The following is an excerpt from Robert Rosenberg’s new leadership book, out this week, Around the Corner to Around the World: A Dozen Lessons I Learned Running Dunkin’ Donuts. As CEO for three and a half decades, Rosenberg led Dunkin’ Donuts from regional family business to one of America’s best-known brands, and in the 21 years the company was public, he earned investors a 35 percent compound rate of return. The selection below highlights the sixth of 12 lessons he explores in the book. For more great leadership advice, check out this recent Q&A.
As I worked at my job, I thought a good deal about what tasks and qualities were important to be a good leader or CEO. The following are my conclusions:
1. Strategy: The CEO is the steward of the strategic direction of the enterprise. This critical function is to ensure that senior management defines not only the existing competitive advantage the company enjoys but where and how further sustainable competitive advantage can be discovered and built. The CEO, in concert with his or her senior management, decides what the company should be and—just as importantly—what it will not be. Easily said, but this deceptively simple process requires realistic assessments as well as vigorous and continuous monitoring and adjustment, since both the competition and the consumer are constantly changing. This kind of continual monitoring requires the CEO to know on an intimate level the strengths and weaknesses of his or her company as well as its competitors. A comprehensive knowledge of the industry in which the company competes is crucial to success. My store visits combined with my leadership roles in trade associations like the International Franchise Association and the National Restaurant Association were helpful to me in this regard.
2. Organization: The CEO bears the responsibility of recruiting and retaining talent with the requisite skills and abilities to execute the company strategy. As my guide to assessing and manning the organization, I relied heavily on the teachings of Peter Drucker, famed demographer, business writer, and teacher. In filling a job, Drucker would stress, it’s best first to define the assignment in detail, then recruit and evaluate against the requirements of that assignment. But it is important to be limber as well. As the business changes, so do the assignments and, quite possibly, so does the search for the proper person to fill the job.
Another principal that guided me in manning the organization I learned from the Gallup Research Company and their work in organizational development. At its core, Gallup contends that everyone has strengths and weaknesses. They further believe it is very difficult, if not impossible, to remediate someone’s weaknesses. They argue that the more effective way to build a high-functioning organization is to build on an individual’s strengths, compensating weaknesses with other teammates who possess complementary strengths.
Key to this concept is that each teammate accepts that there is no shame in not being the best at everything. The team understands and celebrates complementarity of their skills and aptitudes. Our team was composed of people with varying backgrounds and educational levels, but we shared a respect and trust in each other.
Selecting, coaching, and balancing the team takes a lot of time, but in my experience, recruiting and retaining the right organization ranks right up there with strategy as the most important and controlling factor in the success of an enterprise.
3. Communication: As CEO, you are the Communicator in Chief. The responsibility for aligning all the various constituencies in the organization behind company strategy falls primarily to the CEO, but it doesn’t stop there. Just when you think you have communicated clearly to all parties, go back over your message again and again. You cannot make your point too clearly or check back enough times to make sure that everyone in your organization has not only understood your message but buys into it as well. The company mission bears repeating, sometimes ad nauseum. Most constituents are busy—sometimes overwhelmed—with their own responsibilities, and the message often doesn’t sink in until you have reviewed and repeated it countless times.
4. Crisis Management: The last task on my CEO list. The world is stochastic. Unexpected events—often large and impactful— occur in business as in life. This can affect an enterprise in meaningful ways, requiring the CEO’s concerted, and at times, immediate attention and management. First, I would direct my attention to matters that I thought affected the survivability of the business, a condition that , in my opinion, is the foremost responsibility of management. The tests I would use to determine where and when to intervene were:
• Materiality: When the dollar amount of the decision under consideration is large enough to impact the earnings of the company in a quarter by 10 percent.
• Scope: When the decision in question affects many people or multiple departments within the organization.
• Futurity: When the decision creates changes that are of significant size and commit the company many years into the future.
I often joked that being a CEO was like being a sailboat captain. At the helm at sea you experience many moments of calm, but they are punctuated by moments of sheer terror when you have to tack. And tacking is what a CEO is often called upon to do in certain critical moments.