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Chapter 2

The Chemistry of an Executive Leadership Team

“Good leadership consists of showing average people how to do the work of superior people.”

John D. Rockefeller

“Why do you try to form a team? Because teamwork builds trust and trust builds speed.”

Russel Honoré

“I’m frustrated with the tension and disconnect I see between my executives, John. I’m hoping that getting them together to build a strategic plan can solve my problem.” Bill was the CEO, owner, and founder of Friction PR, a very successful public relations firm. He had just signed a major new client and was worried that their own internal executive friction could prove disastrous.

We scheduled the two-day strategic planning meeting for a Friday and Saturday at a local hotel, a neutral off-site location. However, the negative chemistry of the executive team would prove to pose multiple challenges, as you’ll see shortly.

Chapter focus

Successful strategy requires healthy executive team chemistry. This chapter discusses the importance of developing an effective five- to twelve-member leadership team with a balance of competing passions and sufficient strategic and tactical business understanding to shape strategy. It explores ways to develop mutual trust, strategic leadership, and teamwork.

Team chemistry

A healthy executive team is one in which each member:

provides strategic leadership, effectively communicating what the strategy is, why that is the strategy, and coaching people on how to implement it.

starts every discussion and decision by asking themselves what’s best for the company.

trusts each other’s character, competence, and caring.

understands, supports and defends each other, not only within the team but outside it.

An effective strategic planning process will build and strengthen healthy executive team development and chemistry.

An effective strategic planning process will build and strengthen healthy executive team development and chemistry. A poor one will damage or destroy team chemistry.

Bill’s company had one of the unhealthiest executive teams I’d encountered. At the first strategic planning meeting I facilitated for Friction PR, the worst eight of negative strategy meeting behavioral archetypes showed up.¹

The Absentee

The CEO (as in Chief Executive Omniscience)

The Consultant

The Frog

The Politician

The Provocateur

The Sectarian

The Theorist

Let’s look more closely at each of these negative meeting archetypes one by one.

The Absentee – the individual who is present physically but “somewhere else” mentally. Manuel’s head was bent down to stare at his smart phone while he read and responded to emails. He would periodically step out to take or make a phone call. At best, he was half-listening to the discussions, only contributing when asked to comment. Even after I drew the line and insisted that every cell phone, pager, and iPad had to be turned off, Manuel appeared to spend most of his time mentally focused on things happening outside the meeting. (He was staring into space, had us repeat the question whenever he was called on for an opinion, and filled his notepad with stuff unrelated to the discussion at hand.)

Manuel was not invited the next time the executive team met to plan strategically. He was strictly a tactical thinker and Bill needed strategic thinkers for these meetings. Eventually, Bill ended up transferring executive management of Manuel’s department to a true executive, allowing Manuel to focus on what he did best – operational excellence.

The CEO – the leader acting in his “Chief Executive Omniscience” mode. Most CEOs are highly intelligent and very intuitive, able to quickly anticipate where any discussion is heading and likely to supply a conclusion to save everybody the time of figuring it out for themselves. Bill fit this profile and acted just this way. Unfortunately, whenever the team had reached a conclusion this way in the past, team members saw it as Bill’s decision rather than their own. Whenever an implementation issue came up, they put the monkey on Bill’s back to “fix his decision.” In addition, like many entrepreneur CEOs, Bill was notorious for the sheer volume of topics he could raise in one meeting, intermixing the major strategic with the minor tactical. Over time, the executive team members had unconsciously tuned out the noise, which ended up sounding like “blah, blah, bonus, blah, blah, fired, blah, blah, blah… “

I had to enforce the rule that in every discussion during this two-day strategic planning meeting, the CEO would speak last. This enabled Bill to judge how well people truly understood the points of view he had communicated in the past. When Bill did speak, everyone listened intently, since they understood he would be providing new information or correcting a misconception.

Bill’s participation in the planning meeting was essential. Actively listening to the discussions enabled him to understand not only what the team members wanted to accomplish but why. He was more supportive of the resulting strategic plan because he knew what alternatives had been considered. While not initially comfortable in the role, he acted as a participant rather than a problem-solving, time-saving omniscient individual.

The Consultant – the individual who never commits to a team-developed decision. Every time it looked like a decision was about to be made, Ed would pipe up with a comment like “Let me play devil’s advocate and outline how we could fail.” As if the devil needed an advocate to restate obvious hurdles that everyone in the room already recognized! This would put him in a winning position no matter the ultimate outcome. If the decision turned out to be successful, he would enjoy the triumph of having been part of the team. If it should fail, he could say, “I warned you we shouldn’t do that.”

I short-circuited this lack of accountability by making it clear that there never is 100% information or certainty when you make a strategic decision, but it’s necessary to make a decision and commit to following through. Ed was forced to go on record as supporting the decision. Remember, a strategic plan is not a plan until the executive team leaves the meeting with consensus and commitment. (Consensus means that even if a team member might have made a different decision if it were left entirely up to him, he agrees that it makes sense for the organization and he will commit to support it.)

The Frog – the individual who is so new to the organization that they and the team assume they have nothing to contribute. They expect to listen much and contribute little. However, new employees, especially those who have been on board less than 90 days, are a valuable asset. I like to call them “fresh frogs,” based on the old wives’ tale about how a frog dropped into a pot of boiling water will jump out, but a frog put into lukewarm water that is slowly heated up will become a cooked frog. Extending the metaphor to the corporate world, the other members of the executive team have been in the pot for years and may not even realize the water is boiling.

I asked Marcos, “What is the stupidest thing you saw when you joined the company?” When he paused to ponder this question, I piped up, to the team’s laughter, “The list is so long, he’s trying to pick the most important one.” I explained to the team that when you interact with a fresh frog, you need to resist the urge to quickly explain things. It’s more valuable to ask the fresh frog, “Why do you ask that question, what do you see that we don’t?” After that, the other team members would stop and listen attentively whenever Marcos spoke up.

The Politician – the individual who tells everyone a different story behind closed doors. Jack tells Joe, “Just between us, Jolene is an idiot and I don’t have any confidence in her ability.” He tells Jolene, “Just between us, I don’t believe Joe appreciates your hard work.” He avoids any meetings where Joe and Jolene would hear the same story from him. The Friday morning of the planning meeting, Jack actually phoned in to say he wouldn’t be attending since he had finally scheduled a sales meeting at the Mexican consulate. Bill told him to get his sorry butt back to the company meeting. Strategic planning was important stuff and he wasn’t buying Jack’s story that the meeting with the consulate had to be held now.

I prodded Jack during the strategic planning meeting to respond with substance. His backup strategy (if he couldn’t tell everyone a different story) was to try to get away with issuing meaningless platitudes when speaking in front of the entire team. He found he couldn’t sustain his political behavior when he was constantly forced to go on record in front of everybody.

The Provocateur – the individual who never considers an issue closed, a discussion concluded, or a decision final. As often as not, when the group accepts his passionately made suggestion, he immediately comes out against it. He appears committed to perpetuating a frenzy of uncertainty and inaction. On the second day of the strategic planning meeting, the Friction PR executive team began to set the agreed-upon strategy to paper. Julian, this team’s provocateur, immediately tried to reopen each decision. “The strategy has us growing too fast. The targeted profit margin is too low. How will we develop new products when we can’t even get today’s products working?” On and on he went.

Never do something stupid because of something written on a sheet of paper. The written strategy is a communications tool, not a license to do stupid things.

Patiently but firmly, I reminded Julian of the pledge he and the rest of the team had taken at the start of the meeting: “We will never do something stupid because of something written on a sheet of paper. The written strategy is a communications tool, not a license to do stupid things.” I reinforced the chemistry of strategy formula of what we want the future to look like, why we want that future, and how we change the status quo to achieve that future. “We can’t begin moving in a direction until we decide where we want to end up,” I said. “Rather than flailing, we will make adjustments along the way. Asking and answering how is what action planning is all about. This is the next step after providing answers to the questions of what and why.” Over time, Julian was able to productively channel his energy into making sure conflicting viewpoints were aired while accepting and embracing the team’s ultimate decisions.

The Sectarian – the individual who sees their role as only representing the thoughts of their function, department, and/or people. Caroline, the Human Resources Director, saw her role as representing HR, and only HR. Whenever the discussion turned to areas other than HR, such as sales, production, or finance, she tuned out. She didn’t understand that her experience, insights, and perspective were valuable and required to shape the optimal strategy for the company.

I pushed her out of her comfort zone, requiring her to comment on each issue discussed. This drew her into the overall strategy development. As it turned out, she triggered one of the meeting’s “aha” moments when she commented on a production issue from her perspective.

The Theorist – the individual who won’t be around in three to five years to live with the consequences of the team’s strategic decisions. (As Lucius Annaeus Seneca pointed out over 2,000 years ago, “Be wary of the man who urges an action in which he himself incurs no risk.”) This team had two theorists, Jill and Patrick. Jill had recently tendered her resignation, planning to move to a new company at the first of the new year. She had been invited to the planning meeting because of her expertise. She pushed back whenever we discussed any strategy that would require investments this year that could impact her year-end bonus. Patrick was a business colleague of Bill’s who served on the board of advisors and who kept pushing for risky strategies he had read about in the Harvard Business Review that could make the company millions – in the unlikely case that they would work for Friction PR. Failure would have no impact on Patrick, since he had no skin in the game.

At the end of the first day of the planning meeting, at my suggestion, Bill excused them both from attending the second day, since they wouldn’t be accountable for the implementation or suffer any consequences from a poor strategy. The takeaway lesson here is that your strategic planning team shouldn’t include “lame ducks.”

Building the executive team

Building a healthy executive team is a process. There is no magical alchemist’s stone that will do it. I’ve observed that team-building programs that are external to the work environment, like popular “ropes courses,” have limited impact. Too often attendees have told me that the behaviors learned in the woods stay in the woods and everyone reverts to the same old way of acting the next day. As with strategic planning, those team-building programs that integrate with the day-to-day execution of the business have proven to be far more effective.

Building personal relationships through the development and execution of strategy builds a healthy executive team. Working with hundreds of teams has led me to an understanding of the chemistry of success for strategic planning meetings. Here are the approaches proven to work:

Strategic meetings need a large block of uninterrupted time with flexible ending times.

Define the meeting type: Separate strategic meetings from tactical/operational meetings. Operational meetings need to have firm ending times so as not to impact other scheduled commitments. Strategic meetings need a large block of uninterrupted time with flexible ending times. You don’t want to be close to having worked through a major issue or decision when a team member has to leave to catch a flight.

Limit members: Limit the total number of team members in strategic planning meetings to between five and twelve people. With fewer than five, you don’t have sufficient heads in the business; over twelve and the dynamics of strategic discussions and decision-making break down.

Change members periodically: Have the fortitude to change the composition of the executive and planning team over time. Internal and external changes will periodically require new expertise and insights. This is a working group, and membership is not a reward for longevity at the company. Every member should have the attitude and aptitude to contribute to the strategic direction. Thinking strategically doesn’t come naturally to everyone, so allow sufficient time for people to sync with the requirements. However, once it’s clear that this is not the right role for someone, replace that person with someone who is better suited.

Use a facilitator: Always utilize a skilled meeting facilitator for strategic meetings. An external facilitator who commands respect, enforces the rules, and has the ability to move the group to consensus is essential. Facilitating is a full-time job that doesn’t leave someone with the time to be a full participant in the strategy discussions. Thus, the CEO should never be the facilitator.

Clarify roles: Clarify the roles of participants and the CEO. The role of the participants is to look at every issue as if they are the CEO; i.e., to focus on what’s best for the organization as a whole rather than themselves, their people, or their function. The CEO’s role is to shut up and first listen to all the members before stepping in to dot the I’s and cross the T’s.

Follow rules: Demand that members follow this set of rules for productive meetings:

1.Listen actively.

2.Speak up and say what needs to be said – there are no sacred cows.

3.Focus on solving problems rather than placing blame or being defensive.

4.Respect differences of opinion.

5.Avoid cheap shots.

6.Stay focused.

7.Add only new information to the discussion. Don’t flog a dead horse.

8.Permit only one discussion at a time.

9.Silence implies understanding and agreement.

10.Finish with consensus and commit to action.

Let’s look at each of these ten rules in a little more detail.

Rule 1: Listen actively

George Bernard Shaw is quoted as having said, “England and America are two countries separated by a common language.” This is an even more dramatic condition between the various professionals in a company. For example, accountants attach a different meaning to the word “revenue” than salespeople do. (In fact, I’ve heard at least six different definitions in planning meetings.) Computer programmers use the phrase “finished” differently than anyone else.

I once said, “I believe in participatory management. I think we all should manage that way.” My colleague’s quick response was, “You’re wrong! I don’t believe in making a decision by voting, that is an abrogation of leadership.” I had to clarify that I meant that I believed everyone affected by a decision should have the opportunity to provide their thoughts and insights before I made a decision. I still had the responsibility to make the decision, just one that was better informed and more likely to be supported by people who were respected enough to have their opinions solicited ahead of time.

Listening requires an interactive dialogue to make sure that people actually understand what is being said. Active listening generates questions such as “What do you mean when you say quality is poor? Give me some examples.” “Why do you think we need an office in London? Who would be the customer?”

Rule 2: Speak up and say what needs to be said – there are no sacred cows

“Why do we pay a premium for being the first to purchase the newest piece of hardware?” Sally asked in the first strategic planning meeting she was invited to attend at Scientific Processing. The predominantly technical executive team was appalled by her question. One of the engineers’ responses was representative: “We are a technology-driven company. Our customers expect us to have the latest hardware. Why even ask the question?”

Sally persisted. “But we don’t seem to have time to utilize any of the new features for at least two years. Wouldn’t it be better to purchase a used machine two years later when it sells for a much, much lower price?” Putting that “sacred cow” issue on the table ended up helping the company move from losing money every month to making money every month. Shortly after the meeting ended, they replaced their spanking-new hardware with used equipment that cost thousands of dollars less, without negatively affecting their customers. All because Sally, a non-engineer, had asked “why?”

Rule 3: Focus on solving problems rather than placing blame or being defensive

Sales knows exactly what the problem is: “If Bob and his crew in production would get off their butts and deliver what we sold, everything would be fine.” Bob’s response was just as simple and nonproductive. “If the damn salespeople would focus on selling what we can produce instead of making stuff up, everything would be fine.” Wasting time with the two departments blaming each other didn’t get the company any closer to solving the problem of a poorly defined product line. Of course there are problems. The only time a company doesn’t have challenges is when it’s in a stagnant market or not growing. One of the signs of a healthy executive team is how little time is wasted on placing blame and being defensive.

Rule 4: Respect differences of opinion

Each team member brings a different perspective to the table, which is important because strategic issues usually touch multiple functions of the company. An optimal strategy benefits from a 360-degree view of each strategic issue. Bert, the controller, was bragging a bit about how he had improved the company’s cash flow by shifting payment of vendors from 30 days to 60 days. “You’d be amazed how much that’s added to our bottom line.” Carol, the head of production, responded: “Oh? Can that be the reason our vendors no longer give us priority treatment when we need a rush shipment of raw materials? Do you have any idea how much it costs us to priority ship because we had to wait for raw materials?”

The ideal team is a diverse team with members of different ages, with different life and business experiences, different affinities with customers and vendors, and different passions. You must respect the differences of opinion to release the value of that diversity. (You show respect when you solicit, understand, and consider the opinions of people affected by your decisions before you make them.)

Rule 5: Avoid cheap shots

Beyond the obvious negative effects, cheap shots in a meeting can be used to short-circuit decision making. Often, as the team discusses a long-standing issue, a consensus begins to emerge on the action to take. A decision to act, however, will generate additional work and requires personal accountability. It’s fun to discuss a problem as long as you never commit to a solution. When it appears that this time the team is actually converging on taking action, a cheap shot is an effective way to derail the discussion and save everyone from the necessary extra work that a decision would create. The cheap shot-taker can then sit back and think: “Dodged a bullet! I can go back to work as usual and not worry about adding that task to my already burdened work day.”

If you chase two rabbits, both will escape. Strategic planning meetings are about deciding which are the right things to do.

Rule 6: Stay focused

An ancient proverb warns: “If you chase two rabbits, both will escape.” Strategic planning meetings are about deciding which are the right things to do. The team needs to focus on what’s most important or the things that will show greater return. Joe Mancuso, founder of the CEO Clubs, retells the story of how one of his CEO members decided to save money and facilitate the strategic planning meeting himself. “He and the team spent half the time talking about the lack of toilet paper in the women’s bathrooms and never did get to discuss their truly strategic issues.” Without strategic focus you will end up going down a rabbit hole while both rabbits escape.

Rule 7: Add only new information to the discussion. Don’t flog a dead horse

“Everything would be better if only we had more salespeople.” Omari was like a broken record. Every ten minutes he would go off on why having more salespeople was important. “Everything would be better if only we had more salespeople.” Then ten minutes later, “Everything would be better if…” Finally, someone spoke up and said, “Does everybody understand that Omari feels ‘everything would be better if only we had more salespeople’? We don’t need to bring that up again.” This rule doesn’t prevent the team from bringing up an issue they have discussed in the past. It just says they don’t need to use up air time repeating it over and over again.

Rule 8: Permit only one discussion at a time

It should go without saying that you can’t listen while you’re talking. No, you can’t listen actively when you’re having a private conversation with the person sitting next to you. You aren’t fully engaged when you’re reading and responding to the emails on your smart phone.

Rule 9: Silence implies understanding and agreement

It’s three months after the strategic planning meeting, and the CEO wants to know why Chuck hasn’t implemented his action steps. “Well, I never agreed with that decision,” Chuck protests. The CEO says in exasperation, “But you were in the meeting and a member of the team. Why didn’t you speak up then?” Chuck shrugs his shoulders.

Life is too short to allow this to happen. Make it clear to everyone on the executive team that they must speak up on a timely basis or forever hold their peace.

Yolanda also hasn’t implemented as planned. When asked why she agreed to something she didn’t believe in, her answer was instructive. “I didn’t understand what you guys were talking about, so I just went with the crowd.” The CEO asks, “Then why didn’t you ask for an explanation?” Yolanda replies: “Well, I was hesitant to waste everybody’s time asking what cash flow was. I thought everyone assumed I would understand since I was on the team.”

The fact is, business is complicated and few people can understand every aspect of it. A healthy executive team appreciates this and has no problem pausing to allow one member to provide a short tutorial from their area of expertise.

Rule 10: Finish with consensus and commit to action

At the end of every discussion ask, “What’s next?” Create, document, and then follow up on an action step that includes who’s accountable for the action and when that action step has to be completed.

Enforcing the rules

Enforcing these rules is crucial and can usually be best performed by the outside facilitator. (When I facilitate meetings I empower everyone to be a referee by actually giving everyone a physical yellow “foul flag” they can toss at the offender. It’s a good way to enforce rules because anyone can flag an inappropriate comment in a light-hearted, yet effective, way.)

Let’s explore how these rules, and the overall process, support essential team relationships and healthy executive team chemistry.

The importance of intimacy

The strongest teams develop a sense of, to use a somewhat provocative word, intimacy. Intimacy is established when you make yourself vulnerable and share something that would be potentially embarrassing if shared with others. A healthy executive team can be open about personal goals, weaknesses, and objectives. They know that their team members will never use that information to hurt them, but will keep it private. They will use those intimate details to better support each other. We periodically ask each executive to share where they want to be in five years. On the healthiest teams, each executive will openly share their personal goals. On dysfunctional teams, they tend to provide empty answers, such as “I want to be doing a good job doing what’s best for the company.”

The importance of trust

The chemistry of a healthy executive team requires that team members trust each other. Trust is built on the three C’s: character, competence, and caring. There is nothing a team can’t accomplish when they can trust each member to have:

Character: honestly sharing the good and the bad.

Competence: knowing what they are best at and seeking help with what they want to improve.

Caring: understanding and considering what is important to each of their teammates, their company, and their customers.

Bill, the CEO we met at the start of this chapter, focused on building Friction PR’s executive leadership team and it paid handsome dividends. He replaced several executives with strategic thinkers. He held everyone accountable for behaviors that were consistent with the meeting rules and roles. They were able to leverage their new client to change the status quo and put the company on a clear path to turning their vision into reality.

A healthy executive team requires a mix of counterbalancing advocates.

The invisible chemistry

There is one additional characteristic of a healthy executive leadership team, diversity of passions.

Gary was at it again. “We need to order the additional press now or we will be unable to meet our commitment to customers later this year.” The team members nodded their heads. Gary was always pushing to increase capacity at Specialty Printing, the company where he worked. The CFO turned his attention to the Sales VP: “Our VP of Manufacturing wants us to invest another $1.5 million dollars, is the pipeline strong enough to warrant that?” After reviewing the current and expected business, the decision was made this time to place the order. This was a fortunate choice, as the company would otherwise have been crushed by the surge of new business that arrived later that year.

Gary proved to be a reliable steward, making sure that the company remained able to deliver on its customer commitments. He also developed a very capable second in command, Ben, who took over when Gary retired. Production continued to run smoothly under Ben’s leadership, except for one major thing. Ben decided to skip the frustration of constantly having to push for new capacity. He’d just wait until he was asked before proposing any new investments. Finally, about a year after Gary had retired, the company lost two major customers because it suddenly found itself unable to meet their delivery requirements. The team hadn’t recognized that when Gary retired, they lost an essential element of their successful chemistry – a passionate advocate for capacity.

A healthy executive team requires a mix of counterbalancing advocates. There must be an advocate constantly pushing for more aggressive growth balanced by an advocate for control and profitability. There should be an advocate pushing to explore new products and technology balanced by another pushing to fully exploit the current ones. Take stock of how the mix of passions changes whenever the membership of your executive team changes. Make sure that the company’s decisions don’t become too conservative or risky because a counterbalancing voice has been lost.

The next chapter outlines a proven strategic planning process. The planning process can be more important than the plan itself. It’s likely that any of the members of the executive leadership team could create a reasonable plan. But, for a plan to be implemented, each member of the executive team has to understand, agree, and internalize not only what the plan is but why they’re taking this particular course (and not the many possible alternatives). The process is the catalyst that activates the plan.

CHAPTER SUMMARY

The Chemistry of an Executive Leadership Team

What are the major concepts in this chapter?

Each team member must develop trust in each other’s character, competence, and caring.

Each team member must provide strategic leadership, effectively communicating what the strategy is, why that is the strategy, and coaching people on how to implement it.

Each team member must understand, support and defend each other within the team and outside it.

The executive leadership team is also characterized by their balance of competing passions. There must be advocates pushing the strategic themes of growth, risk, sustainability, and productivity.

The executive leadership team needs to be a balanced group of five to twelve members with sufficient strategic and tactical understanding of the business to shape strategy.

Why are these major concepts important?

Everybody in the company contributes to success.

Failure is the exclusive responsibility of leadership. (Doing the right things adequately will always let you outperform those who are doing the wrong things well.)

How can you apply these major concepts?

Commit to a formal strategic planning process that fosters team development and chemistry. For example, “we will utilize a formal strategic planning process with regular follow-up.”

Identify key new strategic executive positions that need to be filled over the next five years as the company evolves. For example, “we will recruit/develop senior executives in Finance – CFO, Marketing – CMO, and International Sales.”

Practice what you preach by insisting on following the roles in strategic meetings.

Participants’ Role

1.Look at the organization through the eyes of the CEO.

2.Represent the organization, not yourself, not your people, not your department, not your function.

CEO’s Role

1.Act as a participant, not as the “omniscient individual.”

2.Suspend your usual problem-solving and “time-saving” operating mode.

Practice what you preach by insisting on following rules that develop trust, consensus, and commitment in strategic meetings.

Abide by the ten rules for productive meetings