Business

CEO Guru: Leadership

  • 4 December 2012
  • From the section Business

Steve Tappin, who coaches chief executives, says being a successful chief executive has never been an easy task, and it's one that has become more difficult as the business world has become increasingly competitive.

One question that business leaders need to grapple with, he says, is deciding how "hands-on" and "hands-off" they should be.

To ensure that companies are heading in the right direction, CEOs have to inspire, says Mr Tappin. But they need to do so with care. The danger is, the more a chief executive becomes a kind of beacon at the centre, the more everyone will be tempted to turn to them for answers.

Eileen Gittins, founder of online publishing firm Blurb, recognises the problem. "I reached a point where I realised that I was limiting the company's opportunities, not furthering them, by being a bottle neck," she says.

She points out that this question can be a tricky one for an entrepreneur to deal with, and not just because they may have a strong emotional attachment to the enterprise they've created. At the start of a company's life, founders often have to get involved in every aspect of the business, regardless of whether they have the relevant skills or not.

"No one is good at everything. You may be sufficient, but you're not superb. And in the early days sufficient is good enough, because there's [just] 10 of you, but over time you must begin to specialise, including and especially at the CEO level," she says.

'Role clarity'

Ms Gittins' approach to handling the issue was to beef up the executive team.

"I have now gotten to the point where it's about role clarity," she says. "My job is increasingly driving the vision and the strategy, connecting the company up externally, but very much driving accountability to the team."

To foster a sense of shared responsibility, it can help if there's a sense of shared ownership too.

Liu Chuanzhi founded what became the huge computer business Lenovo in China the 1980s.

As the company grew, he says he ensured that key employees were given a stake in the business, retaining for himself only a comparatively small number of shares.

By doing this, Mr Liu hopes, the management team will feel that they "have a stage on which they can build a career".

Liu Chuanzhi says his ultimate goal is to create "a family-run company without the family". He adds that he wishes more Chinese business executives would follow his example.

'Big family'

Xia Hua of the Eve Fashion Group is one entrepreneur from China who does take a similar line to Mr Liu.

She wants all stakeholders - employees, customers and suppliers - to feel as if they are part of "a big family". Business activity should be "like a game", with as many participants as possible. Her role is to "provide the content for the game".

An example she cites of how she tries to put this idea into practice is when the company, which specialises in menswear, sent thousands of its customers a surprise gift on Valentine's Day.

"At that time many of our customers were civil servants and university teachers," she recalls.

"When they received the presents… they were surprised. Because it was a special date, most people didn't dare to open the presents in their offices… instead they opened the gift in the corridor or toilet. When they… saw a pink tag saying 'Eve, your lover forever'… many customers were shocked."

But then the customers remembered that they had once bought a suit from Eve. "That day our VIP line was clogged… there were too many people trying to call," says Ms Xia, adding that the response was positive.

The ploy is an example of what she calls "emotional marketing", which she hopes will help to bring the company and its customers closer to each other.

For some chief executives, leadership means getting involved in and understanding the action as much as possible. Sir Martin Sorrell is the founder and chief executive of the vast advertising and marketing company WPP. Although the group employs more than 150,000 people, Sir Martin is proud that he still signs off on all recruitment activity above a certain level.

Sir Martin denies that he does this because he doesn't trust the management team lower down the organisation, or because he wants to control everything. He needs to know what goes on, he says, because he's one of the few people in the company who can "connect the dots".

Staffing costs represent about $10bn (£6bn) a year, says Sir Martin, "and that is the biggest investment we make. And I would be derelict in my duty if I didn't think about that 10 billion… what makes or breaks the success of this company is how we manage that investment."

Chief executives, says Steve Tappin, need to think carefully about what kind of leader to be. They need to get the balance right between being close enough to the action to understand what's happening, and far enough away to be able to see the big picture.

It's a challenge that many chief executives find it difficult to fulfil.