What CEOs can teach the next US president
On January 20, 2017, the next president of the
United States will become chief executive officer of some of the most powerful
institutions in the world, including the White House, 15 executive departments,
the US military, and numerous other federal agencies.
While not all lessons
from the private sector are transferable to the public sector, and many
successful business leaders find their skills challenged in the unique
government environment, there are nevertheless lessons for this transition
period that CEOs can offer the next president and other new senior leaders
entering the government.
Here are a dozen such
lessons, drawn from McKinsey’s work with public- and private-sector leaders
globally and discussions with current and former CEOs of iconic companies who
have undergone similar transitions. These lessons are broadly applicable to
leaders transitioning into senior roles in the government, regardless of
professional background.
Establish your agenda—an overarching aspiration and a
limited set of priorities
Get a clear lay of the land
Understanding an
organization’s context is vital, particularly in government institutions where
so much of the staff is nonpolitical and has been there for many years and so
many of the external stakeholders (for example, Congress, state and local
governments, the press, and voters) have a say in what you do. In order to
grasp the full picture, learn the expectations of the important constituencies
and what experiences various institutions or departments have recently been
through. Even incoming leaders who are insiders, with past experience in the
organization, or possess deep expertise in a particular issue will benefit from
assessing anew their operational landscape. In doing so, deliberately
challenging any biases that the new leaders may have inherited—such as ideas
about who might be your allies or adversaries—is important. After all, as the
saying goes, “politics makes strange bedfellows.” Time and again, government
leaders have stumbled because they did not take the time to reflect on and
understand their institutions’ issues and stakeholders. Understanding the past
is often the best way to diagnose the present to ensure future success.
Start with your vision of where you want to end up
Decide what you are
trying to accomplish for the American people and what key themes you want to
emphasize before setting your agenda. The transition period is the time to
refine the goals set during the campaign and then ruthlessly prioritize those
that will define your tenure. The former CEO of Juniper Networks, Kevin Johnson, once remarked that
this approach does not require that “you translate your point of view into a
new strategy on day one,” but that you should develop and prioritize a basic
list of your long-term goals fairly quickly. A 2015 survey of executives highlighted that they considered the most
important transition activity to be creating a shared vision and aligning their
organization around this strategic direction. Then, once you have defined your
guiding vision and prioritized your goals, assess the big initiatives and
resources required to deliver on each of them. In particular, you should
consider sunsetting any inherited projects that are outside the purview of your
priorities to free up resources and sharpen the organization’s focus.
Focus on the next three years, not just the first 100
days
From the start,
striking a balance between near-term and long-term impact is important. The
media will make you feel like your success is determined in a sprint over the
first 100 days. Inevitably, you will hear invocations of Franklin Roosevelt’s
first 100 days, when he pushed through the legislative agenda that defined the
New Deal. You will want to score a few quick wins that signal your priorities
and demonstrate your ability to achieve them. As Convergys CEO Andrea Ayers has
noted, it is important to stay focused on what matters and for “your early wins
[to] tie back to your major goals. The former has to be connected to the
latter.” While a cabinet secretary’s tenure is typically shorter than a CEO’s,
you need to prepare for more than just the first 100 days. Indeed, trying to do
too much in the first 100 days will not allow the organization sufficient time
for buy-in and may lead you and the organization to feel like you are spinning
your wheels.
Act boldly
CEOs who make four or more strategic moves in their first two years tend to outperform
similar organizations and stay longer than their more hesitant counterparts.
Despite the constraints of government, successful leaders must take risks and
act as boldly as the operating environment will allow. Be particularly
attentive to this if you’re an insider candidate—that is, one that has grown up
in an organization or knows it very well. Our recent research in CEO
transitions shows that insiders are much less likely than an external candidate
to make the kind of bold moves the organization may need.
Communicate, communicate, communicate
Effective CEOs in
transition understand their unique strategic role as communicators. To mobilize
your organization, you will need to set clear landmarks that will guide its
everyday actions. Leonard Schaeffer, who was the founding chairman and CEO of
WellPoint, and has diverse public-sector experience at the state and federal
levels, emphasizes that “a government leader or CEO’s job is to explain the
organization to the world, and to explain the world to the organization.” Given
this need, it’s important to be trusted as a communicator by being as
transparent as possible with your internal staff and external stakeholders
early on so they understand your priorities and rationale, particularly if you
are an outsider relatively unknown to the organization. Complicating this
dynamic, however, is that the scrutiny is on you, especially at the beginning.
Ensure, therefore, that communications are at the center of any initiative you
take and that you have a story to tell before day one. New CEOs are routinely
asked what their long-term strategy is for the company within the first few
days. CEOs we interviewed said that the best answers tended to recognize and
acknowledge major constituencies, project confidence in the company’s
prospects, and have clear ideas about where progress is possible. Your clear
vision and priorities are fundamental to your communications. These best
practices do not mean you should make promises or that you need to have all the
answers as soon as you start, but you should formulate a vision and sense of
direction that inspires confidence. If you do not define your overall
narrative, it will be defined for you by events, stakeholders, or even
opponents.
While new leaders
understandably want (and often need) to bring in people they know and trust,
many leaders fail because they are too insular and resistant to including
outsiders in key decision-making processes. You will need to retain and rely
upon career staff in many positions. It’s essential to gain buy-in early and
build a joint leadership team consisting of career professionals, appointees,
and outside experts. As former Secretary of Defense Robert Gates once put it, “If [career staff] don’t like what you’re doing, they
can just outlast you. They were there before you got there. They’ll be there
after you leave. And all they have to do is wait you out.” Although there will
inevitably be tensions between incoming and outgoing teams—even when a
transition is between administrations of the same political party—it is
important to ask your predecessors for their perspectives on the strengths and
weaknesses of the career staff.
Surround yourself with diversity
Research from McKinsey
shows that companies in the top quartile for gender or racial and ethnic
diversity are more likely to see superior performance measured by average
financial returns. Among other factors, more diverse leadership teams tend to
improve problem solving and decision making. Sheryl Sandberg, Facebook chief
operating officer and author of Lean In (Knopf, March 2013), reminds us that “endless data show
that diverse teams make better decisions. We are building products that people
with very diverse backgrounds use, and I think we all want our company makeup
to reflect the makeup of the people who use our products.” In an increasingly
diverse and multicultural America, that aspiration is even more important in
government.
Welcome thoughtful internal critics
In any organization,
and particularly in government, there is a natural tendency to rely upon a
trusted inner circle. Sometimes this is by necessity, such as with
national-security challenges where only those with a need to know can be
included. But often the circle of dialogue reflects the emotional and psychological
pressures of the senior-level jobs themselves. Being a senior executive in
either the private or public sector is lonely, and there can be a desire for
reassurance. Nonetheless, be willing to include the skeptics within the
organization on your leadership team or in your planning meetings. Andrea Ayers
urges, “Surround yourself with people who will tell you hard truths.” If you
shy away from the criticism or restrict meetings to only those who support your
agenda, the criticism within the organization will find its way to you through
other channels. In the private sector, it can come through the press, leaks
from your employees, or the board of directors. In the public sector, Congress
and other agency leaders only add to the potential chorus of critics. To
counter this, you could consider developing a person-by-person plan to engage
the most influential critics. Many senior government leaders, for instance, ask
their staff to convene groups of outside experts of different viewpoints for
meetings or informal discussions over meals to ensure that critical voices and
creative ideas are shared. You need to manage dissent, not avoid it.
Make tough decisions on personnel as early as possible
While there may be less
flexibility in removing staff from government agencies, cabinet secretaries and
agency leaders retain the power to adjust who is tasked with what
responsibilities. Use this power as soon as you need to, particularly for
important initiatives. In a recentMcKinsey survey on executive
transitions, respondents noted that they wished they had acted more rapidly on
personnel decisions. When doing so, however, make sure you consider the context
of the organization. Underperforming companies tend to see improvements when
they reshuffle a management team, but the results are more mixed for
well-performing companies.
Recruit ‘doers’ as well as policy experts
There is a temptation
in government to hire a team of the best thinkers and policy experts rather
than those focused on internal management or the implementation of policy.
Developing policy initiatives is indisputably important—it is why we have
elections and where you will undoubtedly spend much of your time. But a good
management and operating team is also essential. John L. Thornton, executive
chairman of the board at Barrick Gold, emphasizes that “a leader needs to
ensure that government gets more ‘doers.’” Likewise, our research has
underscored that leaders need a team of managers who can both deliver
performance today and build the foundational organizational health that enables
their institution to sustain that performance over the long haul. Given the
various demands, when considering your top team, the appointment of the right
chief of staff will be critical to striking the balance between policy
innovation and getting things done. The chief of staff role can take on several
forms, including serving as a proxy for your office to other stakeholders,
acting as a counselor to you personally, playing a targeted analyst role, or,
more likely, some combination of the three. You should encourage your chief of
staff to embrace an ethos of being more staff than chief and to focus the right
amount of his or her energies on ensuring effective management to deliver
results.
A new presidential
administration will feel like being on call 24/7. You and your staff will
experience the acute time pressure to deliver rapidly. And delivering is
complex, demanding, and at times depleting—physically, emotionally, and
psychologically. Your senior-executive commitments will also place demands upon
your family and friends, some of which they may not have expected. As CEO
experience attests, you should decide early on what your cadence will be, set
that culture for your leadership team, and then ensure that you trust people to
execute. Although it may appear to be a luxury as you try to launch your
agenda, preserve time from the start for activities that help you
recharge—whether that is exercising, reading, spending time with those closest
to you, or sleeping. Sustaining your energy is perhaps more important in the
public sector because, unlike in the private sector, most senior leaders in
government—even cabinet secretaries—are not only CEOs of their organizations.
Rather, they both lead their organizations and serve as advisors to the
president, who is the ultimate CEO. Therefore, there are times when even
cabinet secretaries must support the president directly in a staff-like
capacity, and that places extra demands upon your time and shapes your
schedule. For example, in the national-security domain, the secretary of
defense is in charge of leading and managing the largest organization in the
country, with millions of employees, but also has to devote significant time to
preparing and then advising the president when he or she is making major
national-security decisions.
Set ground rules
Ensure that any action
you take could appear on the front page of a major newspaper without embarrassment.
Warren Buffett, CEO of Berkshire Hathaway, once warned, “It takes 20 years to
build a reputation and five minutes to ruin it. If you think about it that way,
you’ll do things differently.” Your role brings celebrity and power with all
the attendant benefits, temptations, and dangers, but the scrutiny you and your
family will face in public service will be unprecedented compared to any
previous position you have held. Familiarize yourself with the many new formal
rules and regulations with which you must comply to avoid any missteps. At the
same time, set your own rules with your staff, particularly your administrative
support, on how you want to conduct your public events, travel, finances, and
interactions with friends and past business associates.
The peaceful transition
of power from one administration to the next is a reaffirmation of one of the
great hallmarks of American democracy. It is a unique opportunity to chart a
new course for the country—and the planning and preparation during the transition
period can greatly improve a new administration’s ability to succeed. The 12
foregoing suggestions, based upon diverse leadership experience and spanning
many different types of organizations, should help the next president and his
or her senior-leadership team define their path forward.
This essay is part of First Year 2017, a project of the nonpartisan
Miller Center at the University of Virginia focusing on the key issues the next
president must confront, viewed through the clarifying lens of history and
amplified with actionable advice from leading scholars, former administration
officials, and policy experts.
By Carolyn Dewar, Thomas Dohrmann, Drew
Erdmann, Ryan Harper, and Kunal Modi
http://www.mckinsey.com/industries/public-sector/our-insights/what-ceos-can-teach-the-next-us-president?cid=other-eml-alt-mip-mck-oth-1607
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