The chief executive officer is an appointee of the board of directors. So, he reports to the board and makes the directors’ expectations his focal point so as to have a successful tenure. Since a CEO holds office by the grace of the board, he has to strive consistently to meet and even surpass the directors’ expectations.
A company’s board of directors consists mainly of investors or their proxies. The board acts on behalf of the shareholders, people who have put their resources in the company with the hope of getting worthwhile returns on their investments. Though not directly involved in the daily management of the organization, the board has its eyes fixed on the bottom line, which is tied to the performance of the company. Since assessment of the board is linked to the performance of the business, the board works on the management to improve the company’s financial profile and make it not just a going concern but a profitable business. So, in broad terms, the board has two expectations; increasing revenue and reducing cost because if revenue increases and cost decreases, profit will soar.
There is no magic to increasing revenue; the revenue generated by a company is directly proportional to the size of the market it controls. Companies increase revenue when they up their game and give their customers the kind of products or services that are not easy to come by. Modern day customers have no loyalty; they go where their needs are met the most. So, to increase revenue, a company must keep its customer hooked to its products and services; it must have the customers literally eating out of its hands.
In 2014, Apple released Apple iPhone 6 and Apple iPhone 6 Plus. The products hit a record sales figure of 10,000,000 within three days and that was when the phones had yet to open for sale in China and 26 other regions. The record was unprecedented in an industry where others were experiencing reduction in sales.
How did Apple achieve this feat?
The company was able to accomplish the seemingly difficult task because it was not content with merely meeting market expectation but exceeding it. Apple understands the market quite well and has profited immensely consequently. Those who run Apple know that irrespective of his social status, the average person is vain. Any appeal to his vanity will spur him to part with his money. This is what successful marketers understand and deploy to their advantage. That is one of the secrets of Apple’s success with the iPhone 6 series.
If any phone can be described as gorgeous, definitely the iPhone 6 is. With its full glass, aluminium construction and the fluid look of the rounded edges, the piece is a masterpiece. The phone is unbelievably thin (the iPhone 6 is just 6.9mm thick, while the iPhone 6 Plus is 7.1mm thick) and this accentuates its astonishing look.
Those who are adroit in marketing readily agree that while the form and content are important, the form has an edge over the content for the simple reason that if the form is not tempting, the content may be deemed contemptible. The packaging is, more often than not, more important than the content.
If you ever wonder why perfumes are expensive, the answer is because the package, which holds the perfume, does not come cheap. The perfume actually accounts for about 35 per cent of the total cost, while the bottle and the box account for the balance. This underscores the importance of the form. If the outward appearance of an item is not satisfyingly attractive, the product stands a good chance of being turned down by the buyer. Apple understands this fact very well hence it does not spare costs when it comes to packaging its products. Therefore, the customer is already wowed by the figure of the handset before considering its usefulness.
But Apple did not just work on having a good form, it also ensured the phones have great content. The iPhones are built with Apple’s new iOS 8 software, which has the new Healthkit application that monitors the user’s well being. With the software, the user’s heartbeat rates, sleep, weight and blood pressure are measured. The iOS 8 software also enables users to control all the items in their home with the phone.
This is one of the edges that Apple has over competition; it always delivers more. The phone is more than just a device for making calls, connecting the internet, listening to music, taking photographs or watching movies; it also affords the user to keep tab on his or her health status. For this reason alone, a number of people will prefer it to other phones in its category.
So, to increase revenue, a company has to consciously work towards exceeding market expectations.
There is also the need to consistently work on improving strategy. Most companies lose relevance and revenue because they rely on what worked in the past. Nothing in nature stays stagnant over time, everything changes eventually. Companies that fail to move with change are usually left behind to lick their wounds as they see others leap into prosperity.
A company may up its revenue by also identifying new areas of opportunities. Great companies don’t just follow trend, they set the trend. So, to have customers tied to its apron string, a company must make available to them what they need before the need becomes obvious to the customers.
Many organizations have a warped understanding about cost reduction. Whenever the issue of cost reduction comes up for discussion, what occurs to them is the need to reduce staff strength or overhead cost. While those may be part of cost reduction, they are not all there is to it. Cost reduction is principally about improving the processes of an organization. Once there is an improvement in the processes, every area of wastage will become evident and these can be done away with.
Improving the operational processes of an organization has to do with being effective and not just efficient. An effective company spends less to achieve more, an efficient one gets the job done at a huge cost. Being effective boils down to seeking a better way of achieving maximum value at the least cost possible. When an organization is effective, it means it has the capacity to achieve its stated goals with a minimum deployment of energy, time, money, human and material resources. An effective organization ensures that every resource is made to deliver optimal result. It is when resources are not effectively deployed that a company amasses wastage and the cost invariably shoots up. Great companies consistently tweak their processes to ensure maximum value delivery by every of its resources.
The CEO’s most important task
However, as important as increasing revenue and reducing cost are, they are not the CEO’s most important assignment. His most important task is keeping the workforce unflaggingly inspired. There is a limit to what the CEO as an individual can accomplish. Whatever he hopes to accomplish can only be done to the extent to which his people are inspired to be part of it. With an inspired workforce, reaching the moon will be a done deal for the CEO. Therefore, more than any other thing, keeping the workforce inspired is the CEO’s primary task.
Between motivation and inspiration
In his book, Good to Great, Professor Jim Collins counsels that there is no need to motivate the workforce. His point is that external motivation does not last the distance, arguing that the best thing is to have a self-motivated workforce. A self-motivated employee is self-driven, focused and determined. He knows what he wants and aligns this with the goal of the company to ensure that both the organization and himself profit from his endeavour. He does not rely on external stimuli to do what he ought to do, rather, he challenges himself to be at his optimum at all times.
That is the point of departure between the inspired employee and the one who waits to be motivated. The level of performance and the quality of delivery of the latter is dependent on the motivation he receives. The downside is not that he needs motivation; it is that it has to be done repeatedly. Hence, as Zig Ziglar, a personal development expert, once observed, “People often say that motivation does not last. Well, neither does bathing – that’s why we recommend it daily.” The import of this is that those who are not self-motivated are like junkies; they are irredeemably hooked on external stimulation. If the stimulation is taken away their performance heads south. No organization can be exceptional with that type of workforce.
How leaders inspire others
According to Simon Sinek, author of the book, Start With Why, the difference between companies like Apple and others is that they start with why. Sinek has developed a concept which he calls the ‘Golden Circle,’ which has three layers. The first layer is the ‘Why’, the core belief of the organization. It’s the raison d’être of the company. The second layer is the ‘How’. This is about how the company realizes the core belief. The third is ‘What’, which is the activities engaged by the company to realize its core belief.
Sinek explains that every organization knows what they do but few understand why they do it. He adds, “if you don’t’ know why you do what you do, then how will you ever get someone to buy into it, and be loyal, or want to be a part of what it is that you do.
“The goal is not just to hire people who need a job, but people who believe what you believe. If you hire people who just need a job, they’ll work for your money. But if you hire people that believe what you believe, they’ll work for you with blood and sweat and tears.”
This is why revolutionaries are usually successful; they never start with what they want to do but why they want to do it. This makes it easy for their followers to buy into their vision. Their followers are often so sold out on what the leader wants to do that laying down their lives for its accomplishment is not considered a huge sacrifice.
The leader has to effectively communicate the why to ensure a buy-in by the workforce.
Aristotle explains the three elements of effective communication as ethos, pathos and logos.
He says ethos is the credibility of the speaker. Whether a leader’s speech will be believable or not depends on his credibility. This is not determined by what he promises to do but what he has already done; the reputation he has already built.
Ethos has two components; competence and integrity. The two are rooted in the speaker’s reputation. The audience would believe a speaker if it is convinced that he has the competence to deliver on the promises being made and if it believes that breaking promises is not in line with the speaker’s character.
Pathos has to do with making emotional connection with the audience. This is touching the audience’s core, touching the listener’s heart, communing with him. Pathos is making emotional appeal to the listener. It is the heart of the speaker touching the hearts of the listeners.
It is when a leader connects with the people emotionally that buy-in takes place.
Logos is about the logic of the communication. Many leaders have little problem with this because it often has to do with the use of data; facts and figures. But facts and figures can be disfiguring for a leader who lacks the capacity to use them in driving home his point. For statistics to come handy to a leader, he must first have a handle on it.
The CEO’s most important task is the continuous communication of the essence of the company to the workforce for them to buy into its vision. If he is able to do that effectively, he will have a company filled with committed people who are prepared to give their all to the realization of the vision. This will lead to the company being roundly profitable; always increasing revenue and decreasing cost. If he does not get that right, he will have a pack of uncommitted and acidic employees who are likely going to make both him and the board sad.