What exactly do CEOs do? And, what do the best CEOs do differently from the rest? Drawing on 20 years of research data, Carolyn Dewar, Scott Keller, and Vikram Malhotra answer these questions in this book. In this CEO Excellence summary, you’ll learn the 6 key responsibilities, mindsets, and associated practices that set the top CEOs apart from others. The insights are useful not just for CEOs, but also leaders at all levels and from all types of organizations.
Decoding the Secrets of CEO Excellence
The CEO plays a critical role in any company, accounting for roughly 45% of the company’s results. However, CEO failure rates are high. Data from the Centre of Creative Leadership reveals that in the past two decades, 30% of Fortune 500 CEOs lasted less than 3 years in their position, and 40% of new CEOs failed within their first 18 months.
Indeed, a CEO’s job is both lonely and demanding. CEOs are accountable for everything and the responsibilities lie squarely on their shoulders. They have no higher-ups for guidance, and no playbook on what to do.
The job is getting even harder due to rapid digital transformation, a greater emphasis on sustainability and purpose, increased public scrutiny, and growing concerns about employee well-being and diversity.
What Sets The Best CEOs Apart From The Rest?
To answer this question, 3 senior partners at McKinsey & Co—Carolyn Dewar, Scott Keller, and Vikram Malhotra—conducted an extensive research study.
They scoured 20 years of data on thousands of CEOs across various countries, industries, and types of companies. From there, they identified the 200 top-performing CEOs of the 21st century based on performance, tenure, value creation, and corporate conduct. This was followed by comprehensive interviews with 67 of the standout CEOs, including Sundar Pichai of Alphabet, Satya Nadella of Microsoft, Masahiko Uotani of Shiseido, and Mary Barra of General Motors, and more.
They found that exceptional CEOs have a distinct way of thinking that creates strategic advantages for their companies. Specifically:
• They focused on 6 key responsibilities: charting the company’s course, rallying people around shared goals, transforming strategy into action, engaging the board effectively, building strong relationships with stakeholders, and enhancing their personal effectiveness.
• For each of these responsibilities, they exhibit a specific mindset that’s manifested through a set of practices.
In this free summary, we’ll outline all 6 responsibilities and mindsets, and elaborate in detail on the first responsbility/mindset. You can get the details for all 6 responsibilities and mindsets in our complete 19-page CEO Excellence summary.
1. Set the Direction: Be Bold
Great CEOs don’t play it safe and try to avoid mistakes. They embrace uncertainty and actively shape the fates of their companies, by being bold in their vision, strategy, and resource allocation.
Vision: Change the Game and Redefine Success
The best CEOs don’t just inspire people to beat their competition. They create a game-changing vision that redefine what it means to win. For example, Netflix founder and CEO Reed Hastings didn’t limit Netflix’s aspiration to be America’s top DVD company. He envisioned it as a “global entertainment distribution company that provides a unique channel for film producers and studios.” This vision propelled Netflix to make bold investments in streaming and cloud technologies.
Top CEOs use several practices to redefine success.
• Identify and magnify the company’s sweet spot, which usually lies at the intersection between critical factors. For instance, Best Buy’s niche lies in the spot where 4 things overlap: what the world needs, what they’re good at, what they’re passionate about, and how they can make money. They envisioned themselves “enriching lives by addressing key human needs.” This led them to concurrently (i) enhance interactive in-store experiences to showcase diverse brands and (ii) offer competitive online prices to match e-commerce giants’.
• Focus on meaningful goals beyond making money. They believe that by achieving their vision, profits will naturally follow. Under Herbert Hainer’s leadership, Adidas sought to “help athletes perform better than their competition.” This led them to invest heavily in product development to improve product performance.
• Reimagine past success factors. They look back on the company’s core success factors in the past, and reimagine them for the current/future landscape. Under Brad Smith’s leadership, Intuit continued to solve customer problems, but switched to modern solutions by leveraging cloud computing.
• Co-create the vision with diverse leaders from all parts/levels of the company, to create ownership throughout the organization. When Piyush Gupta took the helm of the DBS Group in 2009, no one on the team could imagine DBS being the best bank in Asia. So, he evolved the vision gradually: shifting to the “Asian Bank of Choice” and laying a strong foundation before moving to the bold vision of “Making Banking Joyful.”
Strategy: Take Bold Steps Early and Consistently
Once a transformative vision is in place, leading CEOs focus on making the vision a reality. They do so by making bold moves early and frequently enough to build momentum.
Do check out our full CEO Excellence summary for the 5 pivotal moves adopted by the best CEOs, along with the practices they use to mitigate the risks from such bold moves.
Resource Allocation: Think Objectively Like an Outsider
Great CEOs can look beyond legacy decisions and internal politics/biases to allocate resources objectively in line with the company’s vision and strategy. In the 1980s, Intel’s memory chip market was plummeting. Its president Andy Grove and CEO Gordon Moore asked themselves: If they were both replaced, what would the new CEO do? This prompted them to pivot to microprocessors—a bold move that laid the foundation for Intel’s success for decades.
In our full summary bundle, we cover the practices that top CEOs use to think like an outsider. Meanwhile, here’s a quick recap of the first mindset and practices:
2. Align People: Prioritize the “Soft Stuff”
Research shows that about 72% of organizational success depends on “soft” stuff like people and cultural issues. These are harder to manage than “hard” technical issues like liquidity or profitability. To rally people around shared goals for successful execution, the best CEOs prioritize 3 “soft” areas: culture, organizational design, and talent. In our complete book summary, we’ll dive into the key practices of how top CEOs:
• Distill and reinforce the essence of their organization’s culture;
• Blend stability and agility for effective organizational design; and
• Manage talent effectively to maximize value from critical roles.
3. Mobilize Teams: Tap into Human Psychology
Leading CEOs cultivate high-performance teams by focusing on team dynamics and human psychology in 3 areas: team composition, teamwork, and operating rhythm. In the full 19-page CEO Excellence summary, you’ll learn how top CEOs:
• Use the right team composition to create synergy;
• Cultivate teamwork to build collective excellence (not individual stars); and
• Establish an ideal operating rhythm that drives execution, streamlines operations, and aligns individual efforts.
4. Engage the Board: Help the Board to Create Value
The Board of Directors are the CEO’s only bosses—they’re supposed to manage the CEO, while the CEO manages the company. Most boards provide oversight without adding value to the business. The best CEOs see the board as partners and consultants, not policemen. They engage the board and equip them in 3 areas—relations, capabilities, and meetings—so they can contribute their wisdom and resources. Check out our complete summary for insights on how top CEOs:
• Built trust early with their boards, laying a solid foundation for the CEO-board relationship;
• Help the board to develop its capabilities and function optimally, so they can better contribute their wisdom and resources; and
• Use board meetings to engage in constructive, future-oriented dialogues to move the company forward.
5. Connect with Stakeholders: Focus on Long-Term Purpose
Stakeholder relationships account for up to 30% of a company’s earnings. Great CEOs start with “why” to understand stakeholders’ aspirations, concerns, and motivations. They strengthen ties through social purpose, stakeholder engagement, and moments of truth. More details in our complete CEO Excellence summary on how the best CEOs:
• Harmonize their company and stakeholder goals behind a social purpose;
• Engage stakeholders effectively by focusing on what matters most; and
• Lead effectively during crises or “moments of truth” to help the company emerge even stronger.
6. Enhance Personal Efficacy: Prioritize CEO-Exclusive Tasks
Exceptional CEOs excel at managing their time. They focus on tasks that only they can do, and delegate the rest. They closely manage 3 areas for personal effectiveness: time and energy, leadership, and perspective. Find out how top CEOs:
• Use cycles of intense focus, followed by renewal, to manage their time and energy effectively;
• Balance between “doing” and “being” to lead and live by their core values; and
• Maintain a healthy perspective by staying humble and down-to-earth.
Getting the Most from CEO Excellence
All the top CEOs juggled all 6 responsibilities above, but they did not excel in every area. What set them apart was their ability to integrate and prioritize these responsibilities based on real-time organizational needs, learning and adapting as they go.
These mindsets and practices for CEO excellence are likely to remain relevant in the future. And, they’re applicable for leaders of any level, not just the CEO of large organizations. If you’d like to learn more about these timeless insights and develop your leadership abilities, do check out our full book summary bundle which includes an infographic, 19-page text summary, and a 32-minute audio summary.
This book is packed with useful details, including: examples and excepts of interviews with the top CEOs, a detailed explanation of the research methodology, and 2 appendices with (i) tools for CEO excellence assessment and prioritization, and (ii) CEO biographies. You can purchase the book here or visit mckinsey.com for more details.
About the Authors of CEO Excellence
CEO Excellence: The Six Mindsets That Distinguish the Best Leaders from the Rest was written by Carolyn Dewar, Scott Keller, and Vikram Malhotra.
Carolyn Dewar founded and co-leads McKinsey’s CEO and board excellence work, coaching many Fortune 100 CEOs to maximize their effectiveness. She’s is a board trustee of Bay Area Discovery Museum and has a Master’s degree in economics and international relations from University of St Andrews, Scotland.
Scott Kellar co-leads McKinsey’s CEO and board excellence work on behalf of the Strategy & Corporate Finance Practice. He has authored and co-authored several books on organization effectiveness. He’s also the founder and leader of a global affinity group for parents of special-needs children.
Vikram Malhotra is McKinsey’s Chairman of the Americas. In the past, Vik he led McKinsey’s Northeast Office, the East Coast Financial Institutions Practice, North American Life Insurance Practice, the North American Personal Financial Services Practice, and co-led the Emerging Markets Financial Institutions Practice. He’s a graduate of the Wharton School of the University of Pennsylvania, and the London School of Economics.
CEO Excellence Quotes
“The best CEOs…think less about what the team does together, and more about how the team works together.”
“Change is rarely an intellectual problem, it’s an emotional one.”
“The top of the pack think differently, which causes them to take profoundly different actions day in and day out.”
“[Successful CEOs] didn’t just raise aspiration levels; they changed the definition of success.”
“The best CEOs aren’t only willing to venture into unchartered waters—they’re also willing to boldly stay the course on stormy seas.”
“Managing energy levels is as important as managing time, and can have a bigger payoff.”
“Candor—even if uncomfortable in the moment—is the only way to establish real trust and credibility.”
“A crisis is a moment of truth not just for the institution, but also for its leader.”
Learn from the top-performing CEOs of the 21st Century!