The five rules ev­ery new CEO should fol­low

Finweek English Edition - - MANAGEMENT - ROGER MARTIN

Re­cently, an ex­ec­u­tive who was on the verge of be­ing pro­moted to head his global, pub­licly traded com­pany asked for my ad­vice on how to be ef­fec­tive as a new CEO. I of­fered him five rec­om­men­da­tions:

1 EX­PAND THE PIE

The most frac­tious and dif­fi­cult thing to do i n an or­gan­i­sa­tion is to take re­sources away from some­one who is used to re­ceiv­ing them. For this rea­son, grow­ing the rev­enue pie is crit­i­cally im­por­tant to the suc­cess of a CEO’s reign. If a CEO at­tempts to re­al­lo­cate ex­ist­ing re­sources in or­der to im­prove the or­gan­i­sa­tion’s prospects, end­less fights and a firestorm of protests will en­sue.

If, how­ever, the com­pany fo­cuses on in­creas­ing rev­enue, then its in­vest­ment ca­pac­ity will in­crease and it can fun­nel new re­sources to growth pri­or­i­ties with­out need­ing to cut ab­so­lute re­sources to non­pri­or­ity ar­eas. Over time, as the rev­enues grow, the non-pri­or­ity ar­eas will di­min­ish in size, and when the pri­or­ity ar­eas suc­ceed, the CEO can shut down the non-

pri­or­ity ar­eas with­out much has­sle.

2 FOL­LOW DUE PROCESS

CEOs aren’t al­ways ob­li­gated to fol­low due process. For ex­am­ple, they have the power to fire any­one they want. How­ever, it is crit­i­cal that as CEO, you do fol­low pro­to­col be­cause all of your em­ploy­ees will be watch­ing you with a keen eye and won­der­ing whether they, too, will be the ob­jects of seem­ingly ar­bi­trary de­ci­sions. When it comes to fir­ing some­one whose per­for­mance isn’t up to par, be pa­tient and give him feed­back and a chance to im­prove.

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