What do CEOs really do? Stevie Spring, CEO of Future Plc (the magazine publisher), recently expressed it to me in the following way: �I am not really the Chief Executive; I am the Chief Story Teller�. What (on earth) did she mean with that?
What really is an organisation? Well, it is a group of people � sometimes a rather large group of people � (supposedly) working towards a common goal. This goal may simply be profit, but it certainly helps if we have a common idea of what we�re trying to do in order to make a profit. Hence, it is about setting a clear strategic direction.
A clear strategic direction is not a 40-page document outlining a firm�s strategy � that�s a drawer-filler. It is a concise set of choices that determines what we do and don�t do. For example, for Future it�s something like �special interest, English-language magazines for young males, possibly with spill-overs on-line and in terms of events�. Hence, they would for instance do a magazine on �guitar rock� but not on �music� (as that is not focused enough to be considered a special interest); they would do such a magazine in the US but not in German (then they might license it); they would cover motorcycle racing, or Xbox or wind-surfing, but not knitting (unless, without me realising it, knitting has recently had a popularity surge in the community of 20-something old males). Thus, it determines what you do, but it also determines what you don�t do, because it doesn�t fit your expertise and capabilities.
And Stevie Spring tells that story � over and over again � to a variety of constituents: to analysts and fund managers, board of directors, employees, customers and even the occasional business school professor.
Good CEOs have a story. Tony Cohen of Fremantle Media says they want television productions to which they own the rights, with spin-offs in other areas (e.g. on-line), which are replicable in different countries � simple and focused. Alistair Spalding of Sadler�s Wells theatre wants to be involved actively in producing a broad array of cutting-edge modern dance, aimed at a London audience. Frank Martin of Hornby wants to produce near-perfect scale models of model trains (and Scalextric race tracks) for collectors and hobbyist, which appeal to some feeling of nostalgia. Their stories are clear and simple; employees, investors and customers alike can understand and believe in them.
Is being able to tell a convincing story enough for a good strategy? I guess not � for instance, I remember a Goldman Sachs analyst writing about Enron in October 2001 (weeks before its bankruptcy) �Enron is still the best of the best. We recently spoke with most of top management; our confidence level is high."
However, it certainly helps. When you have a lousy strategy, without much focus or logic to it, it will be hard to come up with a coherent and convincing story. And it�s a good story that makes people want to invest in you, that carries the day when you need your board�s support (e.g. when making tough choices what to divest or invest in), and what helps your employees see their task and decisions in light of the company�s overall direction. It's the strength of the story, which makes the CEO.