Strategy is a quintessential capability; often the leaders of our societies and our communities define us, as well as their industries. Ensuring your CEO has the required strategic skill set is paramount to the success of your project and your organization. Here are five areas you can investigate to make sure your CEO has sufficiently developed strategic skills to put together and implement the right strategy for your organization:
- Strategic Thinking: What does the candidate think about strategy, how they use it, and what their strategic style is? Here, you may ask simple yet effective questions, such as: “What is your definition of “strategy?” and “How should a CEO use strategy?” Other questions such as “What is your earliest memory of using strategy to get a competitive advantage in life?” A leading CEO will have a definition for a strategy that will echo the definition given in the book “CEO Assessment and Selection” which is “creating a sustainable competitive advantage for the business”. You will be able to gauge how much time they have put into thinking about the concept and how they have utilized strategy in their careers by the way they answer. A top-performing CEO would have thought about what strategy is, and will deliver a well-thought-out, succinct and on-point answer, while an underperformer will ramble on giving a mostly tactical one. Remember: it is as much about how they answer the question, as it is about what their actual answer is.
- Data acquisition and management: A candidate who does not use data is not strategic. It is therefore important to understand how a candidate views data in the strategic process, and how they acquire and use it. A strategy has a significant chance of being superior to your competitors’ if you have access to information and data that they don’t have access to, so you want to see how the CEO is acquiring data, especially proprietary data, such as data about the size of the market, who the players are, who is the most profitable of your competitors, etc. To put this into perspective: Glenn Bell, the founder of Taco Bell, used to drive around to competitors’ restaurants past midnight and counted how many tomato crates they had in the trash bins behind their restaurants and calculated how many tacos they made and how many customers they served. Useful questions to ask here are: “Please give an example of a time when you were able to acquire competitive proprietary data that your competitors did not have”, and “Who is your customer? Why do they buy from you?” Great CEOs who are strategic will invest resources to create this data set. Having the same data as your competitor does not create a competitive advantage and would not create a competitive strategy. Ideally, we would want to see evidence of the CEO deploying resources to acquire data on the market and competitors that no one else has.
- Strategic Framework and Approaches: The top CEO candidates will understand the history of strategies, when to use them – and more importantly, when not to use them. They should be able to look at all problems from a new perspective and compare and contrast different frameworks to highlight their pros and cons, before applying them to the fate of the company. They must also be able to understand the strategic merit of the competition and be able to protect their market share. IKEA is a titan of the home furnishing industry, and their value chain analysis is the reason for that: They knew 40% of the cost of the furniture was the assembly, so they transferred that cost to consumers, who happily assemble their own furniture. Ask your candidate questions such as “Describe a business challenge you faced to which you applied a strategic framework” or once they identify a strategic framework they like to use, ask “Please describe the gaps and negative side of your preferred framework; what are the downfalls of it one should be wary of?”
- Creation and implementation: Gone are the days when the strategy was created behind closed doors; today’s markets move too quickly, and strategies need to be fluid, so they must be owned by the front-line staff. CEO candidates should demonstrate the inclusiveness of their strategic development process because strategies that are not owned by staff will not be executed, and a strategy that is not executed is useless. Great CEOs will create structures to allow employees at all levels to contribute to the strategic development and will assign influencers and key staff who will be ambassadors. Ask your candidate: “Describe a time you led an initiative to get front-line staff to participate in strategic development.”
- Course Correction: As markets shift and assumptions are proved wrong, strategies must be corrected, so you need to make sure that your CEO has the right feedback mechanisms to course-correct the strategy and turn any situation around. The ability to be agile, underpinned by having your pulse on the customer and the market, is key to the successful implementation of any strategy. A key question to ask your candidate is “How long is your strategic cycle?” because rookie CEOs will underestimate that timeline, miss their deadlines, and go over. You want a CEO who has taken something from concept through to profitability, time and time again.
Sadly, most CEOs’ skills are mostly tactical, and they label them as “strategic.” Be ready to play the “cat and mouse” game as almost no CEO will admit that they have no strategic skills, so you will have to come armed with insightful questions to identify whether your candidate possesses strategic skills. The best assessors identify the candidates’ gaps without the candidate realizing it. Embody finesse and elegance during your assessment and make a positive contribution to the career of every candidate you meet.
Looking for more questions to ask a CEO? Read “CEO Assessment and Selection” to learn more about the 7 universal success factors for the Chief Executive Officer, and unlock over 450 fail-safe questions that allow you to recruit top performers. Get more free CEO Assessment tips at https://tpgleadership.com/ceo-assessment-selection-book/ .
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