Does a CEO need to be a smart aleck?

Chief executive officers or CEOs are the most important employees in their respective organisations for a reason. After all, they are in charge of planning and implementing long-term goals for the organisation. They are responsible for making critical decisions that affect the overall structure and well-being of the organisation, and create a vision to take it forward.

“I believe in a 2+2+2, that is, any CEO must have experience in two functions, in two businesses, and in at least two different regions/countries in order to be fully capable of handling the responsibilities that come with the position.”

P Dwarakanath, former chairman, GSK Consumer Healthcare

However, the duties of CEOs depend a lot on the kind of organisation they work in, and therefore, can appear to be rather nebulous for people on the outside. They are entrusted with the task of overseeing the smooth running of all aspects of the business —from the financial to the technological and even the marketing. Therefore, CEOs usually communicate with the c-suite executives such as COO, CFO and CMO to get the work done.

Being such an important part of their organisations, are the CEOs expected to be well versed with every function they deal with at work? Do they have to possess thorough understanding of finance, marketing, technology and so on to be able to do their jobs well? Are they at a disadvantage if they aren’t acquainted with certain aspects of business?

“It depends on the kind of business model, domain expertise, and technology they’re dealing with. For instance, companies that are largely consumer based will require their CEOs to have thorough knowledge of marketing, points out David.”

Emmanuel David, former director of TMTC

P Dwarakanath, former chairman, GSK Consumer Healthcare, says, ‘Ideally, the person should have experience in two functions.”

He elaborates by describing his own policy, 2+2+2, that is, any CEO must have experience in two functions, in two businesses, and in at least two different regions/countries in order to be fully capable of handling the responsibilities that come with the position.

A lot also depends upon how a person communicates with diverse people, and understands the gravity of challenges presented with, explains Dwarakanath.

“For CEOs to effectively do their job, they have to possess an understanding of the key performance indicator (KPI) strategy-management system, leveraging the entire eco-system as a resource, and making everyone follow this process.CEOs should also have full control over the value chain activities that an industry needs to perform in order to create the final product for its customers,”

Pankaj Lochan, CHRO, Jindal Steel and Power

If CEOs are able to essay the leadership role with confidence, and are open to learning new things while also using their experience to achieve the work, then they will be successful at their job.

Pankaj Lochan, CHRO, Jindal Steel and Power says that, “for a CEO to have all round experience across all functions is neither necessary nor sufficient.”

A CEO has different functions, and it is important that he/she gives importance to formulating a long-term plan for the business, and drive people to follow the plan and achieve the desired results.

“CEOs should have business acumen and the ability to understand their job perfectly, because if they are unable to perform due to their lack of knowledge, they’re immediately marked out as not being able to contribute.”

Debjani Roy, CHRO, Mind your Fleet

Is HR experience important for a CEO?

“Not at all,” Lochan says, stressing that the skill to understand people and their needs doesn’t need to be learnt in any specific department, but comes alive through daily interactions with the employees.

“In an organisation, knowledge needs to cut across all functions,” states Debjani Roy, CHRO, Mind your Fleet.

She recalls her own experience as a CHRO at SRL Diagnostics, where she had to sit with the board members at the meetings for all kinds of business decisions, and had to perform different kinds of functions as well. Roy believes that CEOs should have business acumen and the ability to understand their job perfectly, because if they are unable to perform due to their lack of knowledge, they’re immediately marked out as not being able to contribute.

Emmanuel David, former director of TMTC, says that the expertise of CEOs “depends on the kind of business model, domain expertise, and technology they’re dealing with.”

For instance, companies that are largely consumer based will require their CEOs to have thorough knowledge of marketing, points out David.

Clearly, CEOs should have in depth knowledge of their area of work, without which they are likely to flounder.

“Expertise can be bought, but relationships have to be built,” David rightly states, stressing that while technical skills can be learned with the right kind of education, it is important that CEOs also create connections through good communication, which will stand them in good stead in an hour of need.

At the end of the day, the fact remains that CEOs are also human beings. They need to be aware of whatever is going on around them in the organisation, for their own good. It is essential for them to be in possession of the primary skills required to understand different functions. Valuable insights and knowledge can be gained by interacting with various officials from diverse domains and learning from these exchanges on a daily basis.