Three Key Decisions
CEOs face countless decisions. The best executives understand which ones they need to focus on and which ones they can delegate. While the obvious decisions that CEOs need to get right involve strategy and competitive advantage, too many executives delegate away three critical decisions that they need to own: decisions about goals, resource allocation, and people.
Goal setting: As a rule, CEOs don’t give enough attention to setting goals. The greatest mistake they make is to look in the rearview mirror at what they did last year or at what their competition did. The brilliant decision-makers look at the runway ahead.
Resource allocation: These decisions are big because some competitive moves need disproportionate resources. When resources are allocated from the bottom up instead of from the top down, they get out of sync with what the senior team is trying to accomplish. Some activist shareholders are finding gaps in CEO performance when reviewing this.
People and Organisation: Be sure that key people are stationed where they need to be which is where projected growth will come from. Shift the company’s “centre of gravity” to where it is needed. Such decisions might be unpopular and break a lot of traditions, yet they set the future course of the company. Decisions to displace people are even tougher, yet when a study was done of 82 CEOs who had failed, the most common reason was putting the wrong person in a job and then not dealing with the mismatch. Today most if not all industries are impacted by digitisation—mobile technology, big data, and the like. It has a tremendous effect on which people are more critical than others.
Great decision-makers stay on top of these three key areas, because these are the three areas that have the most impact on whether or not the company strategy will be executed. Don’t delegate them away.
Article adapted from the HBR interview with Ram Charan
Do you or your CEO stay on top of these key decisions?