I remember a talk by the president of the major division of the company I once worked for. Asked what the difference was, when promoted from VP in charge of one group of the plants to president, he said that as VP his major focus was the operations of those plants. As President, a lot more of his time was spent interacting with the outside - with th governments, community groups, banks and regulators, etc.
The management fad of the day about that time too, focussed on timelines. It went sort of like this: The individual workers worried about tasks that might take the day or week, the shift leaders were concerned about tasks in terms of months, the plant manager in tasks of a year or two, and the top management had a multi-year horizon, so the CEO’s focus was on what happens on the next 5 to 10 years or more, not the day to day minutae. Like a lot of management theories, it has a grain of truth - basically the sort of thing of setting the focus of the corporate direction - cost cutting? Scaling back? How to focus on quality? New areas or products to work on?
At a career day event in University, I remember someone asking a bigwig from Esso Canada whether marks were important. The fellow replied that they’d done a quick informal survey of the executive suite and he could say that none of them were really close to top of their class. The skill set that gets one into upper management is more focussed on political skills than book smarts.
I would suggest that if this topic is interesting, a good example is to read Barbarians at the Gate. It’s surprising or not, to find that the ivory tower types were some oblivious to the situation of the company, or focussed on self-enrichment rather than what happens to the business and the workers, or… sometimes perceptive. The guys who supposedly knew the numbers inside out, when the rubber hits the road (or something hits the fan) bid their offer price to over twice the original offer. Even funnier was that the outside bidders got their inside information from one of the division chiefs - one who realized, since he wasn’t being included in the plan, that his division was one slated to be sold to help finance the deal.
The primary responsibility of the CEO is to lead and set the tone for the culture of the organization.
It is also the responsibility of the CEO to develop the long term strategy and direction of the corporation. They don’t need to have all of the answers or all of the expertise, but they do need to understand what they as an organization know and don’t know, and then fill in those gaps as needed.
I can imagine that the CEO of Starbucks might say, “We’re going to investigate introducing a line of decaffeinated drinks to increase afternoon and evening business” or “Let’s start a line of breakfast sandwiches to appeal to those who don’t want to drink breakfast.”
Primarily through communication. The culture in any organization is determined by its leadership. The front line employees’ behavior is driven by their local and regional leaders behavior, not from a vision or mission statement of corporate values summary on a sign or a web page. I’ve seen in too many companies where a slick presentation of the corporate values and mission statement is posted, yet their true culture exhibited by employees and leadership a betrayal of their stated culture. So the first thing is to make sure that the culture that the CEO and the rest of the leadership live by is what is stated as the organization’s culture, or vice versa.
If quality of product and strong customer service are tenants of Starbuck’s culture and that is practiced through out the organization and seen as an expectation of success up and down the organization, then it will inevitably make its way to the front line employees as well.
It seems simple, but you’d be surprised by the number of organizations where leadership is focused on the wrong things like financial engineering of their financial results to ensure that quarterly EPS is met so their long term stock incentives are more valuable rather than meeting their stated corporate mission statement to make sure their customers are delighted or such things. This is one of the key reasons for the decline and fall of General Electric (GE) over the last decade…leadership focused on the wrong things.
By creating and putting in play sweeping changes to how stores handle customer service thereby demonstrating that nobody at the executive level has the slightest clue what goes on behind the counter, how customers act or what they really want.
CEO is sort of analogous to the captain of a ship. They’re the person with final authority, say, and responsibility for the company.
They’re typically very tightly wound into things like corporate grand strategy- in the highest level sense of where will the company invest its money, how will it position itself relative to the industry, and so forth. They’re also the ones who tend to report to the Board as to profitability, etc…
A CEO has a bunch of subordinate C-level people- usually a COO, CFO, CIO/CTO, CMO, etc… who all have responsibility and authority over their own spheres of influence, but who all report to the CEO. They also handle the day-to-day of their various departments, leaving the CEO to do the higher-level stuff- strategic partnerships, investments, securing financing, and so forth.
There are a couple of books out there (I read Power Failure) that detail how GE fell and how Welch was ultimately responsible.
But the decisions are made from a certain sense of how the world works. Finance people at Boeing didn’t realize how their cost cutting policies affected quality. Quality problems show up years later, before that the bottom line looks better. Engineers get this.
There was an article in the Times about Costco today, and there was one in Fortune a few months back. Some on Wall Street think Costco is stupid to pay their workers more. But their CEO came up through the ranks. Want to bet that the first thing a finance guy from outside would do would be to freeze pay? And that would screw everything up.
CEOs set directions on how employees are treated. Scott McNealy, for all his flaws, made people at Sun feel valued. He’d pop into people’s offices for his monthly online radio broadcast, give a week off with pay at Christmas with strict directions to not keep working unless you were essential, and had a job fair to place people who were about to be laid off when a project failed. When we got bought by Oracle everything changed. I don’t think we ever got an email from Larry Ellison. No one was supposed to be recognized, because they were afraid someone from outside would poach them. When a survey showed that people wanted stories about other employees, HR published stories about HR people. (Directions from above, I’m sure.) Very different environment just from a new CEO.
MBAs, and particularly finance-oriented executives, are people who do not understand that you can shear a sheep many times but skin it only once. Or, some of them, like Dunlap, understood this perfectly but didn’t plan to hang around while people figured out what to do with the carcass.
What these kinds of execs do to make short term profits at the expense of employees, vendors, customers, and long term investors (not to mention, in the case of a company like Boeing, the safety of the general public) should be illegal. If we’re going to maintain the legal fiction of corporate personhood, there should also be laws regarding corpo-slaughter of stripping healthy companies of assets or bloating them with unpayable debt obligations just to milk out some short term profits.
Well, I think the “how” depends on the CEO and how they choose to run their company. But really you start getting into the operating model of how the business works. How do the goals and vision of the CEO get passed down to the people behind the counter? Specifically, stuff like:
How much autonomy does the CEO give people at various levels?
To what extent has the CEO articulated his vision and values for the company?
How frequently does the CEO communicate to various stakeholders?
What tone does the CEO set in his/her public communications and appearances?
What policies or strategic initiatives does the CEO set (Jack Welch demanded GE be #1 or #2 in every business they entered. Mark Zuckerberg decided to turn Facebook into “Meta” and go all-in on “metaverse”)
This sounds very much like my company, except the current chairman (and ex-CEO) is the great grandson of the company founder. Everything else is eerily the same.
Warren Buffet, Satya Nadella, Jeff Bezos, Mark Zuckerberg, Tim Cook, Bob Iger.
Those are all pretty household names to anyone with even a hint of awareness. The only questionable one there is Satya, as he keeps a lower profile than the others. If you asked a person on the street to name 6 top CEOs, I guarantee 5 of them would be from my list above. Some would probably say Elon, some would say Trump, and some might still think Bill Gates runs Microsoft.
But I digress. Being a CEO isn’t about being able to do your job. It’s about who you know and how you know them. Otherwise you wouldn’t see the same names cropping up again and again, racking up one failure after another and taking nice pay packages home.
I think you are vastly overestimating the “hint of awareness” that the average person has. Of that list, I suspect only Mark Zuckerberg and (probably) Tim Cook are guarantees for the vast majority of people just because they are so high profile, public facing, and widely satirized. Certainly anyone interested in investing will know Warren Buffett, and will (maybe) connect him with Berkshire Hathaway; hardcore Disney fans and entertainment news groupies may recognize Bob Iger because of the recent shenanigans but probably can’t name the CEO who briefly replaced and was then replaced by him. I only recognized Satya Nadella offhand because of the OpenAI business; before that I couldn’t have told you who replace Steve Balmer (or frankly care), and as @Dewey_Finn pointed out, Jeff Bezos hasn’t been CEO of Amazon for several years.
Now, without looking, can you name the CEOs of Eli Lilly, Broadcom, Mastercard, UnitedHealth, Proctor & Gamble, or Home Depot?
The CEO is they guy who figures out company direction - I know nothing about the business except I only buy coffee, not those stupid fancy drinks… But here’s my thought:
Costs
first, see about getting rid of the legenday “two Starbucks on opposite corners” thing. Does this setup actually increase sales enough to pay for it?
what costs a lot? From what I see, the line for those bizarre multi-part weird drinks takes a lot of time. Investigate if there is a way to speed things…
can we simplify the menu. so there are fewer choices and less items in stock (This is what McD’s does, there are a few types of buns and meats, and the rest is how it’s arranged and what toppings)
-can we computerize predictive consumption, so that when I ask for dark roast, they don’t say “we’re brewing a new batch.” Yeah, computer guesses suck, but human guesses suck more.
Can we measure which stores people stay at long times, if all seats are full look at expansion? (Are those long-time customers actually making us money?)
-remember the alleged attraction too is good coffee. How do you make sure you are getting the best beans? Don’t let the beancounters (sorry) interfere with quality.
Then, as mentioned above - what extra foodstuffs can be sold to increase sales (and encourage coffee consumption). Which ones are efficient and cost-effective? Can you pre-plate bakery items to serve faster? For example, while it might be tempting to sell eggs for breakfast, or products with meats in them. or deep-fried products - is that way out of scope,because ti introduces whole new handling and production issues.
if I can think of some simple things, I imagine the CEO and his idea people can come up with dozens of other approaches. Then, ultimately, the CEO decides which way to go.
Tons of things to look at, and this is where the CEO and his idea people hire consultants to do deep dive analysis. If they are smart, they also get input from front line workers. If they are stupid, they save on beans by buying lesser quality, but the temporary bump in stock price makes it lucrative for the executive suite.
The classic example in Canada is the Sears Canada people who drove the company off the cliff, resulting in short-changing the worker pension fund - but the executive suite got retention bonuses to stay on and shepherd the company through bankruptcy and shutdown - at which point front line wrokers were out the door without the promised pensions.
I don’t think any of those CEOs racked up too many “failures”. And many of them are CEOs because they founded and ran companies that became very successful.
There’s no board of directors on a ship with the authority to boot the captain. The captain is the final authority until the ship makes port. A CEO is always theoretically answerable to the board.
I think a better analogy is that the CEO is like the POTUS. (S)he can be removed from office by Congress, and all of them can be removed from office by the voters - like a CEO, board and their stockholders. And like a president, a CEO generally delegates most stuff to lower executives, but reserves the right to step in and take the glory. The president holds a big bill signing ceremony, and the CEO cuts the ribbon at the new factory, etc.
The guy in Seattle determines (or can determine) the pay scale under which the barista is working, the color of the uniform the barista wears, what sort of lattes the barista can make, and how much of the barista’s job will be done by robots next year.
Richard Ferris initially decided to rebrand United Airlines as CEO, and wound up putting many of its employees out of work (including himself).
Oddly enough, on topic, this is the opinion piece in the NYTimes today:
Opinion
Guest Essay There Are a Bazillion Possible Starbucks Orders — and It’s Killing the Company
You’re already in line at Starbucks — having failed to order by app — when you spot one of them. That dude who is looking down not at a cellphone but at the Post-it note that holds the orders of his office mates. Which is confirming that you are going to be late for that next meeting, because this person plans to order six coffee beverages, each of which involves some combination of tall venti grande double-pump, one to four shots of espresso, half-caf, oat milk, nonfat milk, soy milk, milk milk, whipped cream, syrup, brown sugar, white sugar, no sugar and mocha drizzle, from the pike position with two and a half twists.
In my experience in larger organisations, I’d say the CEO is extremely busy.
They perpetually tour the offices around the world, and need to understand what those offices do well enough to ask and answer insightful questions.
They operate as the face of the company, both internally and externally. Our CEO hosts, or co-hosts, all of the biggest events within my company. He also takes the company seat at the largest industry events, gets interviewed when we have big new releases or (heaven forbid) any negative news.
This is all on top of his primary job, which is making the top level strategic calls for the company.
NB: this is all separate to the question of whether CEO pay has got out of hand, whether the business norms of company boards are the most efficient from a market perspective etc etc. I’m just saying: CEOs work hard IME