Today’s CEOs sit in a world of nuances that require judgement, insight and the ability to weigh in on the soft issues—not just the hard ones. Whether it is strategy, handling complex negotiations, orchestrating senior team dynamics, handling a major customer relationship or CEO succession, CEOs must lead in a world of gray.
Take a financial services company faced with a CEO succession dilemma. The transition came at a difficult time for the company, as it struggled to meet new competition. On top of this, the board needed a candidate with the right balance of continuity and change.
Two strong internal candidates seemed prepared to take the reins. The first candidate was a company veteran, very close to board members. The second was newer to the firm and favored by board members who had been most heavily involved in recruiting her. In this case, eventually the newer executive was selected over the company veteran. The new CEO wanted to retain the veteran, expanding the role and addressing compensation with hopes of retention. But that led to another difficult situation, and the new CEO’s skills will be put to the test as the world of gray continues.
This story puts in high relief where the job of just about any big-company CEO resides: in the lonely, often murky “gray zone.” As Doug Conant, chairman of Avon and former CEO of Campbell Soup says, “The black-and-white, right-or-wrong decisions happen before they reach the CEO’s office. The gray area is where the CEO lives and proves his or her worth.”
This means that CEOs face less-clear-cut decisions on strategy, direction, and people. They have to proceed with the nuance, flexibility and maturity to navigate complex human variables that have as much to do with inference and, say, assessing levels of trust among colleagues as hard analysis.
The rub is that while the gray zone is where the CEO position sits, it is not always the comfort zone.
I knew an exceptional CEO who got fired after executing a decision he knew was right for the company, but which went against the personal priorities and ingrained business values of the board chairman, whose family had founded the company. Although the CEO analyzed the facts and thought the answer was clear, he failed to consider the underlying dynamics in the organization and on the board.
As Dominic Pileggi, former chairman and CEO of Thomas & Betts, puts it, “When reacting and making decisions at the top, you have to operate more like a dimmer switch than a simple on-off switch. Things are rarely black and white.”
So, how can CEOs prepare for the gray zone? They must continually ask, “Where is it necessary to have agreement among constituencies for an outcome to go well, even if I’m right and I’m the top boss?” They should also build a strong team of advisors who have license to challenge them.
And what can be done to ensure that top CEO candidates can thrive in the realm of the gray? Most important, smart boards must determine whether the potential leader is an agile thinker. Can she apply wisdom, nuance and a human element into decisions concerning trust, communication and power?
It is proven that this kind of agility is critical in the gray zone. According to a recent Harvard Business Review article, research showed that people who got high scores at “learning agility”—being able to adjust on the fly to changing conditions, process information quickly and effectively challenge the status quo—are also high performers in top leadership roles.
Hence, a maxim for CEO success might be: Seek out the best imperfect solution—the one that you can make work.