Being a CEO can be tough – as the old adage goes, “It’s lonely at the top.” Yet some CEOs lead really successful businesses and do so wherever they are.
How do they achieve this?
Simply, by learning about best practices, and following these, while avoiding the CEO mistakes that others make (and learning from their own). As Jack Welch said, “I’ve learned that mistakes can often be as good a teacher as success.”
It’s when mistakes are repeated and the CEOs don’t learn their lessons that they set things up for failure. So, what are the biggest mistakes CEOs make, and how do you avoid making them yourself?
- Communication
I’ve put this at the top of my list as effective communication is central to leadership and has become highlighted as a point of failure even more since the pandemic. You only have to look at political leaders around the world to see how critical this is.
One of the biggest mistakes leaders make is one-directional communication – where they communicate outwards, but do not want to listen to, or consider, the views of others, and they certainly don’t want to hear bad news from anyone.
Other fundamental errors include a lack of clarity in communication, a constant changing of position and direction (politicians are particularly prone to this, of course), and taking credit for everything that goes well. When they are uncertain, they simply don’t communicate for fear of being wrong.
Great leaders fostering a culture of open communication, of listening to what others say and encouraging questions to get new perspectives. They want to hear the bad news, too, so they can work with the team to sort things out. They keep the team informed of what’s going on, good and bad (a monthly forum for all staff is a great way of doing this), and are consistent with communicating the vision and values of the company.
- Ego
There’s no question that leaders need an ego – it’s what drives them to succeed. However, those whose egos are of a size and nature that they are blind to the possibility of any possible shortcomings in themselves court disaster for the business. They typically surround themselves with acolytes and praise-singers, they don’t develop or advance people, and certainly won’t hire people smarter than them.
“Respect,” as the saying goes, “is earned, not given.” Title or status alone does not mean respect – it needs to be earned by behaviour.
Great leaders show humility, knowing that they cannot do everything better than anyone else (nor should they), which is why they seek out the opinions of others and encourage questions. They know themselves and their shortcomings and ensure they have people close to them who complement these.
Great Leaders express appreciation for things done well and give credit to others, fostering a culture of accountability while allowing for the inevitable mistakes (provided people learn from these) and expect to be held accountable for their actions and their mistakes – after all, everyone makes them. They actively develop their team, encouraging them to advance their skills, knowledge and career.
As Steve Jobs said, “It doesn’t make sense to hire smart people and then tell them what to do; we hire smart people so they can tell us what to do.”
- Walk & Talk
One of the most damaging mistakes leaders make is failing to “walk the talk.” This often is driven by ego, and an inflated sense of their own importance – one that rises above the rules they have set for others (Boris Johnson, perhaps?).
Leading by example is vital: live by the rules you set and ensure everyone, including you, is held accountable for doing so. Great leaders are present for their team, their customers, suppliers and stakeholders as a whole, rather than sitting in a remote, luxurious “ivory tower” somewhere. After all, if they’re not interacting with their stakeholders at all levels, they’ll never know what’s really happening in the business.
- Accountability
A culture of accountability is key for any organisation, no matter the size. A mistake many leaders make is that of wanting to be popular, to be liked. These leaders are vague on what people are expected to do, how they will be measured and what the consequences are when expectations are not met. They don’t take action to correct bad behaviour. They don’t hold the team accountable, in other words.
A strong culture of accountability is essential: one where everyone understands what is expected of them, what their level of authority is, and what the consequences of failure are. The leaders, too, are held accountable in such companies, and these businesses flourish – they show higher revenue and profit growth, greater valuations, more motivated staff, and more loyal customers.
- Centrality
Too often, and especially in founder-led companies, the CEO is not only at the centre, but is the centre of everything in the business. They control all decisions, they believe they can do every task better than anyone else, they don’t delegate responsibility and they micromanage – everyone and everything.
These leaders are not leading the business, they are the business and so can never take a break. They’re stressed, exhausted and the business value is well below what they believe it should be.
Great leaders, on the other hand, recognise their role is to co-ordinate the resources of the business, having the strongest possible team, delegating responsibility and authority, and then letting people get on with their jobs. That accountability culture is a key feature here, too.
They recognise that taking time out to recharge their batteries is essential and that a successful business must be able to run without the constant presence of the leader. After all, the CEO’s primary focus, like that of the board, is on the future, and distance helps give clarity to that.
- Board
A fundamental mistake many smaller businesses make, and some larger ones, too – especially family-owned and run businesses – is to not have a strong board, one which includes independent non-executive directors.
The responsibility of the board is to oversee and direct the business of the company, forcing, in effect, a degree of distance from the day-to-day minutiae of it. The implications of these duties, enshrined in law, are considerable, and company executives ignore them at their peril.
But it goes deeper than this, as a strong board can provide a business with a considerable competitive advantage – analogous to a building having really strong, sound foundations.
Great CEOs are not only members of a skilled, knowledgeable and expert board, but work closely with all members of it to maximise the benefits the board members can bring. They keeping them informed, have regular board meetings to review the business and strategy (remember, the strategy plan must be a ‘living document’ and reviewed constantly), and encourage open discussion around all aspects for which the board is responsible.
- Coach
Not only do poor leaders make the mistake of not coaching their team, but they also don’t look to their own growth and improvement.
The best CEOs, like the best sports people, recognise that they need help if they’re to be the best they can be. Just as the top spots people use coaches, sometimes a number for different aspects of their performance, so great CEOs seek out a network of peers, advisors, coaches and mentors to challenge them, hold them accountable, work on blind spots and areas of improvement and act as trusted sounding boards, too.
By recognising these areas where the most common mistakes are made, great CEOs can ensure they avoid them and lead their businesses to new heights of success.
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I work with successful owner-led businesses to enhance their growth, profitability, cash flow and business value.
If you’d like to have a conversation about your business, leadership and your team, book a free 30-minute call with me here. I’d be delighted to talk with you.
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If you’d like to learn more, these related articles on leadership might help:
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- “It doesn’t make sense to hire smart people and then tell them what to do; we hire smart people so they can tell us what to do.” – Steve Jobs
- “Leading isn’t a position; it’s an action.” – Adam Contos
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