The book of the month – April 2001: “The Mind of the C.E.O.” by Jeffrey E. Garten

News categories: the New Economy economics, enterprise and business strategy, strategic enterprise management

“Companies are an integral part of the societies in which they work”, said Sir John Browne in the fall of 1998, CEO of British Petroleum (now CEO of the merged BP Amoco companies). “We don’t make our profits and then go and live somewhere else. This is our society, too. The people who make up our company are also citizens. They have hopes and fears for themselves and for their families. Companies that want to keep operating successfully have to uphold their employees’ values, just like their customer’s values. We cannot isolate ourselves. We have to be engaged in public policy issues. We have to be constructive”. But “only a profitable corporation can think about being a social enterprise, too” – as Jürgen Schrempp, chairman of DaimlerChrylser put it.

Top executives of global companies lead organizations with enormous reach. They therefore have a crucial impact on economic growth, employment, technological development, and the environment. They can be a progressive force in building capitalism around the world or they can constitute a rearguard action against political and economic change. Jeffrey E. Garten believes, that their influence will be at least as important as that of national governments and international institutions. There is a tension between the various jobs that chief executives have to perform as they scramble to lead their companies and as they come to grips with their changing positions in society. They need to enrich their shareholders with an ever-rising stock price, quarter after quarter, while paying increasing attention to “stakeholders” – customers, employees and suppliers on which the long-term value of the company depends. This tension will shape the third industrial revolution that we are all living through. How do the requirements of running a highly competitive and profitable company interact with other pressures on CEOs to build a better global society ? In the real world, CEOs – particularly the kind interviewed for this book – are required to play roles beyond the narrow scope of their businesses, if for no other reason than that their companies affect the live of so many people and communities around the world.

This means that CEOs will not only have to run profitable companies, but they will need to build great institutions that provide customers with superior products and services, create high-quality jobs, and in the process make life better for the population at large. They have to understand the economics of the knowledge and information based New Economy and they will also have to devote far more effort to helping to devise the rules under which twenty-first century trade, finance and communications systems will evolve, and to lending a hand to build the institutions that will be the global counterpart to the arrangements on which national economies rest.

Based on extensive and highly personal interviews with forty CEOs around the world – people such as GE’s Jack Welch, AOL’s Steven Case, Newscorp’s Rupert Mordoch, BP Amoco’s John Browne, Nokia’s Jorma Ollila, Toyota’s Hiroshi Okuda, and DaimlerChrysler’s Jürgen Schrempp, Jeffrey E. Garten takes you on a journey into the innermost thoughts of the world’s most powerful corporate managers. And the results are surprising:

- Global CEOs are not nearly as powerful as many people think, nor do they see themselves that way. Many are overwhelmed by the complexity of what’s demanded from them.

- The real Internet wars will not involve the dot-coms but will be fought among the traditional corporate titans.

- Many global CEOs are complacent about their international strategies; they know less than they think they do.

- Corporate success in the future will require much more than creating short-term value for shareholders. Most top executives will have to devote more attention to employees, customers, suppliers, and communities – but achieving the right balance is nearly an impossible task

- With creative and expert workers more important that ever, keeping employees’ trust and articulating clear values are increasingly crucial. But in an era of restructuring and layoffs trust is increasingly hard for CEOs to win.

- For CEOs to thrive, their visions must be increasingly bold, and execution increasingly flawless. But the bolder the vision, the more difficult the execution.

- CEOs need to take a much stronger role than most now contemplate to create the framework of globalisation – to manage the environment, train workers, and design the rules and institutions for trade, finance and communications. Otherwise globalisation will end in chaos and anarchy

Jeffrey Garten’s ideas are a challenge to those who are suspicious of corporate power, those who belive CEOs should focus only on enriching shareholders. They will be welcomed by anyone who is wrestling with how to make globalization work better, and those who genuinely seek ways for multinational corporations to exercise the citizenship responsibilities that come with vast economic power.

“The Mind of the CEO” is a must-read for anyone interested in the business world today, and not only for its elite either. Its not just for CEO aspirants. It gives a deep insight into what challenges a CEO faces in his daily life and how those challenges will change with the new economy once everything settles.

Jeffrey E. Garten is the Dean of the Yale School of Management and monthly columnist for Business Week. He was previously Undersecretary of Commerce for International Trade in the first Clinton administration, and before a managing director of two Wall Street investment banks.

The Mind of the C.E.O.
by Jeffrey E. Garten
Hardcover - 224 pages (January 2001)
Perseus Press; ISBN 046502615X

More about about New Economy Economics and Management Best Practice in general, and about other related topics will be continued here in my newsletters. To subscribe for my free-of-charge e-mail push newsletter click here.

… feedback

… more books recommended by Juergen Daum

Back