Top 3 issues facing CEOs today
The average life expectancy of the average CEO is now somewhere between 30 and 40 months*.
There are more challenges than ever facing CEOs and the complexity of business continues to grow. Business is changing rapidly and CEOs need to be ahead of the curve.
Here are some areas should be, but aren’t always, the top priorities for CEOs.
The first area is Pricing. Price is the number one lever to improve profitability. If you don’t get your price right it will make all your other business decisions much harder. Now normally pricing falls under the responsibility of the Sales Director but I believe the CEO should be actively involved. Price is not just an issue for Sales. It is a critical strategic decision with far reaching implications. Price in most businesses does not get the thinking and planning necessary. Pricing appears on the surface to be simple yet is far more complex than appreciated. Pricing should be a strategic decision which the senior team provide input. Instead too often it is delegated like selecting the numbers in the weekly lottery draw.
Wrong pricing decisions aren’t easy to resolve. The most common mistake in pricing is under-pricing. Once your price is presented if it is too low it will be difficult to increase in the near future. The price you charge a customer or client in 2013 will have a huge influence over the price you can charge that same client in 2014 and beyond. Price is not a one off.
How much are you leaving on the table? How well do you negotiate? How could you have maximised your price whilst ensuring your customer is still delighted? How often do we win the deal and then wish we had charged more? In my workshops with senior teams we often discuss the reluctance to talk about money and the embarrassment many of us feel when talking with clients about money. In all other ways these senior business people walk the talk, except when it comes to money and pricing. They can turn into pussy cats instead of hungry brave lions when faced with a conversation about money.
Mark Ritson, associate Professor of Marketing on the MBA programmes at LBS and MIT Sloan once said “Most companies strategy for pricing is a mixture of voodoo and bingo”.
The second priority I believe CEOs need to focus on are goals and priorities especially the balance between long term and short term goals. Long term goals should never be supplanted by short term goals, no matter how tempting. The CEO must have the ability to switch in a heartbeat from the long term perspective to swoop in on the immediate and back again. Rather like an eagle watching relentless from on high ready to fly down to grasp an opportunity or wrestle with a serious problem. Balancing short term targets with the long term ones can be a challenging juggling act.
Simon Sinek summed it up “When people believe in what you believe, they work with their blood, sweat and tears. When they don’t believe in what you believe they work for your money” My fear is that too often CEOs rely too heavily on money and not enough on creating beliefs and goals which are so strong your employees will walk an extra mile over hot coals!
Bigger isn’t better, better is better. Mediocrity is the enemy of greatness.
As Steve Jobs said “Be insanely great”.
CEOs need to be braver, bolder and more decisive. They need to do less to achieve more. Go for stretch targets, go out of your comfort zone, push for real improvements. Achieve what others say is impossible. So take risks but don’t bet the company.
Innovation has become a critical goal for many companies. There is however a fundamental dilemma with innovation. Companies want innovation but lack tolerance of mistakes. They can’t have it both ways. Innovation requires acceptance that mistakes will be made. Think like a hungry start-up or challenger entrepreneur.
“Take calculated risks. That is quite different from being rash” George S Patton.
In order to achieve your goals and priorities you need the right team around you. Be more ruthless with the wrong team members. Let under-performers sink or swim. Often poor performance is tolerated for too long. Take courageous decisions sooner. Take decisions before you need to – then they are ‘brave’ decisions. If you wait till you have no choice and are forced to take that decision, then that’s no longer a brave decision
Focus on your goals. Avoid displacement activities which distract your attention. Busy-ness is a common distraction where everyone is so busy being busy they fail to address the real mission critical priorities. The focus on efficiency can mean effectiveness is ignored and efficacy takes a back seat. I’m convinced our brains are wired to systematise our tasks so we become like an auto-pilot. This is useful allowing us to handle ever more complex and larger tasks however there is a need to keep the focus firmly on those critical priorities and knowing when to seize back control from the auto-pilot.
The final issue which requires more attention from the CEO is the customer. Yes bring the customer into the boardroom.Too many companies pay lip service to this. Go further! Bring your competitors’ customers, your ex-customers and your unhappy customers into the boardroom. Don’t just listen to the customer. Observe them.
As Henry Ford said “if we’d asked the customer what he wanted he’d have said ‘a faster horse'” We need to anticipate what the customer needs in the future before they know they need it. Then communicate clearly with your customer and not just about the positives. Don’t avoid the negatives. Confront the tough stuff. Have more courageous communications. Work harder at communicating how the business is tackling problems, crises and challenges. Communication is about building trust. No trust, no sale.
Too often companies only want to show a superficial veneer. Customers want the truth and to be treated like adults.
Yesterday does not predict tomorrow. Do not assume today’s customer will be tomorrow’s customer. In the past year or so we’ve seen the demise of previously successful businesses which failed to adapt to their changing customers and market, ie Blockbuster, Clinton Cards and JJB Sports. Retail has changed so much – so have many other industries. Other companies which failed to adapt and retain their dominance are Yellow Pages and Nokia. Change sneaks up on us. Often we don’t notice our customers changing or delude ourselves the change isn’t happening. Sometimes we need a near death experience so we take change seriously.
Here are two further thoughts.
A recent article in Harvard Business Review identified the 3 rules for business success which have a wonderful clarity and simplicity.
- Rule 1: better, not cheaper
- Rule 2: grow revenue before cutting costs
- Rule 3: focus on rules 1&2!
Keep the main thing the main thing.
Don’t let the short term over-rule the long term. Don’t screw the future of the business to hit this Quarter’s target.
Which priority do you need to address?
Article first published in Sales Initiative Magazine