I have been reading through "Ben's Blog," which is written by Ben Horowitz of Andreesen Horowitiz (a firm that just raised 650 million, yikes!) He wrote a great post awhile back on how the firm evaluates CEOs. Read the whole thing, it is inspired. I especially love this part, because it is so true and explodes the myth of the all knowing and all powerful CEO:
Courage is particularly important, because every decision that a CEO makes is based on incomplete information. In fact, at the time of the decision, the CEO will generally have less than 10% of the information typically present in the ensuing Harvard Business School case study (emphasis added by me). As a result, the CEO must have the courage to bet the company on a direction even though she does not know if the direction is right. The most difficult decisions (and often the most important) are difficult precisely because they will be deeply unpopular with the CEO’s most important constituencies (employees, investors, and customers).
This point dovetails well with the quote at the top of Ben's Blog:
I will poke around more; he is a very thoughtful guy. Also, Ben's point reminds of something I heard Andy Grove say several years back along similar lines -- see this HBR post on how a good boss is confident, but not really sure.
Can't help but think about our politicians wrangling with our budget as I read about "courage" and "deeply unpopular" decisions. Wish they had more of the former to make the later and drop the partisan nonsense. Wish Washington could go to CEO bootcamp.
Posted by: Cindy Moret O'Keeffe | December 02, 2010 at 01:45 PM
The fundamental prerequisite for leadership is courage. A leader goes on to act in many ways, but without courage, nothing good results.
Posted by: Joe Marchese | November 30, 2010 at 06:24 AM
Bob -- your point that "the CEO will generally have less than 10% of the information typically present in the ensuing Harvard Business School case study" is why I deplore the emphasis on case studies in business schools. (And this is from a Stanford GSB graduate.)
The ultimate decision/outcome in the case is always presented as a no-brainer when approached with the relevant GSB-taught tools, when the truth is that the CEO was really just guessing, and hoping that his/her gut instinct was correct.
Posted by: Dan Markovitz | November 29, 2010 at 08:35 PM
10% sounds bad, but if it is a representative sample of the possibly-available information, that could be pretty sold.
The Von Neumann quote reminds me of Richard Hamming's theme for his book on numerical methods in computing, "The purpose of computing is insight, not numbers."
Posted by: Walter Underwood | November 29, 2010 at 05:16 PM