Being a CEO means juggling countless responsibilities. It’s a role that demands both boldness and careful planning, vision and execution, leadership and humility. In CEO Excellence, McKinsey & Company partners Carolyn Dewar, Scott Keller, and Vikram Malhotra distill insights from 67 top-performing chief executives into practical wisdom you can apply.
Whether you’re already in the C-suite or aspiring to get there, keep reading to discover strategies that will help you lead more effectively while protecting your own well-being.
Overview of CEO Excellence (McKinsey & Company)
How do the world’s best Chief Executive Officers (CEOs) run their businesses? What do they all have in common? These are the questions that Carolyn Dewar, Scott Keller, and Vikram Malhotra sought to answer when they interviewed 67 highly successful CEOs and compiled their findings into McKinsey’s CEO Excellence: The Six Mindsets That Distinguish the Best Leaders From the Rest (2022). By doing so, they’ve created a unique guide to help you emulate the mindsets and practices of some of the best business leaders on the planet.
The authors are all senior partners at McKinsey & Company, one of the world’s most prestigious management consulting firms. Dewar is the founder and co-leader of McKinsey’s CEO Practice, where she works with executives and board members to boost their effectiveness. Keller leads the firm’s organizational health and leadership development practices, and helps companies succeed through better leadership and culture. Malhotra is McKinsey’s Chairman of the Americas and has extensive experience advising chief executives on strategy, growth, and organizational transformation. Collectively, the authors have decades of executive consulting experience and have worked with people from many different industries all over the world.
The authors say the best CEOs are those who can effectively balance six mindsets: company direction, organizational unity, leadership guidance, board synergy, stakeholder relations, and self-care. This overview of CEO Excellence: The Six Mindsets That Distinguish the Best Leaders From the Rest condenses those six mindsets into three key areas:
- First, we’ll discuss the mindset of running a company’s operations and some strategies for doing so effectively.
- We’ll then explore the various ways you’ll need to deal with people: your leadership team, your board of directors, and finally the rest of your company’s stakeholders.
- We’ll conclude by explaining how you can maintain your own health and well-being while still keeping up with your numerous responsibilities as a CEO.
Key Area #1: Company Direction
Dewar, Keller, and Malhotra begin by exploring what most people likely picture when they think of a CEO’s job: making big decisions about the company’s strategy and future. This first section will discuss the two seemingly contradictory elements you must balance as you decide the company’s direction: boldness and risk management.
Make Big, Bold Moves
Dewar, Keller, and Malhotra say the most successful CEOs approach corporate leadership with a bold and fearless attitude. Rather than trying to minimize mistakes and failures, you should embrace uncertainty by chasing high-risk, high-reward opportunities. Some examples include buying or merging with other companies, investing heavily in company growth (as opposed to shielding the assets you already have), and regularly experimenting with new methods and tools to boost productivity or reduce overhead costs.
The McKinsey partners argue this bold mindset is necessary because a tiny fraction of companies make the vast majority of the world’s profits, and the odds that your company will be one of them are extremely low. Think of it like the lottery: The only way to win is to play, and the more tickets you buy—which is to say, the more risks you take—the more likely you are to win big.
The authors add that this bold, forward-thinking mindset extends to managing your company’s budget. In fact, they urge you to approach the budgeting process as if you’re an outside observer—that mindset will give you the emotional distance needed to make big but rational decisions about the company’s future.
Start each new budget completely from scratch, rather than making incremental changes to previous budgets. By doing so, you’ll free yourself (and your business) from any internal politics, historical precedents, and emotional attachments that influenced previous years’ decisions. Instead, you’ll only have to justify your budget decisions based on how they contribute to your overall objectives.
Manage Risks
Even though Dewar, Keller, and Malhotra recommend you make big and fearless moves as a CEO, successfully executing such bold strategies requires you to plan ahead and take precautions to protect your company.
The best CEOs don’t just make big moves; they have the foresight about future market conditions and customer needs to make the right moves. Therefore, the McKinsey partners urge you to invest time and energy into understanding emerging trends, technological developments, and shifting competitive dynamics. Also, instead of trying to predict future trends on your own, build networks of advisors, customers, and industry experts who can help you identify upcoming opportunities.
You can also manage the risks associated with your business strategies by analyzing possible negative outcomes before making any big decisions. If you determine the worst-case scenario that could result from your decision, and make sure your organization can survive it, then you can pursue ambitious goals without putting the entire company at risk.
Key Area #2: Organizational Unity
Managing a company may be what most people associate with the role of CEO, but that’s only one part of your duties. As a leader, you’re also responsible for managing people: keeping everyone from your leadership team to your customers happy, and making sure everyone works toward the same goals.
In this section, we’ll discuss three areas where your soft skills can make the difference between being an average CEO and an exceptional one:
- Guiding and energizing your leadership team
- Building strong relationships with the organization’s board of directors
- Connecting with company stakeholders
Leadership Guidance
Dewar, Keller, and Malhotra say that your executive team’s effectiveness significantly impacts company performance. However, more than half of senior executives report that their company’s top team underperforms. These shortfalls often stem from friction within the leadership team rather than from any lack of intelligence or competence.
Therefore, the authors urge you to prioritize team dynamics: Choose people who can set aside their personal agendas for the good of the company, who support one another instead of tearing each other down, and who bring a diverse array of perspectives and ideas to the table. Doing so will lead to much better results for your leadership (and therefore your business) than obsessing over logistical matters like meeting frequency and agenda items.
Foster Teamwork Among Company Leadership
Dewar, Keller, and Malhotra add that even an ideal leadership team requires ongoing work and active management to perform at its best. This is because executives tend to be competitive, achievement-oriented people who often struggle to cooperate with each other. The McKinsey partners offer two strategies to help address this issue.
First, consistently invest in team-building. One common practice is to hire facilitators or coaches. These professionals can help your team understand each others’ individual working styles, build trust with one another, and set clear rules about how to resolve interpersonal conflicts.
Second, make sure your team works exclusively on issues that need their collective perspective and authority. In other words, give them problems that require them to work together.
Dewar, Keller, and Malhotra encourage you to prioritize agenda items that will truly benefit from the senior team’s input, and delegate other matters to individuals or smaller groups who can handle them more efficiently. In addition to making your executives collaborate on major issues, this practice ensures that you’re not wasting valuable team time on matters that don’t really need the whole team’s attention, such as routine operational issues.
Board Synergy
Working with your company’s board of directors can be one of your most challenging responsibilities, but it’s a crucial part of your duties as CEO. Dewar, Keller, and Malhotra emphasize the importance of building trust with the board, because trust is essential to an effective working relationship. A strong working relationship, in turn, will allow you and the directors to work together for the good of the organization.
To build that atmosphere of trust and collaboration, the authors first recommend that you practice radical transparency with your board of directors. This means you proactively share both positive developments and problems as soon as they arise. In addition to establishing trust between you and the board, such openness serves two more purposes: It stops directors from wasting time looking for problems you’ve hidden from them, and it ensures they can take action while issues are still manageable.
It’s also helpful to cultivate personal connections with each of the directors. To do so, learn about each one’s area of expertise, strongly held beliefs and values, and communication preferences. Also, whenever possible, have one-on-one conversations with board members to get their input on important issues and share your perspectives in turn. These practices help strengthen the bonds between you and your board, leading to more effective teamwork and better outcomes for your organization.
Stakeholder Relations
Maintaining good relationships with your board is crucial, but Dewar, Keller, and Malhotra say that it’s equally important to maintain good relationships with all of your company’s stakeholders, from executives to customers.
The best way to do this is to create a meaningful, inspirational vision for your organization: something you can hold up as your ultimate goal and the reason why your company exists. This will create more authentic and productive relationships with all of your stakeholders because people who believe in your vision will believe in you, and therefore in your company as well. A strong, unique vision will also help set you apart from your competitors.
To develop such a vision, look for places where the market’s needs, your company’s capabilities, and your personal passions overlap.
The McKinsey partners add that you can prove your commitment to your vision by also working to address other environmental, social, or political challenges, even if they’re not directly related to your ultimate goal. As with your overarching vision, you’ll have to identify where people’s needs align with your organization’s strengths.
For example, the Walt Disney Company’s mission is to “ … entertain, inform, and inspire people around the globe through… storytelling.” As an offshoot of that overarching vision, the company invests in a wide variety of philanthropic projects to support people’s health and happiness all over the world.
Align Company Culture With Company Vision
Your company’s vision will inspire excitement and trust among most of your stakeholders. However, remember that employees are stakeholders as well—Dewar, Keller, and Malhotra say that keeping your workers engaged and committed requires you to create a workplace culture that meets their personal needs.
The authors offer some advice on strengthening your company culture. First, choose a cultural anchor—a single, powerful focal point for your company culture. This is a similar concept to the “inspirational vision” the authors discussed before, but less specific; a cultural anchor is a concept or a mindset, rather than a concrete goal. It should be emotionally moving, logically connected to your company’s performance, and simple enough that everyone from C suite executives to frontline employees can use it to guide their decisions. .
For example, suppose you choose “respect” as your cultural anchor. That single word could encompass respect for every member of the organization (regardless of position), respect for oneself, respect for customers, and even respect for the world as a whole—which implies that social and environmental responsibility are also part of the company culture.
The McKinsey partners urge you to involve leadership from every level of the organization in choosing your cultural anchor. Doing so will ensure that it authentically connects with the company’s strategic and cultural needs.
Once you’ve chosen your anchor, the authors say you must make sure your company culture aligns with it. You can do this in four ways:
1) Pay attention to people’s stories about their experiences with your company as employees, customers, or any other role. The authors say to celebrate and share examples that demonstrate the values you want to promote, while letting stories that go against your new culture fade away on their own. Don’t try to suppress negative stories, as that will only call more attention to them.
2) Make sure the company’s daily processes and reward systems support the culture you’re trying to create. For example, if you’ve chosen honesty as your cultural anchor, but only reward employees based on sales, your workers will quickly realize that it’s better for them to tell whatever lies are needed to make a sale. This is a clear mismatch between what you claim to value and what your company actually values.
3) Embody the culture you want the organization to adopt. Your employees watch everything you do and look for clues about what really matters to you, not just what you say in meetings. Therefore, the McKinsey partners advise you to always live up to the values you promote, especially when doing so involves some level of personal risk or sacrifice. Furthermore, if and when you fall short of those ideals, candidly acknowledge your failure and your need to improve; such honest vulnerability will show your employees that you’re making the same changes you’re asking them to make, and facing the same struggles. This is similar to being honest with your board and will produce many of the same benefits.
4) Help people feel confident about learning and living the new work culture. This means giving them the training and tools they need to succeed. It’s also crucial to create an environment where employees feel safe trying new approaches to their work, and aren’t afraid they’ll be punished for making honest mistakes.
Key Area #3: Self-Care
So far we’ve been discussing how to manage your various responsibilities to your company, but Dewar, Keller, and Malhotra urge you to remember that you also have responsibilities to yourself. They write that many executives overlook the importance of self-care, which is a critical mistake—your well-being is crucial to both your effectiveness as a CEO and your personal happiness. In this final section, we’ll discuss two strategies that can help you protect your physical and mental health: effectively managing your time and attention, and having a strong sense of identity.
Manage Your Time and Attention
Dewar, Keller, and Malhotra assert that the demands of a CEO position, and the schedule required to meet those demands, are often overwhelming. It’s therefore crucial to effectively manage your time and energy to avoid exhausting yourself. Approach your role as a series of short but high-intensity working periods, and deliberately leave yourself periods of rest in between.
The McKinsey partners say that, when making your schedule, you should balance structure with flexibility. Start by scheduling your most important commitments, then build the rest of your calendar around those. Since it’s impossible to predict everything your job will entail during any given day, week, or month, it’s wise to leave yourself blocks of time when you have nothing specific scheduled. Those free periods are chances for you to pursue unexpected opportunities, catch up on tasks you’ve been neglecting, or simply to take time for yourself and rest.
It’s also crucial to bring your full attention to whatever you’re currently doing. Thinking about what’s already happened or worrying about the future not only distracts you from the task at hand, it also drains your already-limited mental energy. Similarly, it’s important to establish clear boundaries between your professional and personal life so that you (and your loved ones) can fully enjoy your time away from work.
Remember: You Are Not Your Company
To protect your mental and emotional well-being, make sure you don’t turn your role as CEO into your whole identity. In other words, remember that running a company is what you do, not who you are. Dewar, Keller, and Malhotra offer several strategies to do this.
First of all, make a point of having relationships outside of work that can help you stay grounded. Family, friends, hobby groups, and spiritual communities all offer chances for you to step outside of your role as the ultimate authority and remember that you’re just another person. In addition, those relationships are enriching experiences in their own right.
Second, remember that your company’s accomplishments come from everyone’s collective efforts, not from your own brilliance. Whenever possible, redirect attention from yourself to your colleagues, customers, and your company’s overarching vision. For this strategy, it’s helpful to embrace a philosophy of servant leadership, meaning your first priority is to support your employees’ success rather than pursuing your own.
Finally, keep in mind that your position is only temporary. Someone most likely held the CEO role before you, and someone else will certainly have it after you. The company itself is what produces wealth, helps people, and changes the world; you’re just the person who stepped in to run it for a while.
