Decision Making Of A C.E.O

During the tenure of the typical CEO and the average corporate director, there will be only a few times when a really critical decision must be made. Oh, the board and the CEO will approve a multitude of capital projects, compensation changes, dividend declarations, personnel appointments, and organizational moves. These actions are important, but they're not usually of such a nature to be called the greatest decisions of a lifetime. However, I suggest that there are four circumstances that most of today's CEOs and boards find themselves in at least once and that require all their talent, sagacity, and experience to come to the best possible decision. Here they are: Picking the New CEO. This is a terribly difficult and complex task. It requires intensive and extensive discussion between the CEO and the board to develop the specifications for the kind of leaders needed by the company in the future, as well as consideration of all the pertinent alternatives. Done right, it becomes possible to appoint a Jack Welch or a Robert Goizueta, or to recruit a Larry Bossidy or a Lou Gerstner. Yet many companies do not handle management succession as a time for great decision making. They get into it too late. They leave too much of it to the retiring CEO. They pick a clone of the past CEO instead of a leader for the future. And they end up with a run-of-the-mill CEO and become a stuck-in-the-mud company. Making--or Not Making--the Major Acquisition. Few things are more costly or more dangerous than making a major acquisition. And, regrettably, the board is rushed to a decision and there's rarely enough of the type of information available to be deliberate. As a result, the most persuasive talker often dominates the decision process and all persons do not participate evenly in the discuss ion. What can be done to allow for better decision making here? Sometimes not a lot. But other times, it's possible to predict in advance that major acquisition opportunities may be in the offing. An industry is undergoing consolidation or expansion or technological change. Competitors are involved in deals. Your company is making studies. So it should be no surprise when an acquisition prospect emerges. You can at least get partially prepared. Going Global. In the past few years, many of our largest companies have had to decide how to go global-whether it be by acquisition, affiliation, licensing, or through manufacturing or marketing changes. In every case, this is an important and costly process and the decision to do it and how to do it is a major one. Many companies have yet to make this decision--or have to re-make it. Globalization seems to come in stages that companies and countries pass through. If you're in one of those stages, it may simply be a matter of time before you face the big question. Joining the Internet. How to enter into the Internet world is a question facing most CEOs and boards right now. Again, somewhat like global expansion, there are nosimple answers and the situation is changing with enormous speed. In the Internet world, there is rarely time, nor opportunity for a mulligan, so it must be done right the first time or suffer huge setbacks. Indeed, many CEOs and boards are betting their lives on their decisions in this area. In all of these cases, it's predictable that a major decision has to be made at sometime in the future. It's important for the CEO and the board to anticipate the timing and the circumstances of the decision as much as possible and prepare the way. Sometimes, consultants can show the way and discuss the parameters. Other times, a task force or a project team can come up with some alternatives to consider in advance. Probably best of all is to have the board formally discuss the questions, "What would we do if we had to decide right now on our next CEO, whether or not to make a large acquisition, how to go fully global, and what is our place on the Internet?" One of your duties as a CEO and/or as a director is to help your company make the great decisions. If you believe any of these four points is coming up, you'd better get ready.