
A model for CEO excellence - kungfudoi
https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-mindsets-and-practices-of-excellent-ceos
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jacques_chester
What I am not seeing in this discussion is any calculations showing how much
of these outcomes are down to dumb luck, sample bias and correlation.

For example:

> _Furthermore, research using our CEO database found that the top decile of
> high performing CEOs are 35 percent more likely to dynamically reallocate
> capital than average performers._

Maybe they stumbled into an opportunity that the rest didn't. That's luck.

> _To move “boldly” is to shift at least 30 percent more than the industry
> median. Making one or two bold moves more than doubles the likelihood of
> rising from the middle quintiles of economic profit to the top quintile, and
> making three or more bold moves makes such a rise six times more likely._

So if your random walk takes you upwards, you wind up having walked upwards.
Brilliant.

> _In the largest research effort of its kind, McKinsey found that CEOs who
> insist on rigorously measuring and managing all cultural elements that drive
> performance more than double the odds that their strategies will be
> executed._

Measured number rises, unmeasured number remains unmeasured. Scientists
baffled.

Remember: these are the best and the brightest. They are taken extremely
seriously.

Edit: they do give a source for their 45%-explained-by-CEO claim ... and it's
a pop-business book written by the same authors. Oh well.

~~~
shantly
I've seen nothing to convince me that most C-level management "experts" care
about confounders, selection bias or, generally, the quality of any data they
come up with. Nor have I seen evidence that others in a position to call them
on it care to. They either do not care, or do not know, how to reasonably use
data to support a point or to make a decision. To include folks from the big-3
management consultants.

Though to be fair, it's not like people down the org chart are usually much
better at it.

~~~
bjornsing
I can second this. Everybody wants to be “data driven”, but hardly anybody
wants to adhere to the rigorous standards necessary for sound data analysis.

I think it’s a bit unfair to point the finger at “C-level management” in
particular though. The same kind of thinking can be observed in government
agencies, in the legal system, even in academia. Statistics is just hard, and
a lot of people are simply not interested and cognitively capable enough to
get it right, sadly.

~~~
zipwitch
One piece of data is that there's an inverse correlation between CEO pay and
company performance: [https://cooleypubco.com/2016/07/25/new-study-shows-
inverse-c...](https://cooleypubco.com/2016/07/25/new-study-shows-inverse-
correlation-between-ceo-pay-and-performance-over-the-long-term/)

~~~
barry-cotter
Obvious confounds that should be adjusted for

(1) Long periods of success lead to raises for the incumbent CEO and then the
long period of success ends

(2) The company is failing and needs a turnaround. No external person is
willing to take the job for normal CEO pay for the company’s size because they
know they’ll likely fail and that makes getting another CEO job substantially
harder.

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zebnyc
My wife's company (large pharma in SSF starting with G) consulted with
Mckinsey for "strategy and innovation". Mckinsey recommended

a) the company G move to Agile except that they didn't say how. So now every
meeting/townhall/1:1 is filled with buzzwords. It is clear from the way she
describes it, no one in the company understands what Agile means. Everybody
talks about collaboration but they don't do any of the Agile rituals.

b) All of G's employees should move to an open office plan with non dedicated
seats. You come in the morning and have to hunt around for a desk. If you have
to go for a meeting in a conference room, you have to pack up all your stuff
in your bag and go. When your meeting is over, it is time to start hunting
again.

Morale amongst the rank-and-file is quite low.

~~~
arbitrary_name
Did the Mck guys handle any of the implementation? Because that sounds like
the client took potentially valid recommendations and half-assed the
implementation. Plus if the name ends with g, well, morale was already kinda
low from what I heard from ex employees.

~~~
barry-cotter
McKinsey don’t do implementation. Not doing implementation is what _strategy_
consulting means.

~~~
arbitrary_name
Implementation of strategy. I.e. change management, strategy program
management, follow on work from original strategic planning, etc. They do it
all the time. But should have clarified between system implementation.

Also McKinsey, Bain and I think BCG have actual system implementation or at
least integration offerings now.

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Vaslo
Had a lot of experience with McKinsey doing projects at my company at
different levels I’ve been in throughout it the years. When it’s highly
technical things like implementing a new technology or creat8!( a new
manufacturing footprint, they do really good work. Anything “Strategic” or
fluffy like this I find a waste of time. They are excellent salespeople and do
a lot to calm the C-suite but I rarely see these fluffy items like this
article driving employee happiness or the bottom line after spending millions.

~~~
hos234
Agree but many of the issues at the top of the food chain are like solving
Family Dysfunction. Dad is the problem. Dad doesn't listen to anyone. Dad pays
the bills.

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cosmodisk
I'm sympathetic to the CEO position.Not because of the overly glamorised
picture of what it entails but because of how lonely it can feel sometimes.
Most people can make decisions knowing that there's someone above them who can
advise/change or cancel it all together.For CEOs that's often not the case and
whatever you decide,you have to live with it.

~~~
Zhenya
I think the board plays that role of checking the CEO.

~~~
cosmodisk
Only if the company is big enough,which is not,in most cases.

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gatherhunterer
> What the CEO controls—the company’s biggest moves—accounts for 45 percent of
> a company’s performance.

What do executives think numbers are for? Why does the author find this metric
meaningful? How does this number have any meaning at all? The fact that a CEO
is important was not one that I questioned until I read this.

~~~
kiba
I heard that changing the CEO doesn't really change the performance of a
company, which made me skeptical right away.

I am not sure if the statistics I heard had any basis whatsoever though.

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hogFeast
I truly despair for the world. The "advice" offered is just so devoid of
content.

What if some things can't be learned, packaged into a Powerpoint, and then
taught and instantly absorbed?

It is like the economist who spends his whole life ensconced in his little
office telling investors how to invest, or policy makers how to manage an
economy...despite having no actual experience of those things himself.

I don't know how we got to this point.

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rcurry
After a number of years in the space I’ve come to the sad conclusion that many
(not all) companies succeed despite their leadership rather than because of
it. There are often a large number of true believers involved in keeping the
ship sailing straight and they often get little credit for it.

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ncmncm
What I like in a CEO: takes no salary, and keeps the hell out of the way.

And never, never hires McKinsey.

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jl2718
Very impressive. Language-generation models have really come a long way.

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throwawayuuuu5
Current McKinsey, not associated with this report but kind of close. Yes, this
one is very fluffy. There’s a few high level things that are important though
around Org. Lots of companies just don’t have a good strategy for org, and
there’s a lot of low hanging fruit for things like talent, culture, etc.

~~~
osipov
So do you admit that McK occasionally acts as a fluffer?

~~~
throwawayuuuu5
I would say every business and the vast majority of individual people
occasionally act as fluffers (as I believe I am to interpret that term) so
sure.

My point is not to reveal a gotcha that McKinsey is not the word of God. You
will find nobody at the firm thinks this way.

Many people have strongly negative perceptions of consulting firms, and I’m
sure some people have strong anecdotes to justify their beliefs. Yet I’m
brought in to address certain problems and it’s very clear that help is
needed. Sometimes the solution is something that could have come from someone
inside, or is perhaps something that someone on the inside is already saying
beforehand, but the consultant gets communicated better to leadership because
they have more political capital and credibility on the issue. If this
happens, then you’re already experiencing some of the problems highlighted in
this article. Political and organizational friction is real. If that is the
“only” thing preventing an organization from solving a problem, then they are
still incapable of solving the problem on their own. I think a lot of people
would benefit from seeing how things are from the consultants point of view.

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dwoozle
McKinsey’s advice on what makes a great CEO is like my advice for making it
through menopause. They know absolutely nothing about it and their expertise
is mainly in creating CYA documents for executives and assisting corrupt
governments and regimes.

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tomp
_> Of the 50 most value-creating roles in any given organization, only 10
percent normally report to the CEO directly. Sixty percent are two levels
below, and 10 percent sit farther down. Most surprising of all is that the
remaining 10 percent are roles that don’t even exist._

This is very insightful analysis, using the method called "I made up all the
numbers".

And somehow we're supposed to trust the rest of the article?!

~~~
bostonpete
The source they're referencing was talking about asking companies to
prioritize roles by value creation. Ten percent ended up being roles that
didn't exist in the organization, but should. Also, the source said 20% were
three levels below the CEO (as opposed to the quote above, which says 10% "sit
farther down").

I agree this is pretty sloppy writing.

~~~
hn_throwaway_99
It's still what I like to call "lie with statistics". Take a topic that is
pretty much inherently unmeasurable ("roles by value creation"), and then
assign numbers to it in a pseudoscientific attempt to sound like you've done
your research.

~~~
kthejoker2
You would be amazed at the amount of inherently unmeasurable things The Big 4
can come up with pseudoscientific assessments for measuring.

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buyingarmor
I'm pretty impressed from the content quality level at Mckinsey

Most enterprise don't know how to write content people like to read for some
reason

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nelsonic
Great content/analysis. Shame the PDF is not optimised to read on mobile.

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avip
Coming next on HN: _A model for ladders strength (stanleytools.com)_

