A CEO Job Description - YouTube

I'm asked that question a lot. A lot of it stems  from a fundamental misunderstanding of a CEO's  

role. What it is that a CEO does first of  all understand that CEO is a job title and  

it basically is the top person on the totem pole.  A CEO may report to a board of directors or  

depending if it's a small company, they may  not have one. But at the end of the day the  

only authority that the board has (they don't  have any direct operational authority) the only  

authority that the board has is generally speaking  to replace the CEO. And for all practical purposes,  

that's all they can do. It's the CEO who  really is the final arbiter of all things so  

let's discuss a little bit about what it is the  CEO actually does a lot of people confuse what  

a CEO can do with what a CEO actually does and  with what a CEO needs to do to be - in order to  

be a CEO so for example a CEO is responsible for  everything at the end of the day everything that  

happens in the company is the CEOs responsibility  that's one of the reasons that a lot of CEOs say  

oh the company did incredibly well you should pay  me trillions and trillions of dollars because they  

want to take credit when everything goes well  interestingly enough those same CEOs rarely use  

that logic when things go wrong then they say ah  we had some bad apples somewhere else wasn't me  

and they still take the trillions of dollars but  the extensible justification for those trillions  

of dollars is that it's the CEO who is responsible  for everything the buck stops there when there are  

hard decisions to be made or easy decisions  to be made they are the final arbiter and  

final authority over those decisions they have  the higher firepower they're essentially the  

absolute dictator of the organization and that's  just simply how we work organizations so a CEO is  

responsible for everything now how does the CEO  actually spend their time that's the interesting  

thing because they're responsible for everything  they have hire and fire authority and essentially  

complete control over everything that happens  they can spend their time however they want in  

small companies there are CEOs who spend their  time emptying the garbage and talking to people  

in large companies there are CEOs who spend their  time managing by walking around when I heard that  

I always thought I could walk around also maybe I  can be a CEO someday because walking around isn't  

really that hard and if it is hard you can get a  motorized wheelchair but some other CEOs managed  

by the financial statements so what they do is  they pour over financial statements all day and  

they make decisions based upon these numbers  so in the course of a day-to-day observation  

of those two CEOs if you were to watch them  you would see them doing something entirely  

different one would be walking around talking to  people the other would be sitting in a desk poring  

over numbers but yet both of them are CEOs and  depending upon the company both of them can be  

highly effective so the way that a CEO actually  spends their time and spends their day is it is  

not necessarily an indication of what a CEO in  general does we know they're responsible for  

everything which doesn't really narrow very much  down we know they can actually do anything which  

again doesn't narrow it down so what distinguishes  a CEO uniquely from everyone else and for that we  

need to ask what are the things that a CEO does  that can only be done by the CEO and if the CEO  

is not doing them they're not going to get done  or they're going to get done just by random  

happenstance and there's four of these things  that I concentrate on even first and foremost  

is a CEO sets the strategy of the company because  they have yes no authority over all decisions they  

decide the strategy that the company is going  to use to succeed in the marketplace now if you  

don't know what strategy is I could do another  video on that at some other point but strategy  

is essentially saying how is the company going  to be perceived in the marketplace how is it  

going to respond to its competitors and how is  it going to deploy its resources I was going to  

spend money the kinds of people that it's gonna  hire what he's gonna have those people do such  

that the company can accomplish its goals in the  marketplace a strategy is a a vague and mysterious  

thing I don't know that it was really thought  about much prior to of I believe about the 1960s  

1970s but it turns out to be fairly essential  for example one of the things that happens in  

strategy is acquisitions of acquisition through  new lines of business or expanding into a new line  

of business that would be a strategic decision  so let's say that that you had a bookstore and  

the bookstore decided that gee we want to get into  the business of selling groceries and so they went  

and acquired a grocery chain that's a strategic  decision and at the end of the day it's the CEO  

who decides yup the most sensible strategy for us  to proceed and to succeed in the marketplace is  

for us to diversify from books into groceries  now there may be very valid reasons for doing  

this and you're probably already thinking hmm  he's describing the amazon.com acquisition of  

Whole Foods yes I am however in other four other  bookstores maybe for your neighborhood bookstore  

that's owned by a mom-and-pop trying to expand  into being a grocery might not be a good idea but  

it's the CEO who makes the call for an alternative  growth strategy the CEO could decide you know what  

we're gonna put all our efforts towards really  getting people to buy more books and instead of  

this grocery store strategy we're gonna go out  and find people who don't have books but who  

are celebrities or who are sports figures or who  are people who we believe that with their name  

behind it could sell more books and our strategy  will be not to expand into a different line of  

business and different product but instead to  expand into more of the same product but give  

ourselves a wider product base and then do a lot  of marketing to hopefully get people to buy more  

books those are both strategies you know they  may be appropriate for different companies one  

may work one may not regardless its the CEO who  finally signs off on it the CEO might hire a  

consulting firm like a McKinsey and company is  a management consulting firm Bain BCG if you've  

heard these names these are the management  consulting firms these are some of the really  

big ones and what they may do is they may come  in and on the CEOs behalf they'll analyze the  

marketplace they'll analyze the capabilities of  the company and they will decide you know what  

given the marketplace given who the competitors  are given the regulatory environment given the  

capabilities you have as a company we think  these are the ways that you should succeed in  

the marketplace and that you should grow and the  new products you should put out some one and so  

forth however even though the consulting company  might be the one doing the bulk of that research  

the CEO says yes or no it is the CEO who controls  the company's strategy the second thing that only  

a CEO can do is lead the top team we organize  our companies hierarchically there are a few  

companies for example the gora corporation that  makes cortex that are not organized in this kind  

of hierarchy but those are rare enough that  I'm gonna stick with our standard corporate  

structure and in the standard corporate structure  you have a hierarchy and the CEO is the person at  

the very top what that means is the people one  level down generally business division units or  

or vice president's or directors depending on the  size of the company whoever it is that's the CEO  

they are the person who leads the team of those  people right beneath it now what it means to lead  

a team in an organizational sense is it means  coordinating it means making sure that what is  

going on in with one of your team members meshes  with the efforts that are going on with another  

team member such that at the end of the day the  two work together and whatever the company's work  

product is gets turned out on time on budget  for the right price in the case of the senior  

team this might mean making sure that the product  development organization is working in line with  

the marketing organization which is working in  line with the company's finance department to  

make sure that the money is correct and we can  afford to do the things that we're doing and so  

on and so forth if there is nobody running that  senior level team then unless you just happen  

to get a group of people who are spontaneously  amazing and working together in a collective  

which I can count on zero hands the number of  times I've encountered a group of people who are  

really really great at operating without somebody  fulfilling a coordinating role whether or not they  

have hire that fire authorities a separate issue  but there is an actual coordination function and  

the CEO is the only one who can do that because  the nature again of organizations at least of  

hierarchical organizations is that it's only  someone higher in the hierarchy who can a group  

a particular group of people and in this case that  means the CEO manages the senior team whether they  

want to or not whether they step up and do their  job or not that is a fundamental part of the CEOs  

job and if the CEO doesn't do it it probably is  not going to get done the third thing is being a  

role model for acceptable behavior and corporate  values and culture and this one this one can't  

really be delegated the problem or the phenomenon  is that human beings are hierarchical creatures  

we look to the people upper upper we look to the  people higher than us on the hierarchy for cues  

about how to behave if they behave in a certain  way we feel free to behave in the same way if  

they don't behave in a particular way and we do  behave that way and they come down and say no no  

no not acceptable then we stop behaving that way  and this seems to be I've never read science on  

it I'm making the following statement up but this  seems to be hardwired into humans as far as I can  

tell it seems like as soon as somebody is labeled  as being in a position of power or authority if  

they have a lot of money if they're dressed in  the right uniform people automatically look to  

them for cues about how to behave in times of  crisis and also how to behave in times not of  

crisis because the CEO is at the top of the  company at the end of the day they simply are  

the model that everyone at the company looks to  for direction if the CEO makes it a practice to  

to show up and kick people out of the parking spot  that's closest to the door and make sure that they  

have a private lunchroom and that the only people  who get to see them are the people at the very  

top of the company and then they talk about how  they want to have an egalitarian workforce where  

everybody can walk up and talk to everyone else  but they don't behave that way didn't neither  

does anyone else because everyone looks to the CEO  and says that person is not living up to what they  

say why should I in fact you can see this not  just in companies and in organizations that are  

business organizations you can see this in the  political arena one of the questions that a lot  

of people that a lot of people don't what people  ask what difference does it make for example who  

the leader of a country is and the answer is  if you take a look at it the leader sets the  

tone now that's a fluffy nebulous statement but  that doesn't change the fact that it seems to be  

true when the leader behaves in certain ways that  legitimates those behavior patterns for everyone  

else which means if you're CEO and you waste money  on frivolous things other people will feel like  

they too can waste money on frivolous things if  you berate people in meetings and insult them and  

and trash their ideas other people will feel like  that's acceptable behavior if on the other hand  

you make it a point to hear everyone out people  will take the message that that's an important  

behavior there are some CEOs for example who say  if you want to bring a proposal for a new project  

or a new product or a new business line into the  into the company you have to present a pitch and  

you pitch it to the CEO and the CEO has to become  convinced when the CEO listens to a proposal and  

then says look you didn't do the right financial  analysis you didn't check out the markets and  

gives a whole list of criteria that should be  in that presentation people take that criteria  

they spread it throughout the company and it can  become part of the culture so that's one of the  

key pieces that a CEO does whether they want to  or not their behavior becomes modeled by everyone  

else at the corporation now when I say everyone  else of course not every single person but it  

becomes a standard by which people which people  use to judge what is there isn't acceptable and  

if the CEO behaves in ways that they forbid  other people to behave then other people may  

compliantly behave the way the CEO behaves however  they're gonna go yeah right this is a hypocritical  

statement and requests on the part of the CEO and  it's gonna foster cynicism at best and really bad  

morale and possible actual undermining of the  company's goals at worst so like it or not the  

way a CEO behaves makes a powerful values and  cultural statement to a company and then lastly  

is resource allocation resource allocation  is really that the CEO ultimately approves  

how money gets spent in a company this is related  to strategy the CEO says okay you want a bill you  

want to acquire a chain of grocery stores mr. CFO  or chief marketing officer whoever I'm willing to  

sign the check to make that happen at the end of  the day even though a company does have a chief  

financial officer it is the chief executive  officer the CEO who approves where money does  

and doesn't get spent and they approve everything  that the CFO proposes in fact if the CFO says hey  

we should take out a loan ultimately even though  it may be the financial functions the financial  

departments function in terms of figuring out  the financial strategy the CEO makes the yes or  

no decision and when it comes to spending money  that can have huge gigantic consequences if the  

CEO decides they're gonna allocate a 50 million  dollar a year budget to sweeping the floors in  

their chain of restaurants they get to make  that decision and that will have a different  

impact than if they say you know what we're gonna  spend at most $2,000 on our entire chain of 450  

restaurants to sweep the floors the way that the  CEO decides about money impacts which things can  

and can't get funded within the company which then  determines what the experience of the company's  

product and service and future plans are like so  I hope this has been helpful once again the CEO  

can do they're responsible for everything they  can do anything they want to in terms of how  

they spend their time but at least four of the  elements that that are unique to the CEO that  

the CEO really cannot delegate because at the  end of the day they are responsible for these  

things and no one else is is number one setting  the strategy deciding how the company is going  

to compete the marketplace and broadly speaking  what course of action is it going to take to be  

able to win at the game of business to managing  the senior team it might be like herding cats but  

in that case the CEO has to be a cat herder and  they have to do that because they're the only one  

in the organizational position to be able to do  that number three is modeling the culture and the  

values and again this is less an organizational  phenomenon and much more about how people look to  

their leaders for signals about what is acceptable  behavior and about how to respond in times of  

uncertainty and then finally resource allocation  the CEO Altima signs off on the big checks and  

they have to approve the budget and decide where  money is going to be spent and if they decide  

wrong those impacts will be felt throughout the  organization regardless of what other people in  

the organization think and regardless of whether  or not those are wise financial decisions to make  

so I hope this does a good job of summarizing  and articulating exactly what it is to be a CEO

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