What is the role of the CEO?

I'm Nitin Nohria. I have spent my career at Harvard Business School. I had the great privilege after teaching leadership for 22 years to then have the opportunity to do it myself as dean from 2010 to 2020. Once I've stepped down, in addition to teaching at the school, I'm now at Thrive Capital where I have the privilege of being chairman. My entire lifetime I have wondered what is the role of the CEO. I became intrigued by it because my father was a CEO and as a young kid I would go to his office and sit in his chair and look at the telephone with all of these ringing buttons and wonder what was going on. That early fascination has kept with me throughout my life and then just out of sheer luck at Harvard Business School I launched and was a part of a program for new CEOs. So over the course of 30 years of this new CEO workshop, I've had the privilege of working with 500 plus CEOs. So this book is the culmination of this journey which started with the curiosity of a young child, continued through Harvard Business School and at some point I felt I got to write it out and so this book is that product.

You don't make all the decisions, but you have to shape the conditions that allow others to make the best decisions. This is a job about not direct authority, but indirect influence. Give me a lever that is long enough and I will be able to move the earth. You have to find a way in which you can get the organization to do so much more than you could ever do yourself. And the best leaders recognize that. You can also take this leverage point too far because you do have leverage, right? And so you can lever the organization in all kinds of ways. Financially, you can lever the organization by putting in people who skate to the edges. There's a fabulous line that Warren Buffett has, which is people think that tennis matches are won by hitting to the sidelines. The vast majority of tennis matches are won by the points that you win in the middle. So this is when he had taken over Solomon Brothers and he said to the people at Solomon Brothers, 'I don't want you to win by thinking that you have to skate too close to the lines. Just win the points in the middle.' The best CEOs that I know recognize that the job is won by playing in the middle every day. By the way, Federer, you know, one of the greatest tennis players, also reminds people of that, that you win the game by winning just more points than you lose. And that's done on the middle of the court. Sheer unforced errors matter more than winners.

So, the first thing you realize as CEO is that yes, on the one hand, you can actually make every decision if you choose to, like nobody would stop you if you said, 'Oh, I don't like this advertising campaign. I think we should go in a different direction.' I promise you that advertising campaign gets killed. And yet I think one of the first things that comes as a surprise to CEOs is that if they start doing that the whole organization will come to a grinding halt. There are so many decisions that you need to make in an organization and if a CEO starts to think that they can make all of them the organization will then become completely paralyzed because every decision will have to come up to the CEO. So this is an example of one of the paradoxes of this job which is yes you have immense authority but if you exercise it you weirdly compromise your own authority. So what you learn over time is that you know you have to coach people. You're almost like a teacher. You have to say to people what does a good decision look like? You have to create frameworks. That's why strategy, that's why culture, the things that create the context in which decisions get made are far more important than making the decision yourself. So that's the sense in which I say that the CEO's real power comes from shaping the context in which decisions and choices get made which they can then celebrate. In fact, they can be excited about. They can see people make choices that they say, 'Wow, if I was making that choice, I would have made no different choice.' And better yet, in fact, they made a choice that I could never have even imagined about. Because that's the real leverage that you get in an organization, right? I hope that most CEOs recognize that even though they got the top job, they're certainly not as bright as all of the other people put together, there are people who are talented in ways that they can never be. A CEO can never be simultaneously a great R&D scientist. They cannot be a great marketeer. They cannot be a great production engineer. They cannot be a great CFO. These people exist because they have a job to do. And the CEO's job is to make sure that they're doing a job that the CEO can celebrate and is aligned with the overall direction in which they want to take the company.

I certainly remember many people when I first became dean at Harvard Business School said to me, it's a 100-year-old institution. It's going to outlast you irrespective of what you do. So there's a certain sense in which you feel, do you really matter in an organization that's 100 years old and which you have at most one chapter in that organization. So to try and answer that question, we did a study and what you come up with is an answer that has on the one hand due modesty, which is CEOs seem to account for roughly 15% of the variance of a company's performance over any extended period of time. When you use the word 15%, you say, you know, that doesn't seem to comport with this idea that they matter a lot, but it's important to think that the industry in which a company operates is also only about 15% of the difference in performance. So if you're in pharmaceuticals on the one hand or cement on the other, the difference in performance of companies in the pharmaceutical industry versus the cement industry is 15%. So if you just pause and think about that for a minute, it's a profound thing, right? So every choice of the CEO is the same as a board deciding we should switch from pharmaceuticals to cement. If you frame it in those terms, you suddenly realize, oh my god, this is an extraordinarily important job where over 10 years someone can improve the performance of a company dramatically and over the same period of time someone can cause a very great company to collapse. And we've all seen that. We've seen examples of leaders who have taken companies that were flailing and have gotten them to soar. We know examples of CEOs who take a great company and make it greater yet. But sadly there are also many examples of CEOs, and we can think of many and there have been many that have been written about in storied ways, amazing companies like Xerox and Kodak where over a period of 10 years these companies went from being the most admired companies in the world to being close to bankruptcy.

And in fact, we can, you know, you just used a word that is often used, right? Like people always say being a CEO is a lonely job. I think very few people understand why. People need you to project confidence. They need you to project certainty. While they don't want you to have arrogance, they don't want you to believe you know everything. But they don't want you to be the person who said, 'I really don't know where we're going' because the whole organization is depending upon you to go in some direction. And that's what makes it a lonely job because you have to think about it yourself. There's very few people you can talk to about it. I cannot remember a time when I was dean where there wasn't something that was running in the back of my mind at the same time as I was projecting something on front stage. There's a backstage that I can share with no one and a front stage in which I have to project myself as the representative of this entire organization. That's an odd experience that creates a unique form of loneliness that only people who are CEOs can actually fully understand. But you do have to find a circle of people who you can talk to. Because otherwise, if you have no one to talk to and you're trying to make all of these decisions only in your head, I do think you'll make mistakes. It's not like you will inevitably make mistakes, but over the arc of a career, you will make mistakes.

So we used to ask CEOs to stack rank, force rank 10 things that we used to say, you know, how good are you at strategy, do you have a senior leadership team, so about 10 items. And one of those was, you know, how do you feel about managing time. And the question was how well prepared are you for each of these things, how confident do you feel about each of these things as a new CEO. And almost always managing time was the thing that people were most surprised about and felt least prepared about, always ranked first or second in terms of, oh my god, I have no idea. And that surprised us, right? Like we were surprised, like of all the things you would think, oh, managing time is this very prosaic, how do I manage my calendar kind of activity. So why is it that all of these CEOs always rank that as the activity? And then you realize that it's because, you know, as soon as you get this job, everything is what you have to do, right? Everybody wants a piece of your time, whether it's an investor, whether it's a customer, whether it's a board member, every consultant, every analyst inside the company, frontline workers, people in far-flung parts of the world, your own team, the demands on your time are relentless. And you say, how do I navigate this? How do I navigate this time? And so our feeling was that we could guess, we could ask people, we used to ask people in the workshop about these things, but we never felt sure that even the people who were giving us the answers actually knew how they were spending their time. So with a few volunteers, and I'm always grateful to the handful of people who volunteered early and in particular their executive assistants who ended up doing most of the work, to actually track their time. We managed to get 30 CEOs to give us 24/7 tracking of their time for one quarter. What we discovered was that most CEOs, when you shared with them what their time study looked like, were themselves surprised about how they spent their time. Almost everyone would say that I would expect, but inevitably people had things that they said that can't be true, which showed us that how we manage time has our own blind spots. You just do it, you know, from minute to minute. And very rarely do people pause and say, 'Am I using it in the ways that would be the most productive? Where am I getting drawn into things that I would not get drawn into?' And that proved to be for us and for the CEOs a huge thing. Their time is in fact one of their scarcest resources. And so the way they allocate that time and attention is the best signal of what their strategy truly is. And that was the insight that came out of the study.

So I mean there's three things that I would say about meetings, one of which is super pro, right? I sometimes used to joke that Microsoft Outlook has a stronger influence on the length of your meeting than any intentionality that you have given to your meeting yourself. We were stunned by how many meetings just fit the Microsoft Outlook choices. One hour was the standard meeting. Thirty minutes was the second most standard meeting. So, one thing I would say is just be intentional. Actually, 20 minutes might be better than 30, 45 minutes might be fine. 50 minutes might be fine. So at least choose the length of your meetings to be sensible and to fit the agenda at hand. Sometimes a five-minute meeting may be a fine meeting. That's all it takes. And yet you schedule it for 30 minutes when you really don't need to. So the first thing is just bring intentionality. Don't let Outlook define the time length of your meeting. Define it yourself. It will save you 25, 30% of your time if you just do it that way. The second is who should be in the meeting? I've seen meetings in which too many people are present in the meeting and I've seen meetings in which too few people are present in the meeting. Is this a conversation that I first need to have with three people seriously, serially, before I bring them together? There are times, by the way, when that makes sense because you want to learn something from each person before you bring them together. But there are other times when it's just more efficient to bring all three of them together and to have the meeting. So again, being intentional about who should be in the meeting and what am I trying to get done is really important. And the final thing I would say is that you have to always ask yourself the question: what is the person going to feel leaving the meeting? Do they leave feeling energized? Do they leave feeling belittled? Do they leave feeling sure? Ask yourself the question, what do you want the person leaving the meeting to feel? Do they know what they're supposed to do next? Do they know who they're supposed to talk to next? Do they know when they're supposed to follow up with you? The more clarity you can have about what the person leaving the meeting needs to feel, do, and act upon, the more successful that meeting will be. I think people often just think about the meeting as the meeting as opposed to asking the question what is supposed to happen to the person who's leaving the meeting.