Why are some CEOs so disconnected from reality?

A friend of mine recently asked me: Why are some CEOs so disconnected from “reality?” In this context, reality is defined as field level information. My immediate thought was to explain that CEOs shouldn’t be disconnected. A good CEO would understand his/her company from the field level and up. Then it hit me.

First, let’s change CEO to Sr. Leadership. Then, use Sr. Sales Leadership for illustrative purposes. You can apply this to any function. Next let’s consider opportunity cost and focus.

How does this disconnect happen?

As you move into a Sr. Leadership position, your goals & objectives expand beyond your specific functional task - “sales.” You are now creating strategy, developing tactics, managing people, operations, HR related issues, budgets ... etc. Your breadth of responsibilities expands as you move up.

When your breadth of responsibilities expands, there is less time to focus on specific functional tasks. For this sales example, less time increasing sales and delivering on targets. The Sales Leader has to balance his/her time. Trade-offs happen. Less time on one item or person and more time on another – opportunity cost.

Why is it OK for less connection to the field as a Sr. Leader moves up the organization?

In this paragraph I’m going to layout my current though process on why it’s OK for the field level connection to decrease. Later in the post, I’ll explain a few ways to manage or mitigate the disconnection.

1) As a leader moves up, the dollar value of their decisions should increase 

The numbers listed below are illustrative. Your values and ratios would depend on your company strategy, plus the span and layers of your organizational structure.

As an example: Company A sells a product at a value of $100 per item.  This company reaches $100 Million in sales per year.

If I’m a CEO of Company A, my breadth of responsibilities is immense. I need to focus my attention on sales decisions that are higher dollar value. If I’m a field sales person, I sell a product and manage a territory. I focus my sales decisions on lower dollar values. For this simplistic example, I'll use a 10X value system. 

Dollar Value for Decisions

  • Field Sales: $1-100
  • Field Sales Management: $100-$1,000
  • Regional Manager: $1,000-$10,000
  • Regional VP: $10,000-$100,000
  • VP: $100,000-$1,000,0000
  • CEO: $1,000,000-$10,000,000

 

2) You DON’T want Sr. Leaders making field level decisions if they are disconnected. 

  • Remember, breadth increases, time on a specific function decreases, and trade-offs create opportunity costs.
  • This leader wouldn’t know what’s going on at the field level. Why ask them to make a decision specific to the field?
  • It would take too much of everyone’s time to catch them up to speed?
  • The opportunity cost of that time would negatively impact the entire organization
  • They have historical depth in sales, but not day to day
  • You want the power and ability to make these decisions for your own career, development, and recognition

These two concepts are actually simple. As the sales leader moves up, the value of the decisions increases. As you move up, you want the power and ability to make decisions without the influence of a disconnected leader. Even though these are simple, the disconnect is still frustrating.

5 ways you ensure the disconnection doesn’t negatively impact the field and company? 

1. Empowerment: Your organization needs to develop a system or process that empowers each layer with the ability to make decisions based on their respective value. Understand your talent. Recognize their abilities and give empower them. If you aren’t comfortable with their decision making abilities ... develop, train, or attract better talent.

2. Field Visits: From the CEO level down, leaders need to visit each layer on a semi-regular basis. Connect with each level. Try to understand day-to-day operations as much as possible. Be present. Listen and learn.

3. Voice of Customer: Conduct internal and external voice of customer (VOC). Yes I did say internal too. It’s just as important to understand how the finance team is serving the sales team. Cross-functional relationships impact the entire organization. The VOC process will change a little bit depending on if it’s internal or external.

4. Data: Stop making decisions purely on “experience” or intuition. It’s fine to use those as qualitative factors, but clean data doesn’t lie. Collect data at all levels, internal and external. Find ways to simplify, track, and improve those numbers.

5. Reduction of Layers: Determine if there are too many layers. This goes hand-in-hand with empowerment. The more layers of management, the greater the disconnection. The more layers of management, the harder it is to gain feedback.

6. Cross-Functional & Multi-Level Meetings: Hold quarterly meetings with a cross-functional & multi-level group. Ensure all functions are represented. Make certain you have employees from the field level to the c-suite. These meetings are action-oriented. Goals: 

  • Gain feedback
  • Work on challenges
  • Create open-communication channels across the organization

Every organization is different. You’ll need to develop your own dollar value decision-making ratio. Empower your people. Allow them to take on more accountability and responsibility. If you aren’t comfortable with empowerment, consider training or upgrading your talent. Hold cross-functional and multi-level meetings, but make sure these are productive meetings. Solve challenges with this group. Create open feedback channels.

I hope this post helped. Feel free to give me your thoughts or feedback. This subject is something I’m still exploring. I’d enjoy hearing your thoughts.

Stewart

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