Business Architecture, Inc.

CEO Responsibility

"The chief executive of a company has as his or her highest obligation the management of a continuous process of strategic decision in which a succession of corporate objectives of ever increasing appropriateness provides the means of economic contribution, the necessary commensurate return, and the opportunity for the men and women of the organization to live and develop through productive and rewarding careers."
 - Kenneth R. Andrews
"Do you want a staff of strategic planners?" - Interviewer
"No! God, no! I don't. I want the people running the business to be the strategic planners. I think it's my responsibility to be the strategic planner ... Part of the responsibility of a business leader is to be a strategist."
 - Larry Bossidy
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Strategy Development is the CEO's Responsibility.

A competitive strategy cannot be purchased. If you believe a consultant has a better understanding of the inner workings and capabilities of your business, and thus greater insight than you and your management team as to what the business's strategy should be, you have deep management and leadership issues. Better to address those issues as part of building your strategic management and creative innovation capabilities than to adopt someone else's strategy.

Disciplined Passionate Leaders

The strategic management process presumes that the organization leaders own the development of the strategy. Thus, the firm must have the right leaders to develop the right strategies. To set off in pursuit of sustainable competitive advantage requires having leaders with discipline and passion for the mission of the organization. These leaders must understand the operations of the organization for which they are developing the competitive advantage. This understanding is reflected in the leader's business savvy and intuition which are essential to developing innovative and effective strategies.

The CEO's Responsibilities

Drucker brings home these points in his definition of what the CEO is responsible for:

  • defining what outside of the business is relevant for the business to concentrate on, as well as what to ignore
  • define what is meaningful information needed by the business about the outside
  • decide what are meaningful results for the business
  • providing answers to the questions of what the business is, should be, and should not be
  • deciding the business's priorities
  • placing people into key positions, thus determining the performance capacity of the business.

Beware of Prophets and Gurus

Strategies and competitive advantage are not the result of dogmatic approaches, guru consultants, or imitating other firm's successful strategy. Strategy is both an art and science. Popular panaceas and the gurus who produce them seldom deliver all that they promise. The critics of panaceas have found a number of reasons for their frequent failures. One reason for most of these failures is that solutions do not address the whole of the business. Any program, technique, or method that does not address the performance of the whole is suspect. What panaceas, quick fixes, and fads do in effect is the opposite of a "holistic approach". They "address parts of the whole, treating the whole as an aggregation of independent parts. Such approaches usually fail because the performance of a system is not equal to the sum of the performance of the parts taken separately, but is the product of their interactions. Improvement of the essential parts of a system taken separately may not, and often does not, improve the whole, and may even reduce the performance of the whole.

Beware of Experts

Experts can offer a great degree of comfort to executives who are seeking guidance or affirmation for the weighty decisions they must make. Unfortunately, the experts don't know your business in the depth that the people of the business know it. Also, though they are revered and speak with great confidence, they are often wrong. Following are some quotes to think about the next time you are listening to your favorite expert:

  • "Heavier-than-air flying machines are impossible." Lord Kelvin, British mathematician, physicist, and president of the British Royal Society, c. 1895
  • "With over fifty foreign cars already on sale here, the Japanese auto industry isn't likely to carve out a big slice of the U.S. market for itself." Business Week, 2 August 1968
  • "A severe depression like that of 1920-1921 is outside the range of probability." The Harvard Economic Society, 16 November 1929
  • "I think there is a world market for about five computers." Thomas J. Watson, chairman of IBM, 1943
  • "There is no reason for any individual to have a computer in their home." Ken Olson, president, Digital Equipment Corporation, 1977
  • "We don't like their sound. Groups of guitars are on the way out." Decca Recording Co. executive, turning down the Beatles in 1962
  • "The phonograph ... is not of any commercial value." Thomas Alva Edison, inventor of the phonograph, c. 1880
  • "No matter what happens, the U.S. Navy is not going to be caught napping." Frank Knox, Secretary of the Navy, 4 December 1941, just before the Japanese attack on Pearl Harbor
  • "They couldn't hit an elephant at this dist ..." General John B. Sedgwick, last words, Battle of Spotsylvania, 1864
  • Source: D. Cerf and V. Navasky, The Experts Speak (New York: Pantheon Books, 1984)

Outside Expertise

But, there is a role for outside expertise in guiding management. This is a collaborative relationship that brings management's capabilities to a higher level and beneficial results to the business. See the Role of the Consultant.