CEOs are not elected into their positions because they are robotic followers. Yet, once elected into power, there is tremendous pressure for CEOs to diminish this power. While the crucifixion dilemma is not a new one, it is difficult to negotiate and often gets CEOs into hot water.
Recent research shows that only 62% of CEOs who are ousted from their positions can find jobs again1. However, socially connected CEOs are more likely to find new and better employment after a forced departure. Furthermore, CEOs are less likely to be dismissed if they belong to the same social circle as board members. Thus, it is very tempting to be liked and toe the line when necessary. In fact, CEO cooperative behavior improves organizational performance in some instances 2. If this is so, why is conforming itself very dangerous for CEOs. And how can they handle this difficult dilemma?
Firstly, without even looking at the research, conforming to organizational norms and board expectations is a paradox. CEOs are hired for their abilities to lead an organization. Some may even argue that it is the job of the CEO to be a visionary. But visionaries often see things before others. And they are often not on the same page as others. So once a leader, hired into a new position, the CEO has to sacrifice a unique vision to suddenly play politician and appease the masses. In effect, he or she has to transform himself or herself into a follower. This begs the question: Are CEOs elected into position only elected because they are manipulable? And because there are fewer CEOs than employees or followers of any kind, are CEOs always at the mercy of the masses?
A recent study from a large sample of U.S. CEOs, other top managers, and board members in the period 2001-2007 showed that when CEOs receive high levels of flattery and conform to the opinions of others, this may result in low firm performance and CEO dismissal since CEOs may become overconfident and persistent in a strategy that is not working. In fact, overconfidence can be very damaging for a CEO and compromises the CEO’s leadership ability 3.
What a dilemma this poses! On the one hand, if you listen to yourself only, you run the risk of being pig-headed and overconfident. On the other, if you listen to others and try to do the right thing by them, your comfort may be masking a growing overconfidence that comes from social approval and not effective strategy. So what are CEOs supposed to do? Should they listen to their board members and employees or not?
Brain science teaches us that when people feel confident and are wrong versus being right, the brain knows even when you do not. When you are confident and correct, this registers in the brain’s emotional “core” (the medial temporal lobe) 4-where there are brain regions specialized for smell 5, memory and emotional processing (especially fear) 6. When you are confident but wrong, this activates the frontoparietal cortex-a brain region specialized for attention. This seems to imply that confidence, when it is correct, involves an integration of thinking, emotion and remembering, whereas when it is not, it is biased by attention to specifics without integration with other factors.
On the basis of this science and other factors, we have devised a self-assessment, for CEOs to use (ideally used monthly) to help negotiate the dilemma of “going with the flow” or not.
Click here to take The Conformity-Visionary Screen for CEO Confidence (The Con-Vis Screen)
Conclusion: It is actually helpful to be neither too diffident or overconfident. CEOs who operate at both extremes are often fired7. Rather than being compliant, choose to be committed8. Successful CEOs are much like successful scientists. They envision accurately, test out their hypotheses, and respond in an agile manner whether they are right or wrong.
If you are interested in building agility into your organization and your own competencies, please contact our CEO at This email address is being protected from spambots. You need JavaScript enabled to view it.
References
1. Dang Nguyen B. Does the Rolodex Matter? Corporate Elite's Small World and the Effectiveness of Boards of Directors. Management Science. 2012;58(2):236-252.
2. Espedal B, Kvitastein O, Grønhaug K. When Cooperation is the Norm of Appropriateness: How Does CEO Cooperative Behaviour Affect Organizational Performance? British Journal of Management. 2012;23(2):257-271.
3. Petit V, Bollaert H. Flying Too Close to the Sun? Hubris Among CEOs and How to Prevent it. Journal of Business Ethics. 2012;108(3):265-283.
4. Kim H, Cabeza R. Trusting our memories: dissociating the neural correlates of confidence in veridical versus illusory memories. J Neurosci. Nov 7 2007;27(45):12190-12197.
5. Tranel D, Welsh-Bohmer KA. Pervasive olfactory impairment after bilateral limbic system destruction. J Clin Exp Neuropsychol. 2012;34(2):117-125.
6. Poulin SP, Dautoff R, Morris JC, Barrett LF, Dickerson BC. Amygdala atrophy is prominent in early Alzheimer's disease and relates to symptom severity. Psychiatry Res. Oct 31 2011;194(1):7-13.
7. Goel AM, Thakor AV. Overconfidence, CEO Selection, and Corporate Governance. Journal of Finance. 2008;63(6):2737-2784.
8. Scherer JJ. Circle of Influence. Personal Excellence. 2010;15(4):4-4.
ãNo part of this publications may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by means electronic, mechanical, photocopying, recording, or otherwise without the permission of NBG Publishing. To obtain permission please contact us at This email address is being protected from spambots. You need JavaScript enabled to view it.
One study of 208 new CEO appointees found that the stock market reaction to new CEOs depends very much on the human and social capital on boards. This study also found that the social capital within the organization was greater if the CEO was from within the organization3. Interestingly, it is vital to note how CEO’s development needs to be tied in with development of the rest of the firm, and also needs to be aligned with the company strategy. For example, management development needs to be tied in with succession planning in order to help create a strong pool of internal candidates4and to enhance coordination with the new CEO. Transferring firm-specific knowledge to an outsider can be very costly5.
When a potentially new C-suite candidate is groomed, it is important to pay attention not just to the financials and various spreadsheets but to the culture of the organization as well. For example, building a community of leaders is vital to the survival of any organization6. In fact, as Drucker points out, “culture eats strategy for lunch.”If you have alignment in your team and if you develop this alignment, strategy will be executed much more smoothly. Also, planning for CEO succession is very important 7. Although this is not always possible, having the competencies in place can help a smooth transition.
So if you had a new CEO or sudden changes to your executive constituency, what programs in human capital development could be helpful? The few that come to mind are the following: learning to lead in high stakes; team alignment; leadership agility, and enhancing innovation. Why?
When there are new executives running a company, the stakes are high. There is a high unknown as well as switch cost in the changes that occur. How can the losses of newness be minimized by more effective leadership skills when the environment is volatile, economically or otherwise? In addition, will there be new or existing teams, and how will the new leadership and priorities affect how teams function?When there are sudden changes, as there often are, is the company prepared to be agile and do the new executives have the necessary know-how? And finally, when all else fails, are the leaders prepared to innovate?
Examples of the Role of Brain Science in Human Capital Development during C- Suite Succession
1. Unconscious factors play a role in stress and anxiety: While traditional methods of managing the stress and anxiety of succession take into account conscious factors that need to be addressed, they leave out unconscious factors which account for a large impact on strategy8, 9. The key, though, is not to leave the unconscious factors in the unconscious but to make them more conscious and to know when to pay attention to them and when not to 10.
2. Team alignment requires learning certain skills such as cognitive empathy which activates distinct parts of the brain (from emotional empathy) 11and enhances social sensitivity12.This improves team alignment during the transition phase.
3. Leadership agility requires tapping into how the brain can adapt to walking in the complete dark or having to change very fast. The brain is wired for multistability 13,14and brain science can teach us how to tap into this capacity and learn this quickly.
4. By understanding what makes the brain more innovative, leaders can learn to develop more pipelines and approaches to thinking that get them past bottlenecks15.
Conclusion
How CEOs perform and how long they survive has much to do with their reputation and that of the board. But more so, it has a tremendous amount to do with developing and anticipating human capital development throughout the organization. Brain science can provide efficient methods to use to develop these skills and to help CEOs enhance their own social capital within the firm.
References
1. Kaplan SN, Minton BA. How Has CEO Turnover Changed? International
Review of Finance. 2012;12(1):57-87.
2. Carlson J. Top executives staying put: CEO turnover rate down, but experts say it’s still too high. Modern Healthcare. 2011;41(11):14-14.
3. Tian J, Haleblian J, Rajagopalan N. The effects of board human and social capital on investor reactions to new CEO selection. Strategic Management
Journal. 2011;32(7):731-747.
4. Royal C. An Analysis of Leadership Development Gaps for Arts
Executives in the Not-For-Profit Sector. Proceedings of the European
Conference on Management, Leadership & Governance. 2009:222-231.
5. Naveen L. Organizational Complexity and Succession Planning. Journal of
Financial & Quantitative Analysis. 2006;41(3):661-683.
6. Drucker PF, Dyson E, Handy C, Saffo P, Senge PM. LOOKING AHEAD: IMPLICATIONS OF THE PRESENT. (cover story). Harv Bus Rev.
1997;75(5):18-32.
7. Bower JL. Avoiding a Succession Crisis. Wall Street Journal - Eastern
Edition, 2007: A22.
8. Pavlovich K, Krahnke K. Empathy, Connectedness and Organization.
Journal of Business Ethics. 2012;105(1):131-137.
9. Woodside AG, Megehee CM, Sood S. Conversations with(in) the collective unconscious by consumers, brands, and relevant others.
Journal of Business Research. 2012;65(5):594-602.
10. Huizenga HM, Wetzels R, van Ravenzwaaij D, Wagenmakers E-J. Four empirical tests of Unconscious Thought Theory. Organizational Behavior
& Human Decision Processes. 2012;117(2):332-340.
11. Shamay-Tsoory SG. The neural bases for empathy. Neuroscientist. Feb
2011;17(1):18-24.
12. Woolley AW, Chabris CF, Pentland A, Hashmi N, Malone TW. Evidence for a collective intelligence factor in the performance of human groups.
Science. Oct 29 2010;330(6004):686-688.
13. Kelso JA. Multistability and metastability: understanding dynamic coordination in the brain. Philos Trans R Soc Lond B Biol Sci. Apr 5
2012;367(1591):906-918.
14. Gershman SJ, Vul E, Tenenbaum JB. Multistability and perceptual inference. Neural Comput. Jan 2012;24(1):1-24.
15. Green AE, Kraemer DJ, Fugelsang JA, Gray JR, Dunbar KN. Connecting
long distance: semantic distance in analogical reasoning modulates frontopolar cortex activity. Cereb Cortex. Jan 2010;20(1):70-76.
Companies are acutely aware of the fact that they need to be innovating to maintain a competitive edge, but how do you improve the innovation potential of the people you hire? While learning is possible (NBG has a innovation paradigm that it teaches), the actual core of this learning is unlearning. A recent article outlined the ways in which learning can suppress innovation 1 and several other authors prior to this have emphasized how important it is to recognize this 2-5: (1) Definitions block innovation since they determine how deeply you are willing to think about what is possible. For example, if you believed that an iPhone is a telephone with a music playing and internet capability, you may never explore whether it may be able to iron your clothes; (2) Disciplinary boundaries may lock you in. For example, you may start out as a biotechnology company, but what if you suddenly realize that all drugs in your pipeline are not working out? If you stick to your discipline, you may not explore an income from diagnostic tests that you can sell based on your existing drugs; (3) Academic credentials do not ensure innovation. Innovation occurs only if academics are prepared to leverage their structured knowledge into unknown territory. Educated or not, you have to be willing to explore the unknown to be innovative. (4) More people buying into your product helps you only if you are willing to say to all of them: this does not work anymore. Networks of buyers may be helpful or hurtful-the latter is true if they deter you from change; (5) Learning how to work out kinks in an existing technology may help you learn more about that technology but does not promote innovation of the next technology. This promotes a monoculture where more of the same people are hired rather than people who will come up with new ideas; (6) Learning by grazing does not work. A casual model of learning does not promote innovation. According to Malcolm Gladwell, 10,000 hours of learning is necessary for innovation to be more likely. It has to be fast. And it has to be copious and intense. This it is not learning that
matters, but the type of learning.
Thus, doing away with definitions and boundaries, taking a non-academic approach, relying on fellow-learners and not herders to be your followers, and hiring fresh perspectives into your culture is the way to enhance innovation. But
how can you do these things and not think you are falling off the deep end and putting your company at risk?
Read more: The Paradox of Unlearning Brain-based evidence for the path to innovation
Innovation enhances financial performance 1. For CEOs, one of the most relevant areas of innovation is business model innovation. Changing the business model allows for greater creativity in how firms make money. It also makes the business a moving target for competitors2. But when and how should CEOs change the model, and can an executive coach help CEOs manage innovative processes more effectively?
One study of 107 multinational firms found that in order to be innovative, having a creative culture is essential and that simply relying on partners can be detrimental to the company’s innovation3. People who work in the company need to be able to be open to creativity and change. If you are in a start-up, you may weed out the people who are not this way. But what if you are in an established company? How do you build these capacities in employees? Please login or register to see the full article and assessment tool
This is one place where an executive coach or trainer well versed in the subjects of creativity and innovation can help. The value of the trainer or coach here is not simply to coach or mentor but to develop human capital for the firm. This requires embedding a coaching and mentoring culture in the firm. One study showed that 94% of top executives supported either formal or informal mentoring in the workplace4. With adequate mentoring, CEOs themselves are better able to make complex and competitive decisions.
Creating a culture of innovation requires actual change in mentality in most employees. Before even attempting to enhance innovation, companies need to pay attention to how they manage fear (both conscious and unconscious) 5, 6. Fear often stands in the way of taking chances and managing risk. As a result, people avoid innovation altogether. To be in the flow state of innovation requires attention, concentration and internal control, all of which are significantly diminished in today’s economic environment 7.
A coach, especially one well versed in the brain science of fear management, can help CEOs and employees use their brains to diminish fear 6 by either directly decreasing activation of the fear center of the brain or learning how to manage the thinking center of the brain to pull the reins on unbridled emotion. Such a coach may also be able to teach relevant employees some of the techniques of innovative thinking such as analogical reasoning 8. This competency can be measured over time and improved using several other techniques as well. It refers to the ability to make associations between ideas that seem bizarrely connected to better understand how these ideas can work together.
Here again, a coach, when working with a CEO to determine when innovative thinking can be helpful and when it is not, may help direct the CEO’s attention to the following questions: Is the proposed innovation unique? Does it provide tangible value to the customer? Is it commercially viable? 9 Furthermore, who will buy this, what is involved in development, and why will it make business sense to proceed? An experienced coach will thus not just proceed with building capacities for innovation in the organization without having a method to connect this with the company strategy. Even more ideally, the coach will build these competencies into the organization and empower that organization before leaving. Contrary to older notions of executive coaching being purely collaborative 10, these approaches above would suggest that it is also consultative.
The check-list below is a guideline that executive coaches can use when coaching CEOs and teams on innovation:
The 12-point check list for coaching innovation and creativity
Feasibility:
Is it unique?
Does it provide tangible value to customer?
Is it commercially viable (e.g. feasible development costs and price)?
Is there a market?
If you answer yes to all of the above, proceed to the next level of evaluation
Baseline feelings:
Is there fear in the company culture?
Is the company culture one of creativity and innovation?
Is the company culture one of agility?
Is the company culture one of risk aversion?
Target each competency as needed
Structural elements:
Has an ROI been conducted?
What are the measurable outcome variables?
Have you determined a plan to embed the coaching in the organization?
How will you ensure this information is remembered?
Ensure all of the above are in place before proceeding
Conclusion: Coaching CEOs on innovation is only helpful in the context of the entire organization. Coaching organizations on innovation requires specific knowledge of the company’s purpose and mission and is best achieved if embedded in the organization.
If you are interested in building innovation into your organization and your own competencies, please contact our CEO at This email address is being protected from spambots. You need JavaScript enabled to view it.
References
1. Nybakk E, Jenssen JI. INNOVATION STRATEGY, WORKING CLIMATE, AND FINANCIAL PERFORMANCE IN TRADITIONAL MANUFACTURING FIRMS:: AN EMPIRICAL ANALYSIS. International Journal of Innovation Management. 2012;16(2):1250008-1250001-1250008-1250026.
2. Salunke S, Weerawardena J, McColl-Kennedy JR. Towards a model of dynamic capabilities in innovation-based competitive strategy: Insights from project-oriented service firms. Industrial Marketing Management. 2011;40(8):1251-1263.
3. Bock AJ, Opsahl T, George G, Gann DM. The Effects of Culture and Structure on Strategic Flexibility during Business Model Innovation. Journal of Management Studies. 2012;49(2):279-305.
4. Offstein EH, Shah AJ, Gnyawali DR. Effects of CEO-BOD Mentoring on Firm Competitive Behavior. Review of Business. Winter2011/2012 2011;32(1):75-88.
5. Pillay S. Life Unlocked: 7 Revolutionary Lessons To Overcome Fear. New York: Rodale; 2010.
6. Pillay SS. Your Brain and Business: The Neuroscience of Great Leaders. Upper Saddle River, NJ: FT Press; 2011.
7. Perschel A. Work-life flow: How individuals, Zappos, and other innovative companies achieve high engagement. Global Business & Organizational Excellence. 2010;29(5):17-30.
8. Green AE, Kraemer DJ, Fugelsang JA, Gray JR, Dunbar KN. Connecting long distance: semantic distance in analogical reasoning modulates frontopolar cortex activity. Cereb Cortex. Jan 2010;20(1):70-76.
9. Stevenson J, Kaafarani B. Breaking away: A new model for innovation. Leader to Leader. Spring2012 2012;2012(64):44-50.
10. Stevens Jr JH. Executive Coaching From the Executive's Perspective. Consulting Psychology Journal: Practice & Research. Fall2005 2005;57(4):274-285.
No part of this publications may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by means electronic, mechanical, photocopying, recording, or otherwise without the permission of NBG Publishing. To obtain permission please contact us at This email address is being protected from spambots. You need JavaScript enabled to view it.
In the quest to make business life more meaningful, organizations are now looking to see how they can enhance spirituality in the workplace. A recent article in the International Journal of Business and Management outlined five pathways for the development of spirituality in business: 1) organizational culture; (2) organization's mission, vision; (3) leadership; (4) human resource development; and, (5) organization structure and job design 1. Why might you make a business more spiritual? What does brain science have to do with this?
Spirituality essentially allows one to have a feeling of connectedness with people, and this connectedness has profound implications in the workplace. One important implication is that spiritual connectedness connects business with customers through enhancing an awareness of corporate social responsibility 2. Another study found that spiritual intelligence in teachers has been found to increase job satisfaction 3. In China,
Read more: Spirituality and Business New age nonsense or a clue to strategy?
A Premier Neurocoaching™ Company
NeuroBusiness Group, LLC.
One Mifflin Place, Suite 400, Cambridge, MA 02138
This email address is being protected from spambots. You need JavaScript enabled to view it.
Skype: srinipillay
Google Maps
© 2012 | NeuroBusiness Group | Boston Web Group
