Revisiting the Role of the Modern CEO
Photo by Austin Distel on Unsplash
Several recent articles explore leadership at the highest levels. Three different platforms I follow recommended the same TED Talk by Hamdi Ulukaya, the founder of Chobani, titled The Anti-CEO Playbook. It contrasts with the model, shaped by Nobel Prize-winning economist Milton Friedman, who argued that the primary social responsibility of business is to increase profits for shareholders.
Within a decade, this idea morphed into boosting short-term shareholder value. This trend began with activist investors who invested in companies solely to extract profits in two or three years. Hedge funds and private equity operate in three- to five-year cycles. Today’s 24-hour business news channels focus on daily market moves, shifting attention to short-term traders rather than long-term investors.
I wrote two newsletters in December 2022 that explored these themes.
The Role of the Modern CEO | Mark Rapier - The Leaders Journey Newsletter
This newsletter came in two parts.
The first part looked at the pressure CEOs faced as generative AI emerged. Leaders were told to future‑proof their companies, even though the future was unclear. Investor demands for near‑term results clashed with the costs of pursuing rapid technological change. Decisions with long‑term impact had to be made quickly, while the global economy was still unsettled after the pandemic. There was no clear or consistent definition of the word future.
The challenge was in defining the future. Investor pressures pushed to deliver results in the next two or three quarters. The speed of technical evolution was driving decisions that had long-term implications to be made in just a few months. Regardless of where pressure was coming from, decisions were being made quickly. Times were still very uncertain, as the full impact of the pandemic on the global economy was not yet known.
The second part reviewed The Man Who Broke Capitalism: How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America by David Gelles. The book examines Jack Welch’s 20‑year run at GE. The company grew steadily, then surged through acquisitions in Welch’s final years. The share price rose 400% before his retirement, but the company proved fragile. The author casts Welch as a villain, but he was also a product of an era focused on short‑term gains. Enron and WorldCom are examples of where that mindset was present.
The author paints Welch as an evil mastermind who single-handedly put capitalism on the road to ruin. I believe he was a product of his time. The 1980s and 1990s were full of stories of investors and companies that pursued short-term growth instead of long-term stability. Enron and Worldcom are just two examples.
The Negative Effects of the Politicization of ESG | |Mark Rapier - The Leaders Journey Newsletter
ESG was a major topic in 2022 and became a target for critics who saw it as government overreach.
Environmental – I remember when stories about air pollution and acid rain were published almost every day. EPA superfunds to clean up toxic sites were epitomized by Love Canal. In the fifty years since President Nixon signed the Clean Air and Water Acts into law. Things have gotten better, and stories that were common in the 1970s are seldom seen today.
Social – Companies are part of the social communities they operate in. They have an obligation to consider their needs in their planning. Employees, suppliers, and customers call those communities home. One element of building a strong long-term future is ensuring that the communities they rely on also thrive.
Governance – There is nothing wrong with strong governance. Too many boards today serve as rubber stamps for the CEOs they help bring on board. FTX, Enron, and Thernos are all examples of cases where boards did not oversee, probe, or validate what was happening.
I agree there are too many regulations. Tens of thousands of rules support the Clean Air and Water Acts. I believe that through consolidation, streamlining, and modernization, the number of regulations could be reduced by 20% or more without weakening their purpose. The same is true for programs that guide Social and Governance activities.
Leaders today are expected to make their companies rich rather than wealthy. Rich companies can fail fast if the economy deals a bad hand. Wealthy companies have built up generational capital and assets and can recover from almost any setback.
Related Articles
3 ways to plan for the (very) long term | TED
The Transformation of the CEO | Russell Reynolds Associates
Love Canal: A Brief History | Geneseo
Chips and Salsa: Snack-sized news and posts
Across the country, Liberal Arts curricula are under scrutiny. In some ways, the word ‘liberal’ is part of the problem. In today’s environment, ‘liberal’ equals a specific, and often extreme, political point of view. The Oxford English Dictionary defines liberal arts as “academic subjects such as literature, philosophy, mathematics, and social and physical sciences as distinct from professional and technical subjects.” The purpose of education is to teach people how to think, not what to think.
UT stays silent, COLA suffers | The Daily Texan
The debate on President Truman’s decision to drop the atomic bomb resurfaces every year or two. I believe all of them fail to understand the context. The invasion of Okinawa cost between 200,000 and 250,00 lives. The estimates for the invasion of Kyushu were more than twice as high. The island of Honshu was next. While it is impossible to know, estimates for deaths from the bombings of Hiroshima and Nagasaki range from 250,000 to 500,000. Truman had to make a terrible decision. The personal calculus must have been difficult. But he made a decision and accepted the responsibility. It is much easier to criticize a decision someone else had to make after they have made it.
Old adages are often true. Don't judge a book by its cover. Jack Kerouac once said, “I had nothing to offer anybody except my own confusion.” That is how I felt about 'On The Road' before I quit reading about a third of the way in.
15 Books That Only Sound Deep Until You Actually Read Them | Medium
My mother is descended from a Mayflower voyager. My father's family owned land in Maryland in the mid-1600s. Rapiers have been around for a long time.
How the Plymouth Pilgrims took over Thanksgiving – and who history left behind | The Conversation
Goals are never stated in the negative. Goals focus on the future. Good goals have the added benefit of mitigating risk.
I view mindless TV and background noise. I tend to use music for this. Sports on TV is also a good background.
The Rise of "Mindless" TV: Quantifying a New Way of (Kinda) Watching Television | Stat Significant
There are more small things than big things. Take the time to focus on them. You will find many more small wins than losses.
How ‘micro joy’ can help you feel happier every day | Fasat Company
Many families face challenges in today’s economy.
America's deepening affordability crisis summed up in 5 charts | CBS News
Rage is a major category of clickbait.
The real AI threat is algorithms that ‘enrage to engage’ | Fast Company
Quotes
“What doesn’t kill you will make you stronger.”
- Friedrich Nietzsche
"Wealth is not about having a lot of money; it's about having a lot of options."
- Chris Rock
"Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win,"
- Sun Tzu
Please be kind and follow and subscribe to my newsletter on LinkedIn, Medium, or Substack..
I write about leadership in business and life. I am a certified M&A Specialist and Leadership coach. My perspectives are based on my 40+ year career working with leaders from around the world at over 100 companies.
My goal is to make this newsletter as interesting and valuable as possible. Please share your thoughts and suggestions for improvement. If there are specific topics in leadership you would like me to focus on in future issues, please send them my way.
You can order The Leader With A Thousand Faces on my website's Recommended Reading Page. This page also has links to purchase the books discussed in this and previous newsletters.
