gained an advantage because when setting its goals, it discovered that society's medical needs for diabetes were not yet complete, and it also knew that the company's specialty was biologics. In addition, Novo Nordisk allows employees to meet with diabetic patients so that they can see their contribution to patients, so they remain enthusiastic about their work.
2. Review fund allocation from scratch, not limited by past experience
After establishing goals, leaders should review whether resource allocation is consistent with the goals. The "CEO Excellence" recommends that leaders think about capital allocation like an outsider and start from scratch. Starting from scratch can avoid cognitive biases. When leaders do not refer to past budgets, but re-evaluate whether capital investment can help the company achieve its goals, it is more likely that the capital will produce ideal returns.
For example, after General Motors CEO Mary Barra took office in 2014, she carefully analyzed each market and put aside the mentality of "I have been working hard for a long time so I can't give up." She said that if the department cannot come up with a profitable plan, it will not be able to obtain funds and ensure that Funding allocations are in line with targets.
3. Align management talent with goals and identify high-value but overlooked roles
In addition to funding, talent management should also align with goals. "CEO Excellence" believes that companies need to examine which job roles create the most value.
When Kan Trakulhoon was the CEO of Siam Cement Group, since the company's goal was to transform original products into high value-added products, he enhanced the strategic position of the research department to ensure that the department had the best people. Talent eventually allowed the sales percentage of high value-added goods to grow from 4% to 35%.
