The Most Important Distinction A CEO Makes

As CEO, be explicit about the state of conflict you face, and only go to war when it’s fully warranted.

“The board looks at us like we are the Navy Seals,” the executive told me. “We agree on a number and go get it—year in and year out—and we need someone on the team to soften that view.”

The exec was looking for a “softener” in the form of a person who could put a strategic wrapper around what amounted to a reputation for being single-minded financial performers. The Navy Seals comparison might have even been a little strong since the half-dozen or so Navy Seals I know would say that frogmen rarely just “follow orders.”  That’s what the Marines do, and they do it well, but it’s not as sexy to compare yourself to leathernecks.

But I digress. The gist is that the “person” the executive was looking for would be sorely misplaced. Let me tell you why.

Wartime vs. Peacetime

When it comes to C-level executives, there really are two different leadership mindsets: wartime and peacetime. This is covered very well by author, venture capitalist, and former CEO Ben Horowitz on his blog, here. I’m going to take a slightly different angle than Ben and say that a great executive can dial up both mindsets, but he or she has to be explicit about it. Specifically, in wartime, there is no tomorrow, and in peacetime, it’s all about tomorrow.

I write a lot about respect and healthy strategic outlooks for high-performing organizations, but I don’t spend a lot of time on financial and value-based performance. Why?  Because it’s a prerequisite; If you don’t create value or enable it as an executive, you’re probably not going to cut it. As I wrote nearly a year ago: Performance is the prerequisite. The latest management article on how mindfulness unlocks your team’s performance is all nice, but financial performance is where the median CEO is going to be evaluated. So, balancing performance needs and organizational “health” is, fundamentally, what value-based strategy is all about. In the purest sense, and in the short term, performance and health can be highly conflicting, and that is why executives—really leaders of any stripe—need to manage the balance, which is where the wartime/peacetime mindset conflict comes into play.

A wartime mindset means that decisions get made, by me, every day. It means I don’t have time for debate and discussion, that emotion and, yes, intensity are a part of the puzzle. In wartime, there is no comfort in comfort—it’s win or else. You fight through injury.  You forego pleasantries. Wartime mindsets are most appropriate in business during times of economic crisis, customer crisis, or product transition/launch/retirement, during deals, and, most importantly, during times of competitive attack. As Horowitz puts it, during times of existential threat.

In wartime, a leader makes an objective or else. Take that hill!  Hold that beach!  Cut 50 FTE!  Close that deal!  They are all the same. Mind if I curse? Was I rude? Oh, you didn’t like that I threw that document on the table? It bothers you to have to work past 7?  Comes with the territory. It takes a strong stomach. Suck it up. It’s wartime.

A peacetime mindset is one of building. It means that studies can be done. It means that I might defer a decision for a year (or more in some companies) because…bluntly…I don’t have to make it. It’s where investment and improvement come into play. It’s the mindset that focuses on people’s careers, the future of the company, and the weaknesses that need to be addressed (but not until the next employee conference). As Horowitz puts it, it’s the time to “focus on expanding the market and reinforcing the company’s strengths.”

It is a mistake to think of wartime as better than peacetime. They are different, and executives must understand the difference. Some will be much better leaders in peacetime than in wartime, although that’s beside the point.

What’s important is that great companies are built  with a peacetime mindset and sustained with a wartime mindset.

And so, the most important distinction

Executives, especially CEOs, must be explicit about the state of war a company is in; that distinction drives all others. Why must the CEO be explicit?  Because it’s not always obvious to others in the organization. To use the U.S. military’s old DEFense CONdition ratings:  When the CEO is at DEFCON 1 (signaling nuclear war) and the organization is at DEFCON 5 (signaling peacetime), things get discombobulated.

A CEO might be at war based on things the CEO and only the CEO knows, while the rest of the organization might be at peace because, well, things seem to be going well. This is a recipe for disaster as the CEO continually churns through people, disregards ideas,  and thinks short term without real rhyme or reason. If you operate as if it’s wartime and everyone thinks it’s peacetime, you will demoralize your people. CEOs who have overweening focus on the short term (layoffs, cost cutting, and general pressure) while extolling their company’s strong financial performance year in and year out run into this problem. They create cognitive dissonance in the organization.

A CEO might be at peace in an organization that knows it’s at war, and then the opposite thing happens: the CEO is fiddling with transformation or branding while the customer base is burning. If you operate as a peacetime CEO and everyone thinks it’s wartime, you will lose credibility quickly. There’s a reason we still talk about Nero: a CEO who fails to acknowledge that there are existential threats will lose his or her organization.

That is why leaders, CEOs and others, need to be clear on how they view their worlds. They need to be clear that DEFCON 1 behavior (slashing product lines and replacing people) is only warranted by DEFCON 1 threats, so they need to get people on the same page. Everyone also needs to be clear when DEFCON 5 behavior (delaying decision on a project viewed as critical by others or by a faction within the company) is warranted as well.

This is the most important distinction a CEO will make in the day-to-day operation of a company:  Wartime or peacetime.

A cautionary note on “artificial” wartime

Yeah, but we want a team of warriors, you say. So you continually keep the pressure on through artificial means—even lying to people about the true state of things to make them seem more dire—in order to ensure that people keep an edge or a warrior mindset.

I get it. It’s sexy, like saying you’re a Navy Seal. But it’s also dangerous.

From analyses on the topic of combat fatigue, it’s a known fact that normal people cannot sustain a wartime mindset for an extended period of time. Those who are in active, continuous combat for more than a month generally start to lose effectiveness. Those who are in active continuous combat for more than a couple of months typically become psychiatric casualties. This is true in actual combat, and I’d propose that it’s true in figurative combat.

Dave Grossman, a researcher on the science of combat and killing, outlines from an earlier study that after the beaches of Normandy in World War II, 98% of soldiers who survived constant combat for 60 days had become psychiatric casualties. The other 2%?  They were characterized as “aggressive psychopathic personalities.”

Let that sink in for a second.

The negatives of manufacturing a wartime mindset for your organization are legion. Not only do you (1) place focus on survival vs. building as outlined above, you (2) create an environment in which normal people struggle to thrive for any extended period of time and (3) facilitate the rise of psychopathic personalities who actually can handle the sustained pressure.

It makes no difference whether the artificial pressure is placed by the CEO herself or by some proxy, another C-Level executive or consultant tasked with “cracking the whip” so that the CEO can be the good cop.

So, be explicit about the DEFCON you face, and only go to war when it’s fully warranted. Again, this is the most important distinction you will make as CEO.

While executives (like the one in my opening story) may recognize that their boards see them as mercenaries who propagate a state of war because they act like it, they can’t solve that by adding peaceniks to the team; the peaceniks won’t be heard if the entire organization is charged for combat or thinks the C-level executives only expect combat mentalities. Culture, as I’ve written before here, will crush even the best change agents. The executives have to acknowledge—themselves—a credible state of war or peace within the organization and actually live it out.

And if they can’t change?  Well…