Bill Campbell helped me understand how he did it. Bill would always say that if there was any potentially surprising or controversial topic, the CEO should go to every board member, one-on-one, to walk them through it before the meeting. That allowed them to ask questions, offer different perspectives, and then the CEO had time to take those thoughts back to the team and revise their thinking, presentation, and plan.
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6.2. The Board
“Good CEOs walk in with a presentation of where the company was, where it is now, and where it’s headed this quarter and in the years to come. They tell the board what’s working but they’re also transparent about what isn’t and how they’re addressing it. They present a fully formed plan that the board can question, object to, or try to modify. Things might get a little heated, a little bumpy, but in the end everyone walks out of the meeting understanding and accepting the CEO’s vision and the company’s path forward.
Then there are the great CEOs. With great CEOs the meeting is smooth as butter.
Even the best CEO cannot stand alone, untouchable, unchallengeable, accountable to no one. Everyone needs to report to someone, even if it’s a two-person board that you meet with for an hour every few months.
There always needs to be some kind of pressure-release valve. There always needs to be someone who can shake their head and give it to you straight.
And if you do it right, you should never be a victim of your board. As CEO, you help to shape it. Boards always change based on the CEO—the board under Steve Jobs was different from the board under Tim Cook. Boards complement a CEO’s strengths and no two CEOs are alike.
We wanted to foster a team-like approach that would allow the CEO to collaborate with the presidents and to help advance their thinking in real time. We wanted to create useful dialogue in place of a one-way, bulletproof presentation. Instead of burying the issues, we wanted to talk about them openly. We wanted a new management system for the creation and review of the five strategic choices.
I went to our board’s compensation committee and explained the dilemma. When you innovate, everything needs to change, not just the way you make or deliver a product. Many of the practices and structures within the company need to adapt, too, including, in this case, how the board rewards our executives. I proposed a radical idea— essentially, that I would determine compensation, based on how much they contributed to this new strategy, even though, without easily measured financial results, this was going to be far more subjective than our typical compensation practices.
At GE, Immelt relies on the board to take the pulse of the company, to gauge whether the business is humming along smoothly or there are glitches that need attention. “I asked each of our directors to visit the GE businesses twice a year,” he says. “You’re never going to know the intricacies of this company. There’s too much mass. But you can get a feel of the culture. So when they go to GE Aircraft Engines or GE Medical Systems, I want them by themselves [without corporate management], so they can make their own assessments - maybe we’re pushing too hard or maybe we’re not pushing hard enough.”
At The Home Depot, all directors were required to visit eighteen stores every year and spend two hours on each visit speaking with employees and customers. When he became CEO in 2000, Bob Nardelli continued that tradition and enhanced it: “I pair two board members with every division president and every functional leader for a full day. I look for their advice and counsel. These are CEOs and experienced men and women in their own right. I took advantage of their experience. Rather than being intimidated by it, I reached out and said, 'You go in and assess, give me your view of the individuals and their staffs.’ So the board is helpful.