The Hidden Habits of Extraordinary Leaders! - Mark Thompson & Byron Loflin

0:00I love it when I hear people doubt themselves first. That's what, as a coach, you'd hope the most is, that you have the humility to say, so what will this really take? Rather than just being a prize to be won, it's the job to be done.

0:19What would happen if we just told the truth? Welcome to TruthWorks, where we dig into the nitty-gritty of leadership and work. And what needs to change. I'm Jessica Neal. And I'm Patty McCord. Our journey together started in HR, but trust us, it's evolved into something wild, honest, and well, a bit rebellious. So throw out the handbook. We're here to redefine rules to work for us, not against us. Let's dive into another episode.

0:54Hi, everyone. Welcome to another episode of TruthWorks. I'm Jessica Neal and Patty is still out recovering from her surgery, but so I'm going solo, but I have two guests today, which I'm very excited about. So you probably, some of you have heard of these two individuals, but I have Byron Laughlin and Mark Thompson here. They're the co-authors of a really cool book called CEO Ready, What You Need to Know to Earn the Job and Keep the Job. I think that's the most important part, kind of keep that job. It's a hard job to get, but you want to try to keep it. So I am so excited to have you guys here.

1:34We have a lot of listeners that are CEOs, founders, but we have just a lot of listeners that are leaders. And I think that the advice that you give translates not just to a CEO, but to all leaders in general. So I'm excited to have you guys here. Can you, first of all, tell us a little bit about how the two of you met and how this all came about because I don't even know how you know each other. What is this story? Tell us how this happened. Well, it's a delight to be able to work with Byron because Byron and I are like bookends in the boardroom because he's the most preeminent expert on board excellence and governance and created a wonderful company that was focused on that and then sold that to NASDAQ and has led that at NASDAQ for many years.

2:22And I'm the other end of the bookend because I'm a CEO coach. So I'll be invited. He'd be coming out of the boardroom and I'd be walking in. And I'm here to try to help the current CEO keep her job and help the grooming of the next candidates in the line. But the way we actually met was a delightful happenstance. I think we were at the House of Lords, weren't we, Byron? That's right. I was walking in and he was walking out of the House of Lords. and then what happened parliament okay and what happened you just like really okay we realized that uh we were both at uh in similar orbits and had been for many for at least a couple of decades i think and we were able to validate that do you know who so and so and do you know and who are you going to see well i was going we were just leaving a meeting from uh with lord michael hastings uh who's been a good friend of byron's for many years turns out the three degrees separation don't actually exist.

3:19We had the same ecosystem. I'm sure you did. And it is such a small world. So and for the two of you doing what you do, how did you not know all the same circle of people? So but it's one thing to kind of meet each other, you know, in this kind of very fancy place and then decide to write a book together. We've had the privilege of doing so much coaching Byron with boards and me with CEOs. And the serendipity was to realize that in all cases, Byron, how would you describe it? One of the main functions of the governance of a board is to hire and fire the chief executive. And my job is to help the hiring piece, the firing piece.

4:01How would you describe it, Byron? I was quite instantly taken. Mark and his wife, Bonita, were together. And you know how you get a sense of people when a couple of together in a professional environment like that, because you don't always, you don't always see it's usually it's social, but they had been in a meeting and I could tell there was something special. And I knew a little bit about Mark before, but, um, but this, this idea that Mark's referencing the, that the CEO ascendancy to being in that position and then the transition that starts as someone becomes CEO, we hadn't focused on it.

4:40I heard considerable lament from board members, this process needs to change a bit. And it needs to be thought of as longer term. I heard one day, an example is in the motor, in the automobile business, it takes about five years for a life cycle of a model. And if we're rotating CEOs every four and a half years, we've got maybe a disconnect there. So seeing afterwards, Mark and I agreed to connect and we quickly found this idea. I mean, it's a bit of the bookends is an image of it, is how we could somehow someday work together. We met, by the way, in 2019. And then since then, what we tested is we started to convene dinners and lunches.

5:27Mark came to a lot of our activities at NASDAQ, helped sponsor and helped host some of those. And we found a quick connection around our relationship and our passion for helping CEOs, both on their journey to becoming and becoming ready. That's where the name comes from. And continuing that forward, particularly in Mark's professional work. Well, I just love that story. I mean, you're just kind of walking by each other, meet and have similar passions, write a book and a great book. So let's talk a little bit about, you know, the CEO role. I think maybe there's a, and I'm on boards now and I work at a VC firm and we talk about having great CEOs all the time.

6:15But I think that there might be a misconception out in the world about what is actual turnover like in these roles? Is it frequent? And, you know, there is so much on the line when you get it wrong, when you're hiring a CEO. And I know the board feels tremendous pressure to get the right person in there. And so talk to us a little bit about like, what's the turnover normally like? And how should leaders be thinking about this, but boards be thinking about this role? Well, the notion that there used to be a belief that you could plan to install a CEO and make make sure they were successful forever for decades and decades in the kind of world that we're looking at today.

6:58There's just so much change and disruption. And I don't think there's a day that you could look in the paper and not see someone leaving. Yeah. Or someone expelled a major event. I mean, it's a brand name. Yeah. Don't get on, don't get on the camera at the concert. We're, we're, we live in a fishbowl. So what, what's authenticity mean in that context? We need to be really evangelizing the development of our people and our brand. And the turnover rate has never been higher right now. And there's so much at stake for a board, billions in shareholder value that can be affected. And then there's been so little preparation, to Byron's point.

7:40It should be a program that's continuous, where you're always developing that next in line to work their way up through the company and then hopefully to lead the company. and yet about a third of all CEOs are interim. So that means they were caught by surprise and they needed to do a temporary fix and lead the company. Well, that also creates further disruption. I mean, Byron, when you're thinking about that turnover, we were talking a little bit about that earlier in some correspondence today about the impact on the company and how disruptive it is. And it's impact on that person's life. Yeah.

8:13Meaning that I never want us to lose and try to emphasize, you know, I work for a CEO now, having been a CEO and a smaller company, but that person has a difficult job. And are there ways in which I can help make that job easier, better, elevate the integrity, help foster the culture that helps to provide that trust framework that's important in an organization? Because CEO, particularly in a large organization today, very busy person, and they have choices every day and we can help augment those choices. So part of the readiness process is I think those who are interested in possibly being CEO someday, are you augmenting or are you undermining is one start.

9:09Because there's also that egotistical approach where you're thinking, oh, how do I get there quicker? Yeah, I can be that. I can do that. It's easy. To your point, it's a very hard job. And it's, I think, a very lonely job. And, you know, I do CEO coaching as well. And I work with a lot of founders. And the weight of the world is upon them. You know, you have shareholders, you have employees, you have decisions, you have millions of dollars in ARR on the line all the time. So what's this, can you give us like the, we'll talk a little bit about the loneliness and who should be ready for this. But talk to me a little bit about the augmenting part.

9:48Like, you know, do you really want this job, right? Or do you just think it's like a thing that you need to check off the bucks? Because I don't think it's for everybody. I was talking to Arthur Levinson, who's Apple's chairman today. And he was recruited by Steve Jobs to join that board, then became chairman of Apple. And he was running Genentech. And twice, he faced just the crisis you're describing, Jessica. And that is that, is this really a job you want? He says, I am a scientist. I came here to cure cancer. I have a mission. Bob Swanson, who was founder of Genentech, had one of those cancers and actually didn't see the dream fulfilled, but was able to fund it.

10:29And it took several tries to convince Arthur to become CEO of Genentech because he said, I belong in a lab. And I've got many, many people that I'm working with. I'm collaborating with them. I really want to fundamentally change the way we see certain cancers. And he was working and making progress on that. And then he visited many times with the board, but the most effective meeting was with his spouse on both occasions when she said, OK, so if that is really your objective, how best do you think that could be served by Genentech being a great company and having great scientists and that you understand them better than anyone?

11:06So one of the chapters in our book is completely focused on this idea that really great, capable people, being a CEO isn't for everybody. And I think, Byron, correct me if I'm wrong, but I think some of our best candidates are the ones who actually check themselves in the mirror before they decide to go ahead with this. Because there are a lot of tradeoffs and a lot of sacrifices. As you say, it's lonely. It's risky. It can take you away from what, in Arthur's case, was his core mission in life. And yet it also could be, and hopefully is, the most rewarding gig of your life in being able to have, creating more permanent, lasting place for that organization.

11:45But I love it when I hear people doubt themselves first. That's what, as a coach, you'd hope the most is that you have the humility to say, so what will this really take? Rather than just being a prize to be won, it's a job to be done. As Anita Thompson, my spouse that Byron referred to, she's a professor of organizational leadership and an author as well. She sounds smart. Our best material comes from. Well, most of, yes, I think that's true for my husband as well. Jessica, you know, we hear this often mentioned, this concept of imposter syndrome. That's in there. But if we stop and think about it for a minute, there's a quick antidote to imposter syndrome, and that is humility, as Mark was mentioning.

12:27and not trying to make oneself something that we aren't. We're not little gods. We're human beings, and the difference between us is much more slim than it is wide in terms of we try to widen the chasm, but we're between, say, a CEO and somebody who's working on the line somewhere. I've met people that they've just chosen not to be CEOs. They could have been, but it's a lot. But importantly to this point is that having good friends, having maintaining integrity, having people in the organization that you can rely upon to have honest exchanges. The trend that I am seeing is in the boardroom and in the C-suite.

13:16More interaction and more authenticity in that interaction drives a more high performance an interesting culture because you're almost always going to have a few people vying for that next position. But are they vying for it in a way of high integrity or are they vying for it in a way that they're trying to undercut or undermine the other? Fostering a culture that the best person wins and the other person even loves the fact that they want to use Arthur Brooks' language today. He's talking a lot more about love in the boardroom or in the C-suite or in the business. I think it's fascinating to hear that kind of language being used.

13:59I love that. I actually started using that at Netflix because we were a very critical culture. We didn't celebrate very often. It was always like, okay, well, that was fine, but what can we do better? What can we do better? And I was like, we need to give love to each other on our strengths. And I think we often forget that. So I'm glad that that's happening in the boardroom because I think boards need a little love. All boards are different, and all board members can be a little different. They all have things that they are interested in or the thing that they want to push on. And there's different independent board members versus some of the VC board members that come on board that are investors.

14:42But what do you think? And I think self-awareness is such a critical part of being a great leader in general, but especially a CEO and humility. But what have you guys seen in the pattern recognition that you have of great CEOs? What is it that sets them apart from some of the others? Because there's obviously average CEOs that are fine, but then there's exceptional CEOs. What is it that you find in the exceptional CEOs? I found that for years now that the thing that makes a difference is that they are really believers in developing people and the teams that they bring together that can collaborate at scale because nobody does anything worthwhile alone.

15:28Nobody. And in that job, it's not about being the subject matter expert. It's now being the kind of chief facilitator and chief guide, sometimes architect, and someone who really loves the people on the team enough to help them grow into the roles they have and has the humility to always hire people better than themselves in each of those functions. Yeah, that is very true. They often don't do that. I think we were generally pretty good at that at Netflix. In terms of, I guess, succession and kind of talking about hiring the team beneath you, many companies don't do this well. It's very, very hard.

16:09And a lot of boards try to have a plan. A lot of companies try to have a plan. You sort of have your up and comers. But I have found that in succession, it's rare that there's an obvious one for the CEO seat. There's some contenders, but they're not quite ready. Maybe they could be ready. We have an interim plan. We might have to go external. Yeah. Byron does a survey that he started many years ago. He might talk a little bit about how, and I was shocked to hear the data on it, even most recently coming out of NASDAQ about, I think, only half of companies have a succession plan and only half of those can actually send you a copy of it.

16:51Yeah. We do an annual governance pulse kind of survey out to boards and CEOs and the need for succession planning is in high demand. But I do think that it's trending that we're starting to understand this. And the erroneous ethos of succession in the past was that it was some sort of tapping. Yeah. A tapping ceremony. You know, there was almost some sort of anointing, exactly. And it needs to be, and the best are now engaging this as ongoing. So it never stops because it'd be very sad for a company to lose their CEO in an emergency circumstance and not be ready because there's a whole line of people waiting to say, what?

17:42Wait a second. You weren't ready for this? Like, which part of emergency don't you understand about the whole, we use the term getting hit by the bus. It means a lot of different things all the time. So it's these realities that set in in the boardroom and they're saying, we've got to do this better. So it's an ongoing transition period of periods in the life cycle of CEO-dom rather than it's stop, start, stop, start. So this whole idea of a continuum that has periodic transitions of a new person coming in and building that as a part of the ethos of the board, that it is a planning process that's ongoing and revisited every year, sometimes a couple times a year as it draws near.

18:29Other times a little more drawn out if you've just ensconced someone, probably things have changed enough that you need to revisit the emergency plan at least once or twice a year in a formal function where it's in, we approve this plan and we can go to the street with it if necessary at some point in the future. A couple of people who are heroes of mine that do what Byron's talking about, and they've institutionalized it. So it kind of takes the ego or the urgency out of it in the sense Enrique Lourdes, who I work with, as he was being, he was on the short list to become the new CEO of HP. And they've gone through their cycles and transformations.

19:10And he's done an amazing job since he was in seed. And what he institutionalized was this program where there would be senior executives who with the high potentials who would always be in the running to be elevated because it's not just the CEO, it's everyone else in the C-suite and beyond. If they're moving up from the inside, everybody needs to have that anchor, that solid successor in that succession plan so that it isn't up to him or the priorities of the day because there's always a crisis, right? There's a big capital allocation thing or there's often, well, he or she's not leaving a CEO for a while.

19:45So, yeah, we have the backfill. If they get hit by a bus, we'll put this person in there. But he wanted to take that off the table and say, hey, we have a continuous process. And as a part of Byron's governance with the board of looking at succession plans with some frequency, it's institutional at HP. Same is true as at Best Buy. Corey Berry is not going anywhere. She's the new Best Buy CEO who filled very big shoes of Hubert Jolie. And they said, no, we're institutionalizing this pipeline so that we aren't going to get caught like everyone else when the shit hits the fan. Yeah. Yeah. I mean, I think it's so important.

20:21And I was on a public board where we, I wouldn't say it was institutionalized, but we regularly did it once a year and were reflective on it. And we certainly were at Netflix. I mean, Reed was a – but often it's, you know, it is kind of morbid to do the hit the bus thing. I would always get a little sad. I'm like, Reed, I don't want you to get hit by a bus. I want you to be with us forever. But it is important. And I think it's important to recognize those that may be in the pipeline so that you are developing them and you're getting them that access to that type of work or you're getting them access to that type of coaching.

21:05So that, again, you're not anointed. It's not happening. but if it were to, you might be ready. Reed was one of those, I think, more gifted in that regard because here he is larger than life. He had another partner who was a big part of the founding of Netflix and today you've got co-CEOs there who are with us and they both were tested through this kind of pipeline of leadership development each who are part of some of the biggest crucibles and transitions of Netflix. Yeah, they were. And when we first started talking about that transition, you know, me and Reed, I was like, they're not ready.

21:43But we really did come up with a plan to, you know, with coaching and with things to, and then, you know, I think people think that sometimes these things are, you know, sort of decided in the moment and then they happen. This was something that we thought about for. Very intentional. Five, six, seven years, you know? Yeah. Okay. So you talk about the first hundred days being so crucial. And let's say, you know, we're a board, we're a company, we just got a new CEO. What do we do? How do we set this person up for success? Well, hopefully part of this ends up being the fact that you've been investing for the last year or 18 months.

22:25It's usually when I get hired by the board members. Or you're thinking, Byron, about this is that the first hundred days should be a reflection of the plan And one of the wonderful drills which you do for candidates and, you know, Harvard Business Review just asked us to write an article about this. They were focused on this idea of how do you really get these people in the right place and in the right mindset and actually do the assessment early enough. And part of it is to write a vision memo, which has a bold vision for the company because every company is trying to go through massive change.

23:00and so that memo is what you actually pitch to be in contention to become ceo and it has a first hundred days and then it has the next thousand which may be just as important because the first hundred days yes that's that's really critical but it's not really a full reflection of as byron often talks about with boards you're playing a long game and you're building a company that can really drive change for a long period of time. What do you think, Byron? Well, and I'm not a CEO coach of official capacity. So this is a third party overview, even though I already like you. I think you qualify as a CEO coach.

23:43I already like you, Jessica. So I imagine you do a great job, but I know what Mark does and I've gotten feedback on what Mark does independently. I would emphasize that if you want to be in the game today and you're thinking about that 100 days, to Mark's point, you need to have had a coach for a year or two or three before really preparing you for that vision and testing it and helping you stress test that vision. Because to, I think the implied point, that 100 days, it's like a 100-yard dash for a hundred days. And the exhaustion level, if you're not prepared, could wear out some people and it takes them a while to recover.

24:28And I've observed people, and Mark and I have talked about this, that when they look at it with that approach and they've got the support of a coach and they've got the support of the other teammates behind them, it's a much more relaxed than overly stressful environment. It's a great point. When you think about elite athletes, probably that's the easiest metaphor because the game is won before you step on the court, right? I was one of Venus's coaches. She'd have four at any given time and one for business. And I served in that role. And it was really clear the preparation didn't come in those hundred minute games.

25:05So they came leading up to it. So you've got to perform on the court. The issue is, have we reinvested as to Byron's point in that person so that we actually have a prayer of success in that sprint in the first hundred days. Yeah. So how, so if, well, I'll ask this question because sometimes you get to promote from within and sometimes you have to hire externally. It would be hard to have that type of preparation if you got an external person. You need to run them all through the same test. So the focuses of the article that we just wrote, they were kind of fascinated because I was saying the headhunter now is also playing a huge role as one of your key jurors in selecting you.

25:45And so they run the internal candidates and the external candidates through the same psychometric testing, business scenario testing. They all have to pitch the board with that five-page memo on the hundred days plus a thousand days. And we were just advising Byron and I in this article that we were also impressed by those who took even a bolder look at selling the future by behaving like an activist investor. So you're right. Activist. Yeah, exactly. Because it's inevitable, you're going to get, if you aren't leading the change, somebody's going to help you with that. Whether you want it or not.

26:27so everybody gets the same test and it and it's still why most more than 70 75 percent are hired from inside for the reason we're just talking about here because there's more context there's you can run more drills but the outside also has the appeal of being the the great hope the knight in shining armor who may or may not metaphorically have done this sort of transforming. Somewhere else, right. Yeah. There's kind of an extra sex appeal around that external candidate always because you don't actually know how clumsy the executive was as you do the internal executive who had to pull up here. Yeah, you know where the bodies are buried.

27:11Is there, so 75 % are promoted from within? Yes. Okay. And is there like, Like, is there a success rate that you see from external versus internal? Is it more, do you have a higher success rate doing an internal promotion or is it kind of about the same? It's a little bit higher because for all the reasons that we've described, there should be more context. Yeah. They know the culture. They know the people. Right. Right. What in that hundred days? because I was just imagining like if I was a CEO and you know, you kind of are this, like when you get anointed, everybody, whether, and I tell CEOs like this all the time, like whether or not you think so, now you are God-like, you know, because everybody is looking at you as like this God, this person who knows it all, this savior, and you're not.