The importance of identity in a CEO

07 September 2021
Why hiring leaders over managers is crucial in securing the more intangible drivers of success

Selecting a CEO is the most important decision a company can make. It is the quintessential role of the board and one which, if made incorrectly, can make or break a firm. In the worst of cases, it can bring down an entire market.

The selection process for CEOs considers both an individual’s tangible and intangible skills. On the tangible side, the requirement boils down to one simple question: can you generate revenue? On the intangible side, it is: can you lead? Unfortunately, boards can miss both.

Particularly tricky to identify are the intangible qualities of leadership. In essence, our leaders define us; they give us identity.

One of the great oxymorons of our existence is that our groups often define our personal identity. To say “I am a navy seal”, “I am an artist” or “I am an author” is to subject ourselves to the identity of all those who have gone before us in the same profession.

When someone accepts a job, they make a statement about their identity as much as making a living. The same is true when someone quits a job.

While the resignation may often be cloaked in a salary change or new title, it is in its rawest form an identity statement as the employee says, "You are no longer part of my identity. Your values and direction are not who I am, and now I am leaving."

Top job appointees

Boards and CEOs often miss the point that the expression of identity can be key to peak performance. When boards hire managers over leaders for the top job, they can readily subjugate their companies to banality and mediocrity at best or, at worst, herald the beginning of their own end.

A glance across the leadership landscape of the Middle East reveals the tendency of boards to promote their chief financial officer into CEO roles. While this practice can be a sound decision in an inefficient market, it can be a death knell in a highly competitive market where the only mantra to live by is “grow or die”.

Today, companies need innovative revenue growth that only comes from a clear sense of identity and direction. Yet many have CEOs who are simply doing the bare minimum not to get fired.

Their personal identity is not tied to their profession, and they will often say, “I have a life. My work does not define me". For most of us, unfortunately, our work does define us. It, in fact, defines entire regions – take, for example, the winemakers of France.

CEOs who do not have alignment between their personal and professional identity will never beat the market. They will always float with the economic tide and boast stratospheric results when the economy peaks and whine about losses when the tide recedes.

Market winners

The DNA of rocket-fuelled revenue growth is identity. Take the case of Chobani, the yoghurt company started in 2005 by an entrepreneur named Hamdi Ulukaya.

His friends thought he was doomed for bankruptcy after he took a loan beyond his means to buy an abandoned Kraft yoghurt plant in New York. Yet by 2011, the business was generating well over $1bn a year.

It seems like an anomaly from the outside, but in reality, Hamdi comes from a long line of yoghurt makers. His Turkish grandfathers were yoghurt makers, and it was a craft intimately tied to his identity.

The streets are lined with similar examples of companies that beat the market. When you look down the chocolate aisle, remember that Frank Mars is the founder, a man who had polio as a child and could not walk.

He sat in a chair in the kitchen and watched his grandmother make chocolate. When he recovered, he resolved to become a chocolatier himself.

He wrestled with bankruptcy three times before inventing the Mars bar, which became one of the best-selling chocolate bars of all time.

The average person would quit in such circumstances, but Frank Mars pressed on. Each time, he started back up. His character is marked with unusual tenacity – a tenacity that was seeded in his identity itself.

The logic of empirical analysis would not sway Hamdi and Frank; their performance was an expression of the identity rooted in the generations who came before them.

Recruiting leaders

To drive a team to peak performance, a CEO must tap into their sense of identity. When real value is created, its precursor is almost always founded in a group of professionals on a journey of becoming.

As companies and boards now lean into the future, it is paramount that they ensure identity is part of the epicentre of any CEO assessment programme. The top job is for leaders, not managers, and they must be committed to hiring leaders who can answer the core questions of who we are, what our purpose is and where we are headed.

Boards that hire CEOs who have alignment between their identity and their purpose will, just like in the journeys of Chobani and Mars, reap an alpha of profitability well beyond the beta of the markets.

Find out more about The Phillips Group here

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