What do CEOs really do? Stevie Spring, CEO of Future Plc (the magazine publisher), recently expressed it to me in the following way: “I am not really the Chief Executive; I am the Chief Story Teller”. What (on earth) did she mean with that?
What really is an organisation? Well, it is a group of people – sometimes a rather large group of people – (supposedly) working towards a common goal. This goal may simply be profit, but it certainly helps if we have a common idea of what we’re trying to do in order to make a profit. Hence, it is about setting a clear strategic direction.
A clear strategic direction is not a 40-page document outlining a firm’s strategy – that’s a drawer-filler. It is a concise set of choices that determines what we do and don’t do. For example, for Future it’s something like “special interest, English-language magazines for young males, possibly with spill-overs on-line and in terms of events”. Hence, they would for instance do a magazine on “guitar rock” but not on “music” (as that is not focused enough to be considered a special interest); they would do such a magazine in the US but not in German (then they might license it); they would cover motorcycle racing, or Xbox or wind-surfing, but not knitting (unless, without me realising it, knitting has recently had a popularity surge in the community of 20-something old males). Thus, it determines what you do, but it also determines what you don’t do, because it doesn’t fit your expertise and capabilities.
And Stevie Spring tells that story – over and over again – to a variety of constituents: to analysts and fund managers, board of directors, employees, customers and even the occasional business school professor.
Good CEOs have a story. Tony Cohen of Fremantle Media says they want television productions to which they own the rights, with spin-offs in other areas (e.g. on-line), which are replicable in different countries – simple and focused. Alistair Spalding of Sadler’s Wells theatre wants to be involved actively in producing a broad array of cutting-edge modern dance, aimed at a London audience. Frank Martin of Hornby wants to produce near-perfect scale models of model trains (and Scalextric race tracks) for collectors and hobbyist, which appeal to some feeling of nostalgia. Their stories are clear and simple; employees, investors and customers alike can understand and believe in them.
Is being able to tell a convincing story enough for a good strategy? I guess not – for instance, I remember a Goldman Sachs analyst writing about Enron in October 2001 (weeks before its bankruptcy) “Enron is still the best of the best. We recently spoke with most of top management; our confidence level is high."
However, it certainly helps. When you have a lousy strategy, without much focus or logic to it, it will be hard to come up with a coherent and convincing story. And it’s a good story that makes people want to invest in you, that carries the day when you need your board’s support (e.g. when making tough choices what to divest or invest in), and what helps your employees see their task and decisions in light of the company’s overall direction. It's the strength of the story, which makes the CEO.