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CEOs: If You Do This, Prepare to Fail

May 3, 2016

A few years ago, we worked with an organization to design and implement a new business model. They hadn’t had any growth for six to seven years, and the leaders were smart enough to know the “rollover” was eminent. 

 

We gathered the best and brightest, and the CEO charged our team with this goal: design and implement a new business model that will produce at least 10–12 years of double digit profitable growth. Our only boundary conditions were to not drift from the company’s key core competencies or code of conduct. 

 

And we did exactly that. It was one of the hardest, most rewarding engagements we’ve ever had the honor to work on.

At the meeting to describe the new business model, the CEO asked two questions.

  1. First, he asked what the probability was of this new business model giving them double-digit profitable growth for the next 10–12 years. We answered that there was an 80 percent probability.
     

  2. Then, he asked what the probability was of the new model being successfully implemented. We answered that there was a 50 percent probability of successful implementation. 

He took a deep breath and asked, “Under what conditions could we change that to 80–90 percent chance of successful implementation?” We paused and said that a number of his key executives were too invested in old mindsets that were closely tied to the old business model, and that they would not sufficiently embrace the new business model. 
 

If you’re not willing to do the courageous work of aligning the leadership with the new business model, prepare to fail.

He privately asked for the names of these leaders with unbending mindsets, and promised to have appropriate-minded leaders in place shortly. 

 

He then returned to the team and gave the go-ahead to implement the model as planned. The right leaders were in place shortly, and the company went on to double its size and triple its profits. 

 

One of our favorite quotes from the great management expert Peter Drucker is this: “The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic.” 

 

Leaders often do this unknowingly. 

 

Appropriate-minded leaders are crucial to relevant, enduring organizations. Problems that arise are often the result of leaders who have not kept up with the environmental realities.  

 

But the world changes, businesses ebb and flow, and our mindsets and assumptions may not stay in sync with the environmental realities. So regardless of a company’s past success, what matters is that today’s leaders think differently than the leaders of the past. They must prioritize differently, and their decision-making must be different. 

 

In my book The Enduring Organization, I write about the importance of what we call "appropriate-minded leaders." When leaders mindsets and beliefs are aligned with new relevant business models, they are the essential ingredient in the recipe for success. 

 

If you’ve done the very difficult job of redesigning your business model, but you launch it with leaders whose assumptions are still tied to old environmental conditions, it won’t work. If you’re not willing to do the courageous work of aligning the leadership with the new business model, prepare to fail.

 

If you’re not willing to do the courageous work of aligning the leadership with the new business model, prepare to fail.

 

Learn more in this short video on the "Black Box" of leadership: 

 

 

 

In his 25 years as Founder and President of The McLean Group, Hal McLean has honed a unique ability to liberate hidden capacity in businesses, creating value far beyond the bottom line.  Follow him at @TheMcLeanGroup and contact him here.

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