330. The CEO mindset: Six undelegatable roles in strategy

0:01If you're uncertain, if your team is uncertain, you have no common ground. If you have no common ground, you are not debating choices and you are certainly not acting on them. So we see the CEO as a really important catalyst in terms of inspiring the organization to lean into uncertainty, into seeing the benefit where others may not, into reframing the conversation around strategic advantage. From McKinsey & Company, I'm Sean Brown, and welcome to Inside the Strategy Room. That was Andy West, co-author of the new book, Strategy and Value, which we are excited to be launching on November 17th. In today's episode, we will discuss a topic featured in Chapter 26 of the book, the six undelegatable roles in strategy that only the CEO can play.

0:50We'll explore how CEOs can set the conditions for a successful strategy by engaging in the right way, owning the value thesis, and making the hard calls on resource allocation. And at a time when companies need to lean into uncertainty, we'll discuss why CEOs are the catalyst for change and that they truly hold the unlock for organizations to execute well as a united enterprise. Andy is a senior partner based in our Boston office and co-leads our strategy and corporate finance practice globally. We are also joined today by his strategy and value co-author, Whitney Zimmerman, a distinguished expert on strategy who is based in our London office.

1:29Carolyn Dewar is a senior partner based in our Bay Area office and co-leads our CEO practice, along with Kurt Strovin, a senior partner in our New York office. Welcome, everybody. Carolyn, let's start with you. Today's topic likely sparks a question for many of our listeners on how much does the CEO's personal approach and engagement on strategy really matter to the success of a company? Thanks so much, Sean. I do think it's such an important question, right? Because the natural response is often, well, isn't this a team sport? Isn't this something the whole organization does? The reality is it is, yes.

2:06And there's also unique things that only the CEO can do, right? So what is it that the CEO's role uniquely plays in setting strategy and driving strategy in an organization? It turns out it really does matter. If we share some of the statistics and the research, you'll see that it turns out for CEOs who adopt a lot of what we'll talk about today, these really sort of cogent, high-functioning, tactical, and important roles as it relates to strategy, it makes a meaningful difference on the performance of the company. You know, 15 and a half points higher profitability versus the average, right? Almost 10 % higher growth.

2:48That's measured in employee growth, but sort of abundance and growth of the organization. Those are meaningful numbers that really matters. And some might say, well, isn't this just correlation, right? High-performing companies attract high-performing CEOs. When you dig into the numbers, it's actually more specific than that. when a company takes on a CEO who adopts and day-to-day practices the kinds of things we'll talk about today, that's when these numbers move. It's really quite fascinating that I wouldn't say an individual person. I would probably say an individual role, right? That unique role of the CEO has such an amplifying effect.

3:25Thanks, Carolyn. And Kurt, what's your perspective here? What makes the CEO role so unique and so pivotal to the strategy? We usually think about the CEO role is particularly important for three broad reasons.

3:38Whitney Zimmerman: One is they do have a perspective across the company and the market that is uniquely broad. They see more than often their boards see. They see broader range of things in their management teams. And so their perspective gives them a leverage on strategy questions that's particularly important. So that's one reason we think the CEO role is vital in the strategy domain. A second is they usually have accumulated experience and knowledge and maybe a set of beliefs that are important. Sometimes these are built inside of a company from leading it or being part of it for a long time. Sometimes they're outside because they understand the industry and they've come in into the company.

4:15Whitney Zimmerman: But they have a series of beliefs and they can help with calibration and judgment as senior folks that have usually led a lot of other parts of the business up until then. That's particularly vital. And that is useful and important in strategy and not something that can or should be fully delegated. And third, they play a structural role by being CEOs in the organization itself. And that confers a certain kind of authority. They aren't focused on one silo. They're focused on the overall enterprise. They best approximate in a way the overall stakeholder and shareholder interest just in their position.

4:48Whitney Zimmerman: And that's very important. We call it authority here. But what we really mean is a structural kind of authority that is given to them by virtue of their role. And that's very important. And in particular, we've written elsewhere about how CEOs often break collective action problems and stop inertia and other things from happening in organizations and their roles uniquely important for that. So all three of these reasons, I think, are some of the principal roles and reasons that we see CEOs playing, particularly on strategy. Got it. And Andy, perhaps at this point, and it may sound like a simplistic question, but it would be helpful to anchor everybody for this conversation.

5:23What is strategy and how do you and your colleagues define the term? So if you are listening and wondering, what are you even talking about with strategy? You're not alone. When we look at just search criteria and we did the book, we said, hey, let's just check out Google search criteria. And the question, what is strategy is up 14x over its 20-year average right now. So a lot of people are thinking about strategy. And one of the things we wanted to do is just frame the concept, right, as we talk about the CEO's role. And I think it really helps underscore why the role of the CEO is important.

5:58So what is the strategy? What is a great strategy? Well, it actually changes your trajectory. Strategy is not tactics. It's not incrementalism. It's actually seeking to create outsized value. And it has to do that through bold choices and trade-offs. It has to do that. You can't have a strategy that is do everything. Other interesting fact, the role that doing more is playing in corporate strategy right now is increasing. When we look at the spread between the amount of saying no and the amount of saying yes that's happening in terms of external communications, that spread is growing. So the concept of trade-offs is really important because that allows you to direct resources and change work.

6:39Now, I skipped over the word uncertainty. And I think it's really important because the CEO's role, as Kurt and Carolyn have already introduced, is to channel confidence, is to channel direction, is to channel resources in the face of uncertainty. Uncertainty is incredibly important to strategy. Most people think of uncertainty as risk. Well, uncertainty for a strategist is opportunity. It's an unfreezing moment. And these are the times when strategy matters. And I think it's no coincidence that the concept of what is strategy is up so much in search criteria because we are in a strategy moment right now.

7:11We are in a moment where choices are in front of us and those choices create opportunities. But as the CEO, the question, you know, we want to posit today and we'll address today is how do you actually lead through this moment? One last bit of fact and context, you know, in terms of the burning platform, we measure the quality of strategy over time. We look at whether strategy is actually successful, the quality of corporate strategies, individual strategies, And those strategies are down roughly 40 % over the last 15 years. So when we look at the quality of strategy, the moment's increasing, the relevance is increasing, the curiosity around strategy is increasing, but the ability to create great strategy is reducing.

7:50And that only calls out the importance of the role of the CEO. But yeah, John. Andy, in your experience working with CEOs, what is the most difficult challenge in terms of creating a great strategy? That's a great question. My take, Whitney, you should weigh in. We debated this for the last two years. We debated this for the last two years as we were working on the book, right? I think we are absolutely addicted to complexity. We're addicted to saying yes. I think saying no is the most important piece. It's the tradeoffs so that you can actually reallocate resources. Great strategy without funding just dies on the vine.

8:26It's a report, right? So you need to actually say no and reallocate whatever is scarce in your organization, whether it's funding, whether it's executive time, whether it's attention. That, to me, is the most important when we think about it in the context of today.

8:42Whitney Zimmerman: Yeah, I would just add, you know, we've done this research in the last two years on the capabilities required to design and deliver strategy well. And we studied 28 capabilities. And the number one, the one that everyone struggled with most was exactly this, deprioritizing and eliminating things not consistent with your strategy. It is very, very difficult to do well. And it's essential now, especially as AI is making it easier to do things. I might add one idea just that can help maybe revise and focus on where strategy can have the most value, given that saying no is difficult. I think it's this sharp line and distinction between strategy and tactics.

9:21Whitney Zimmerman: And I think lots of organizations get that wrong. The best definition of that in my mind was 2 ,000 years ago from a philosopher and a military leader who said, I think I'll see if I can get the quote in my mind, strategy without tactics is the slowest route to victory, but tactics without strategy is the noise before defeat. And I think that's a super important thing to think about when you're focusing, what are those real strategic questions, those ones that are really important to focus on and make sure that the focus is on those as opposed to a lot of reversible things and tactics that you can sort out separately.

9:53Whitney Zimmerman: And I think people often combine strategy and tactics of this melange that commits them to a broad portfolio of things. But if you isolate those true critical strategic choices, I think you'll be able to focus as Andy and Whitney are suggesting that we must. And so how does the CEO success in strategy then actually emerge in terms of the success of the company. What are some of the KPIs, for example, that you might use to define the CEO's success as the organization's strategy leader? Whitney, do you want to take that one? I mean, I know it's a favorite, so I'll... Yeah. I think it's... So I like to say that every company is different when it comes to strategy, its needs, its opportunities, its situation, right?

10:35Whitney Zimmerman: So there's no one size fits all in terms are the right KPI because fit matters. But what I would say is oftentimes the sign of a CEO doing a good job with strategy and with a company that needs it is not to like, you know, be a dead horse, right? But it is how many things are stopping, right? Famously, Steve Jobs came into Apple and he dramatically rationalized their product roadmap, which was an exercise in saying no in order to be able to say yes to the right things. And so oftentimes when it comes to strategy working, it is the number of hard decisions that are being made in order to clear the way for space and opportunity for the organization.

11:16Sean, I'll say the opposite. The flip side is watching out for short-termism. We talk a lot about that in the book, which is maintaining that long-term mindset. Very, very many people in the organization with bonuses and incentives and KPIs that focused on the quarter or even the year are actually disincentivized from investing in strategy. That trade-off is very, very tricky. So usually the CEO needs to understand that tension that exists in the organization and find ways to circumnavigate it, right? You can't always change the entire incentive structure of your organization, but there is an inherent disconnect often between the KPIs for people's kind of performance every single day and what's actually required of a strategy.

11:59So I would just say also being kind of clear-minded about the risk and how the incentive structure of the organization may disincent medium to long-term bets. Andy, now let's just walk through at a high level the six roles in strategy that you've determined as being undelegatable for CEOs. Yeah, and so Kurt had the perfect lead-in to the very first one, right? These are the six undelegatable roles, and the first is choosing how you engage. just as Kurt had mentioned. I mean, there are a lot of different ways to engage in strategy. It is a choice, but it is a requirement. The second is around the value creation thesis.

12:39And this isn't that you have to build and write the value creation thesis yourself, but you need to hold how your company actually creates value. The reason we wrote the book, Strategy and Value, is that we think that there's an inextricable link between the concept of creating a great strategy and translating that to how it's creating value for the organization. the CEO needs to know and understand that golden thread. We just spent time talking about making tough resource reallocation calls and saying no. One that people don't think about, I think, often enough is the strategic tempo of the organization.

13:13This can be speeding up the organization, and often it's phrased that way. It can also be slowing down the organization. When we think about Reed Hastings and what he did with Netflix and thinking about the transfer from DVD to streaming, We like these old examples, by the way, because you can see how the strategy has played out over time. There was a speed up and then there was an absolute slow down moment there to make sure that the organization and the customers were in line with what was happening in the market. Inspiration is really important, but the organization, again, is not often wired.

13:46The KPIs may not be there. The mindset might not be there. The confidence might not be there to withstand what's needed to actually make a meaningful full pivot in the face of uncertainty. Really important role for the CEO. And then finally, and related, being a catalyst for change. You need to understand between the tempo, between the thesis, between the organization's ability to digest uncertainty, you often need to role model what's required in the business that you want to be. So we'll spend time on each of these, but these are the six undelegatable roles. Great. And as we think about these six roles, what has the impact of AI been on this more broadly in terms of the roles of the CEO and the way the CEO operates?

14:30Sure. I think there's at least two different lenses, even in that question, right? One is, I think, the speed with which AI is shifting boundaries between industries and economics and what's possible is putting the vast majority of companies in a strategic moment, many of which they haven't had to revisit in many years, And so for a while, the play was optimizing your operations, delivering. For a lot of companies at the moment, they're asking pretty existential strategic questions, or at least they should be. And so part of the role of the CEO is to recognize to what extent, whether it's AI, geopolitics, all the changes happening externally are impacting your ability to operate, your source of competitive advantage, your moat as a company.

15:17So are you even in a strategy moment? I would posit that for many companies right now, the answer is yes. So that's the first role of a CEO is to recognize it, to ask the question. There's a second piece then is, can you use AI tools and the capabilities it comes with to inform a lot of the steps and the six roles that we'll talk about today? And I think we'll get into that as we get into each of these. But AI can absolutely bring data and insight and analysis. It does not replace thinking. It does not replace judgment. And it does not replace conviction. And so even in a world where you're using great AI tools, the question you're asking, and then on the back end, when you receive the analysis, the debate you're having around, not just can we do it, but should we do it?

16:02That is absolutely the realm of the CEO. Understood. And Whitney, Kurt, anything you'd like to add here on this AI moment? Yeah.

16:09Whitney Zimmerman: Yeah, I think what Carolyn just said is such an important point around this AI moment, which is a strategy moment. It's a CEO moment. I mean, AI is central to resource allocation question. We're fundamentally talking about allocating capital, OPEX, talent, and management attention to AI bets. And so thinking through how big those lineups are, how you frame the strategic challenge or opportunity around AI, and be it for use cases or domains, how do you think thoughtfully about the extent to which you need to see return on investment now versus later, and really how you drive down to the key underlying assumptions that give you a sense of whether something is playing out or if you need to have patience and wait.

16:51Whitney Zimmerman: These are all really the domain of both the CEO sometimes making really hard individual allocation decisions, but also being in the flow in order to shape the quality of conversation to ensure that these are strategic debates and not tactical ones. And Kurt, would welcome your thoughts here too. I think AI is creating so many more analyses, but it's not taking away the importance and the premium on judgment. In fact, it may even be sharpening that premium. So in strategy thinking, AI is both an asset and a tool, but it's also reminding us of a core element of synthesis that needs to be part of the strategy process by humans with experience and reasoning ability, backed by the ethics and the beliefs that we talked about earlier.

17:35Whitney Zimmerman: And so I think that AI is a third way in which AI is mattering for strategy is it's sharpening the premium and the returns of really good judgment by teams focused on this and led by the CEO. Super. So now let's dig into each of the six roles. Whitney, maybe you can talk us through the first one on how to engage. The first ground and sort of foundational role that really can't be delegated is the simple choice of how a CEO will engage in strategy. CEOs, when they come into a business, they will usually inherit ways that they are engaged in strategy. And it's very important not to miss the opportunity to choose differently because choosing how to engage is both important for being able to be close enough to the business to understand what's going on and understand when a CEO decision is needed and not, but it's also a signal.

18:29Whitney Zimmerman: So I work a lot with new CEOs that come in and review strategy and launch change programs. And it's a very powerful signal when a seasoned CEO comes in and says, this is how we're going to change what I'm involved in, either me being involved in more or being involved in less, right? Drucker used to say, Peter Drucker used to say that it's important to do the right things, not just do things right. I would adjust it a little bit for this or apply that in a certain way. Choosing to engage is about being involved in the right things in the right way, right? It's not over-involvement, but it's close enough to shape, to influence, to know enough to make the hard choices with an intimate understanding of the business, right?

19:06Whitney Zimmerman: And typically the failure is not neglect or investment of time. It's your return on it. We have eight deliberate practices to consider, right? These are not ones that you need to tick your ticker box, but they're particularly useful and relevant for those who are maybe taking on the role for the first time and really thinking about with your chief of staff or with your team, really where do I need to be engaged and how, and not just being in the room, but being close enough to really understand the business. Of course, it is granular engagement with your portfolio and really understanding how value is flowing, right?

19:36Whitney Zimmerman: And not through reports. It is spending real time externally with stakeholders, with investors, with customers, right? And spending time learning also for yourself, taking time, like David Cody talked about at Honeywell in terms of the sort of blue book days he would take in terms of really taking time for himself to reflect and learn on his strategic challenges. It is about being, making sure that you are involved in some kind of stage gating of major strategic initiatives, right? Allowing yourself to weigh in at the right times or be in the flow of information about when we are making things go faster or slower.

20:10Whitney Zimmerman: It is about periodically being involved in a review of where resources are going with a small group. It's about periodically understanding what is our strategic talent pool and how does that compare with our strategic talent priorities and our initiatives. And that may not be to actually allocate that talent, but at a minimum to understand the health of that pipeline and to be able to take action to involve yourself in certain ways in the sort of factory of talent that your organization should be building. It is about ensuring that you are involving yourself in a true postmortem of big strategic bets, right?

20:44Whitney Zimmerman: To be able to both understand what has gone well or not, but also to be able to hold a high bar for the right kind of conversation about what we're learning from successes and failures. And then finally, our research finds that if you have a strategy function, its success is heavily dependent on whether or not it has a clear mandate, a clear understanding of what your strategy needs from it, the strategy function. And it's very rare that there's a CEO-backed mandate of the strategy function. But those that do have it, those that sort of 30, 20, 24 percent that have a CEO-backed mandate that is clear, they are significantly more effective.

21:20Whitney Zimmerman: And in this day and age, strategy needs to be effective at all levels of the organization. So that's the first role. It is how to engage in strategy, not overinvesting, but in the right ways. Thanks, Whitney. These are really tangible practices for a CEO to know when and how to come in and engage rather than just calling the strategy down from up on high, so to speak. So shall we move on to the second rule? The second is, as Andy was talking about, the value creation thesis, right? Now, a lot of people might say, ah, the CEO owns the strategy, is the chief strategy officer. And when we were working on this perspective, we wanted to make sure that the roles here really apply to all kinds of of CEOs, all kinds of situations, large companies, small companies, scale-ups, et cetera.

22:03Whitney Zimmerman: And there's a reason why we landed on the value creation thesis. It is that underlying logic. We believe strategy is about choices. It's about a few coherent, bold choices you're making at any given point in time to allocate resources and to help people understand what are the biggest ways we're changing our business, right? Some of those choices may not really be made by the CEO, right? The CEO may not own them all. And so it's important to understand what the CEO does own with regards to strategy. And we think it's the underlying logic. It's the value creation thesis. It's the theory of why is it that our strategy will work?

22:36Whitney Zimmerman: How our company and its markets with its sources of advantage are going to earn the returns to justify the resources we're committing based on our unique view of the future. That underlying logic, right? And why? Well, it's because the CEO is so uniquely positioned to be able to see. Also, I think as Drucker said, both the inside and the outside of the organization, right? To be able to understand, is this thesis working, right? Do we have the data that shows it should, should we be patient and or do we need to change it, right? And that helps everyone across the business make strategic choices because they understand the why behind the where and play to how to win, right?

23:13Whitney Zimmerman: They understand the why behind that logic. And a great example I'd like to use is Jimmy Diamond at J.B. Morgan, where he talks about and has for a long time this sort of fortress balance sheet strategy in his shareholder letters. This is not, in my view, their strategy. It is not the choices they're making at any given moment. It is the underlying logic. It is we believe that we need to have a fortress balance sheet because of our view of our markets and what drives value. And we're going to be making choices, strategic choices at any given point in time that are consistent with that thesis. And so having that underlying thesis is valuable and important to moving quickly and is ultimately the domain of the CEO.

23:48The one thing I would just underscore just in practical realities, this last point you made around conviction. And it really is important because if you think about when we say making big, bold bets, it kind of implies that somewhere in a strategy room or in a boardroom, there's a choice that's made and then the organization just goes and does it, right? And, you know, that's partially true. But strategy, you know, that lives in that world and doesn't live in the real world of the organization and the thousands of choices that are made by thousands of people every day in a large organization will never survive.

24:20It will die from thousands of cuts of misunderstanding, right? And so this concept of owning the thesis, what is the business we're in? What makes us special? And how does that actually translate to returns is so important in just establishing conviction and helping just set the frame for the thousands of decisions that actually accumulate over time to a true strategic shift. So, you know, the conviction, the CEO's role in establishing conviction around it is something really only a CEO can do with the executive team, of course, with a great comms team, with a great IR team. But it really does start there so that it can extend and flourish in the rest of the organization.

25:01So can we talk about how this ladders up in a multi-BU environment where typically a BU head considers themselves the CEO of that BU? So in your experience working with really large companies, as the corporate CEO is thinking about this. What's the interplay between them and their BU heads in terms of what's undelegatable?

25:23Whitney Zimmerman: I'm happy to take a crack at this. I was just talking about this last night with a group of CSOs at a dinner. So number one, I think this idea of strategy being about a few big choices, right? Hopefully no more than five or seven for any given part of the organization that really help clarify what we are and are doing. That's the domain of anyone in an organization, right? It might be in a product team. It might be in an operations team. It might be at the top of the house. It might be at the top of a BU. The idea of ensuring that your part of the organization has a coherent set of clear choices, a strategy, I think is something everyone needs to know how to do, which is why we're trying to also very clearly clarify that that's what we think strategy is, right?

26:05Whitney Zimmerman: Now, the underlying thesis, right? It might be that for a given organization, if it's a pure holding company, right? If it is like a Berkshire Hathaway, right? That they may have a thesis for how that overall holding is creating value, but ultimately there needs to be a crystal clear value creation thesis for the underlying holdings, right? Because they are different. But it also might be that for the overall organization that you're really different shades of the same kind of business. And that the way that you create value and how you compete is really about being coherent as a whole. And maybe there is one really guiding value creation thesis, right?

26:44Whitney Zimmerman: That's guiding the entire organization. I think it is the domain of the corporate CEO to make very clear what kind of business are we and where do we really need to be clear about our thesis and how it differs? But across the organization, everyone should be holding a high bar for strategy and feeling accountable for the choices you're making that are guiding your part of the organization being crystal clear and having at least an underlying logic. Thanks, Whitney. And Carolyn, anything you'd add here? One really simple question I've seen some leaders use to frame that is, if I'm the head of a P &L or a geography or country is, what are the choices or priorities we have that are in the highest and best service of our overall strategy?

27:23If the company has a strategy, it's our role to say, what's the biggest, most important things we can be doing to support that? They absolutely link. That's great, Carolyn. And Kurt, it looked like you were going to come in as well.

27:34Whitney Zimmerman: Yeah, I was just going to say, I think this links maybe to our next point around resource allocation, because I think one of the ways in which the intersection happens between business units leaders and an overall CO, as well as the CSO and the CFO, end up being around choices of resource allocation and where do you put your resources, both capital, management time, people, etc. etc. You know, one of the roles that we see that CEOs play that's vital is this question around shifting resources and really setting up a system to be able to think about this in a disciplined way that has a certain kind of periodicity.

28:11Whitney Zimmerman: So that you're looking at resource allocation for the enterprise again and again in a process that injects objectivity, good strategic reasoning, but also trade-off thinking and making hard calls. And while the CEO doesn't necessarily design that entire resource allocation process that is usually in our experience done best by a chief strategy officer and a CFO, the conditions and making sure that those are present for objectivity, for reasoning through things, and also ultimately for making some hard calls often falls to the CEO leadership. And so we think this is an important third area that is undelegatable in that sense.

28:48Whitney Zimmerman: And it's hard. It's structurally hard. One of the things we observe is that often a particular unit or business that might be losing resources at a particular point in time might have a longer track record, might have more social connections, people in the organization that have over time worked with them. And some of the newer areas that rightfully deserve funding and resource allocation might be newer, less proven. And so there needs to be a process of giving enough time and creating some cover, quite frankly, for these innovations to take hold. Oftentimes, CEOs play a vital role in balancing those elements of things that are emergent, that are not yet fully there, and creating time for them to actually reach their full potential, and organizations that may be very formed, but may have longer track records, but not be the best marginal place to put additional capital.

29:45Whitney Zimmerman: And so these decisions oftentimes require a CEO's leadership to do that in order to give the portfolio a dynamic feel. We see over the course of the work that we do that dynamic resource allocators create more total return to shareholders. They do it about four points of actual TRS a year. That's huge when you think about what 10 years means for an organization. So it's very important to be on the right side of dynamic resource allocation, and CEOs can insist on that as an operating principle and parameter. One other thing I would just say is that there's an important point around calibration.

30:21Whitney Zimmerman: And I think this is another role that CEOs play in resource allocation, which is ultimately the question of how far and to what extent to move in a certain direction and how fast is sort of an undelegatable question of the first order for a CEO. You take input from a lot of places, but ultimately you have to have a sense of what's the direction I need to move and how fast do I need to move there to keep pace with and differentiate versus competition. That's a hard question to delegate. And so resource allocation is one of the ways that you make that calibration sort of manifest and get the gearing of the organization to move in that direction.

30:55Whitney Zimmerman: We see a lot of what Satya did in the early years of Microsoft in particular as being good example of this. He shut down the phone hardware business, went back to our theme about stopping things as opposed to starting things. He put Office on iOS and Android. That was not easy, had a lot of internal resistance. Those are tough choices that are semi-irreversible. That's also another marker of good strategy. And he basically pulled into a centralized capital allocation, a lot of things that used to be very federated and maybe even fiefdoms, as I recall, they talked about originally. And so the centralization of some of those resource decisions was also something he did.

31:35Whitney Zimmerman: So we all know the run-up in many of these companies, 10x over 10 years or something in market cap. But a lot of the core choices stem to some of these resource allocation decisions and his role, which was active in it. Right. Thank you, Kurt. And those are some great points about the importance of resource reallocation. It also begs the question that if resources are reallocated very frequently, that can also cause challenges for the people who may be reallocated along with other resources in the organization. So how do you help and work with CEOs to strike that balance, to have people working toward a North Star, but also not feel like the sands are continually shifting beneath them?

32:19Yeah. Yeah. I'll, I'm happy to take that one. That's one of my favorite topics, Sean, because I would say when we talk to executives, when I go talk to executives, we're getting ready for budget season. We're kind of out of strat planning for many companies. We're going into budget season right now. And there is always trepidation around that. And there's always a sense of incrementalism and things moving too slow and the process just not working, which just creates a massive amount of frustration in the organization. It's one of the reasons why we wrote the book, why we call it strategy and value, because one of the things that you can't control is pace on every single decision at every single level.

32:56You talked about, yes, some things need to go fast. Some things need to go slow. But without context, without understanding why are we making the strategic choices that we're making? If the finance organization or, you know, the folks driving the budget don't understand the choices and don't have a long-term mindset around the strategy, it will slowly die a thousand cuts. It's not going to work. If the strategy team and the business leaders can't translate what they're doing into meaningful impact, it won't get funded, probably shouldn't get funded. That level of uncertainty is what grinds everything to a halt.

33:31So instead of worrying so much about pace, we have to go faster on average. Processes are too slow on average. The process is incredible. That value chain you just described is generally broken. I think people would acknowledge that. But instead of obsessing about what needs to go fast, what needs to go slow, what we very much talk about in the book is increasing the level of understanding so that when you're in that meeting, when you need to go fast, you can articulate why. And finance, if you're a strategy person, will nod its head and will go figure out a way to make it happen. If you need to slow down or you need that funding mechanism to work, people will understand that it's not working and why.

34:08And instead of doing a workaround that only compounds complexity, they'll actually use the process to have the debate, to reallocate the resources for the big things that need to take a long time and use that budget process. You can do that as well. So it's a nuanced answer, but the point and the point of the book is if we can get conviction around the different roles, if we can get conviction around a fundamental amount of understanding on strategy and value, the organization should be able to adapt even if your process is a bit slow or maybe, you know, too fast and feeling irresponsible. Thank you, Andy.

34:42And Carolyn, that brings us to the fourth undelegatable role. So maybe you can talk now a little bit more about this notion of the pace or tempo that the CEO must set. Yeah, we've been building towards it. So at this point, you've already decided where you'll engage. Ideally, you have strong conviction on where to head. You've allocated resources. What about pace? And Andy, Kurt, others have already hit on this one. We hear this question so often. Usually, it's how do I get the organization to move faster? But to Andy's point, sometimes it's also how do I slow it down? How do I make sure we're operating at the right pace?

35:20You have the classic Netflix one he already mentioned where, you know, Reid clearly had huge conviction. Although back in 2007 about the future was streaming, but he had a DVD business. He held both for four years. You know, in that case, the organization almost wanted to race ahead and move immediately. He said, we're not quite there yet. The technology's not quite there. The market's not quite there. The content's not quite there. And so he held both in parallel in that tension for four years. And then when the moment was right, made the call and said, okay, I'm going in, right? It was$100 million bet funding the House of Cards.

35:59It didn't have a pilot. It was going to be their big bet streaming content. It was a big bet. And then they launched in 130 countries simultaneously. So that's an example of hold, hold, hold, hold, hold, go, right? Right. Only the CEO. And I would say, you know, there are some degrees of freedom of the founder CEO. We can get into that where maybe they even have more, more ability to do some of these things. But everyone can set that pace. When are we rushing? When are we going? What does that need to look like? And it really does need to come from the top. Everyone is taking signals on what does that need to look like?

36:35I guess the last point I want to make on this before we move, because it links to a lot of what we've been saying. we've been talking about being bold and and setting resource allocation which is so so critical i would just say in you know spending time one-on-one with folks sure there's process reasons why saying no is hard and resource allocation is hard sometimes it's a little bit of hedging right if i'm honest right if you don't have full conviction because we're really saying you have to be bold and right right and that's scary right and and there's some fear and sometimes leaving resources on some of these other pieces are ways of hedging.

37:13You're not quite sure yet. What does that look like? And I just want to acknowledge the practicality of that, that that's the tension we're all facing, right? And so how do you know enough to have the conviction to go through those one-way doors, right, while you're testing and learning along the way, maybe through things that are going to give you more information to get you more and more convicted and move faster. And so it's just a thread that's under the surface I thought was worth acknowledging.

37:41Whitney Zimmerman: If I may just add one comment on this. Just again, last night at this dinner, and I hear this a lot right now, there is a realization that we are all moving so fast, maybe we need to slow down. Right? So I think this role and what Carolyn just talked about is particularly important for a CEO to be thinking about, about when is it that we need to deliberately slow down or deliberately speed up and making sure that it's a choice, right? You know, I'd imagine that the notion of slowing down is not something that folks often think about, but it's great that you brought that up. And so now let's move on to uncertainty.

38:19What is the CEO's role in inspiring their organization to get behind the strategy, especially as we think about these fast moving uncertain times? Andy? Let's do it. So we talked a lot about uncertainty, right, and inspiring the organization to lead into uncertainty. Why do we care? And I mentioned it a bit at the beginning, but why do we care about uncertainty? Well, a few things I would say. One, you know, it is an opportunity. And the reason why uncertainty is an opportunity for a strategist is that it's this unfreezing moment. So we generally celebrate uncertainty, which is not the way most people think about it.

38:55I think about it as a risk, but it really is an opportunity for a strategist. The problem is, is that when people are uncertain, if you think about it at an individual level, if you are uncertain, and today is a time when people are quite uncertain. I don't think that the world is that confusing, but it's different. So people are uncertain about their role in it, whether it's in the last few weeks, I'm uncertain about AI and is it safe? I'm uncertain about my job. I'm uncertain about what's happening with competition. We see the barriers to entry eroding in many industries at an unprecedented rate.

39:27There are a lot of things that people just don't understand and they're uncertain about. Each individual is a part of a management team that is equally uncertain, right? And why is uncertainty a problem? It's because it freezes the organization. You don't act. If strategy about big and bold choices, if you're uncertain, if your team is uncertain, you have no common ground. If you have no common ground, you are not debating choices and you are certainly not acting on them, right? With vigor, right? The vigor that's required to move first and to capitalize on uncertainty. So we see the CEO as a really important catalyst in terms of inspiring the organization to lean into uncertainty, into seeing the benefit where others may not, into reframing the conversation around strategic advantage.

40:13I love Walmart as an example, because when Doug took over, the world, if you go back at that time, and it's still not an unfamiliar conversation, everyone's saying retail is dead, right? You are sitting on a business model that has no assets, that's slowly dying. And what he said is he reframed the debate and said, hey, actually, we have almost 4 ,000 or 5 ,000 locations, I think 4 ,700 locations within 90 % of the population. We have a fulfillment engine that's unrivaled. He reframed that uncertainty into a path and into an opportunity. And in doing that, he got the conviction in the organization that was required to actually change their business model pretty fundamentally.

40:51So this inspiring organization. I mean, CEOs, we know that they're a source of inspiration, but when you link it to some of these other practices, you can see how powerful leaning into uncertainty and inspiring the organization can be. So uncertainty can also be a little scary. And as the CEO, you're trying to inspire the organization to embrace it. But as we've acknowledged, there can also be risks associated with uncertainty. So how do you give people that safe space to embrace the uncertainty while still recognizing and rewarding them, even if the bold move didn't necessarily turn out as expected?

41:25Kurt?

41:27Whitney Zimmerman: Sean, I can say maybe a few things around that. I mean, one is I think you can, as a CEO, you can role model and set the expectations for a continually learning organization, not a punitive one where things go wrong and you're immediately, you know, voted off the island. But when these bets are syndicated, and they're well done, they, they essentially still have some uncertainty to them. And you're creating a culture that leans into that future. You know, one of the things we've been talking about kind of throughout in the last 45 minutes is maybe it's worth just stating, you know, strategy, I always think of as a reasoned response to an essentially uncertain world.

42:04Right?

42:05Whitney Zimmerman: It's just, this is structural and it's baked in. And so sometimes strategies fail because they imagine that they can conquer and completely domesticate this world and render it like no uncertainty. That's not going to happen. Strategy is fundamentally probabilistic. It's like a batting average. Can you bat 400 versus 200? Understanding you're never going to bat 1 ,000. And what levers and approaches can you take to give yourself the best chance over time of winning. And I think what CEOs can do is frame this as essentially, there's structural uncertainty, but it's a question of how we respond.

42:41Whitney Zimmerman: We control the controllables, the things that are within our control. We control, we experiment, and we continue to learn and we grow. And you create not a punitive culture, but one that's learning, striving, and recalibrating. And CEOs play a vital role in teaching that and maybe making that and being honest and authentic about that and then making sure that the incentives are coherent against that. But I think it's important to think about strategy as fundamentally probabilistic, not as, you know, this is our strategy. We did it two years ago. This is the answer. We've written it down. All will follow if we'll just, if we just execute.

43:16Whitney Zimmerman: People like to say we execute against the strategy, but you do need to revisit and constantly calibrate different elements as you learn. So I think that's one of the big things that folks can do is, as Andy said, reframe this and not confuse conviction with certainty. It's not certainty. It is a belief that this is the best way for now to prosecute that uncertainty for us and create a culture that believes in that and understands that. At the individual level, this sometimes requires working on the inner game of yourself to release things because it's uncomfortable sometimes uncertainty. And we sometimes talk about this concept of hurry up and relax in a different context, which is, you got to move fast, but you also got to stay comfortable with this and understand that this is part of the operating environment that we all now live in.

44:13Whitney Zimmerman: So institutionally, I think you have to think about it probabilistically and maybe personally, you have to create the space inside of yourself to acknowledge that things are going to be outside of your control, but you can still act and give yourself the best chance of winning. All right. So now let's talk about number six, being the catalyst for change. Kurt, would you like to continue? So we talked about these, I think some of these themes from the very beginning, what we wanted to basically observe was one of the roles that CEOs play is breaking what might be considered collective action problems across the organization.

44:44Whitney Zimmerman: Sometimes very well-intentioned people following incentives that they have in different ways in different parts of the organization lead up to an outcome that's suboptimal. And so being a catalyst for change, and I think we're integrating points that we've mentioned earlier rather than introducing new ones at this point, CEOs can set the conditions for an enterprise view and can break down things that could otherwise get in the way of strategy formation and execution. And we do find that CEOs play a particularly important role in transformation. We've written about this separately around collective action problems and how CEOs can break those.

45:18Whitney Zimmerman: And when they do that well, they get a bump for transformation success of about two and a half to three X, which is very, very substantial. So I'll allow other colleagues of mine to comment on this and come in here. But we think that the CEO role of keeping everybody on task and putting the right conditions in place for transformation so that strategies can get executed, not just conceived, is really important. I would just add, you know, don't underestimate the role modeling impact you have of everything you do, whether it's intentional or not. You know, as the CEO, people are reading into every word, every action, almost sometimes in an uncomfortable way.

45:59And so you do have to be quite intentional about how you show up, right? And not just what you're doing and spending time on, but how are you being. So if you're part of your strategy is about focus and saying no, then you can't be the one that every Monday morning is coming in with 18 new ideas, right? You hear, there was an interview with Jeff Bezos and he was talking about early days when he was founding and building Amazon. He almost had too many ideas that the organization could absorb. And he got some tough love coaching of, you actually have to keep those to your inside voice. And so there's some of these things where you have to reflect yourself on, am I actually role modeling what I'm asking everyone else to do.

46:37And it will, it'll have a magnifying effect in great ways, right? If you're thoughtful about it. Thanks, Carolyn. That was a great anecdote and I'll be thinking about using my inside voice. So you all serve clients across the globe. How universal are these six undelegatable roles across regions or across cultures? Have you looked at that as well?

46:58Whitney Zimmerman: I think that these six roles are inherent in the role of the CEO. I think that they are not cultural. They have to do with the, as Kurt noted near the start, the unique aspects of a individual charged with leading an organization inside and outside. And I think that the dynamic of, if you try to delegate this, will you struggle to create value with strategy? I think that that holds. I do think that there are a lot of nuances to the extent to which or how you succeed in leading as yourself as a CEO. We have a new book out called, I think called Founders and Shapers. It covers profiles of founder CEOs in Asia.

47:46Whitney Zimmerman: And you see in that book just how varied successful CEO founders are in that part of the world. But I think grounded across that is an understanding that impact comes at inflection points from discharging these roles and ensuring that everyone else in the organization has what they need to succeed. Got it. And Kurt? I was just going to add, I think Whitney's point on the founders and shapers is a really good point. And in Asia, if you look at the top 5 ,000 companies or so, the share of Asia in the top 5 ,000 companies is doubled in share. I think it's like 14 to 27 or 28 in the last 25 years.

48:27Whitney Zimmerman: And an awful lot of that has been driven by founders, almost 50%. And so founders, I think, is a special case of the broader notion of CEO role. It has even a longer shadow when one's a founder. There's also challenges to being a founder and creating the room for others to lead around you, which we can talk about maybe on a separate webcast. But I think Whitney's right that the general role is conferred on you because of the structural property of you being the CEO leader. And that is more consistent across regions. I would say that the founder case is a special one and that has even more focus on mission versus market opportunity, even more focus.

49:05Whitney Zimmerman: But some of the similar things around telescope, microscope, long-term, short-term, resource allocation, upside, but protecting the downside as part of resource allocation, very similar. So right now, if we think about these six CEO roles, if they're required for a successful strategy, what sort of capability or preparation is most important if you're looking to become a CEO or indeed if you're a CEO right now? Whitney? So one of the things that people talk about a lot right now is the importance of judgment, right? And of course, how important judgment is to individual decision makers, but also to CEOs.

49:44Whitney Zimmerman: And I'm personally a student of judgment. One of the first business books I read many, many years ago was called Judgment by Warren Bennis. And it's worth talking about where it comes from as a CEO. Judgment comes from having beliefs and values, right? It doesn't come out of thin air. It comes from having taken time to learn the fundamentals, right? For example, as we talk about in our forthcoming book, the fundamentals of how to think about whether a market is attractive and why. Think about what it takes to win and have competitive advantage and why. How an organization actually creates economic value and why.

50:22Whitney Zimmerman: And why is it worth committing to something for the long term? It comes from taking the time to learn those things, to make decisions and watch decisions and how they play out and reflect on what you learn from them and to build beliefs and values about what you believe works, right? Like positive biases. And that's what allows leaders in part to exercise judgment. And some of the very, very most effective strategic CEOs I've worked with are effective because they're able to talk about those beliefs. They will talk about those values, talk about why they think what they do when they approach a strategic challenge or opportunity.

51:00Whitney Zimmerman: And so an organization can come to adopt those beliefs as well. And so if you're thinking about preparing to be a CEO one day, I think it is particularly important to be thinking about that learning, that reflecting, that engaging, especially now when you may need to turn this up a notch. We've heard, for example, Toby Lutke at Shopify doubling down on this moment and saying, I want to stick around and be CEO in order to really help Shopify transform itself for the AI era. And one of the ways he's doing that is through this, through learning and engaging deeply in the technology, reflecting, and then talking about what he believes and how he's renewing that.

51:36Whitney Zimmerman: So I think it's very important to be thinking about what it takes to become that kind of CEO. And Carolyn, I know you do a lot of work with clients on CEO effectiveness across their tenure. Anything you'd like to add here? No, I guess just reinforcing, right? These apply at any stage of your journey, whether you're an aspiring CEO in the future, new, getting up to speed, or frankly, in your mid-tenure and trying to kind of reset and make sure that you're bringing fresh eyes and thinking to the organization. at any stage of your leadership tenure, these things are important, right? Constantly learning, creating the time to think and reflect.

52:11And that's a calendar issue as well. It's not selfish to block time in your calendar to think it's actually part of your job, right? And then being the engaging, you know, chief storyteller. And Carolyn, as we close out, these six undelegatable roles also seem pretty tightly interrelated. So does that mean to use the spinning plates analogy that we've discussed previously in your book, CEO Excellence, that you have to work really hard to keep them all turning at once? Or is there one or two that you might typically start with? I do think they're sequenced in a bit of a deliberate way, right? You need to decide it's your job and then have real conviction around where you need to go.

52:48And then the others flow from that, right? The resource allocation, the storytelling, all of those pieces. But there's a reason why those first two are first. It all stems from that. Awesome. Thank you, Carolyn. And Andy, before we close, I'd love for you to share what you're most excited about from this work and your new strategy and value book. Like, what would you like to leave our listeners with as they contemplate these six undelegatable roles, which they can actually read more about in chapter 26? What I'm excited about both, hopefully what came away from today, and hopefully what comes away from those of you that have a chance to pick up the book, is the power of simplicity.

53:28You have to keep it simple. Right now, nuance and complexity is choking our confidence and our ability to engage in strategy in a meaningful way. I would say that most of the, whether you're a CEO or an aspiring CEO or a business unit leader or a manager that wants to just be better at driving and managing strategy, what I hope you took away from today also is you're already doing a lot of these things. Much of this is as a general manager is in your job description. It's just a matter of tightening what you do and eliminating a bit of the noise as opposed to adding to the noise. So I love it if everybody, I am excited about the concept of simplicity.

54:06I think we need it in a world that is drowning in nuance right now. I'm excited that we've actually come up with something that can meet the strategy moment. And again, hopefully you take this as a guide and a way to hone your craft and what you're doing right now, as opposed to just another six logs to throw on a fire that's probably already raging out of control. Thanks, Andy. And Kurt, did you have anything you'd like to add before we close out?

54:32Whitney Zimmerman: Maybe the line between what you can and should lead yourself and what you can and should delegate to a qualified and strong team around you. I think that line is a leadership line, and it's really important to be self-conscious about that. And we're making the case here that these are six things that are undelegatable, but there's a lot of other things that are delegatable. And it's really about what you lead and how you lead leaders. And I think that line is super important for CEOs and not just in strategy. it's also important for any leader in an organization to really distill what can they do themselves and how can they empower others around them and what's that line between the two awesome and a quick reminder for our listeners strategy and value the four foundations that drive long-term performance is out on november 17th and the link to the book is in the show notes carolyn kurt whitney andy thank you so much for taking the time today our pleasure thanks john thanks john and thank you to all of our listeners for joining us we hope you enjoyed the conversation and we welcome your feedback and ideas for future episodes.

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56:12Thanks again for listening. We look forward to having you join us again next week inside the strategy room.