Why would a CEO seek external advice?

For many reasons an external consultant is the best friend a CEO can have.

By YOHAN ALBO
January 24, 2018 18:34
Top Israeli tech executives talk

Top Israeli tech executives talk. (photo credit: Courtesy)

 
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Running a business is tough, no matter what the industry, the composition of the product line-up or the maturity of the firm... and sadly it's a lot less sexy than it seems...

From a bottom-up perspective, being a CEO entails being ultimately responsible for all day-to-day management decisions and for implementing the company's long- and short-term plans.

From a top-down perspective, however, the CEO acts as a direct liaison between the Board and management of the company and communicates to the Board on behalf of management.

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The CEO bears full responsibility for a company’s success or failure but is, in fact, unable to control many factors of what will determine results. He or she needs to navigate through a long journey of imperfect decisions, be sharp and practical, and know how to stretch reality in the interest of the company. He or she also must know to ask the good questions, both inside and outside of the organization, know how to decipher and integrate the contradicting signals, know to build and kill initiatives quickly, know how to hire and fire, and the list of skills goes on and on.

In most cases, the CEO knows the business inside-out and may have spent months or years building a strong management team. So why in the world would a CEO seek external advice? 

Here are some excerpts of reasons gathered as part of post-project surveys from our CEO clients: 

·  Get a new perspective - Knowing the business inside-out has its "other side of the coin." When being deep in the day-to-day operations or  constantly surrounded by the same group of people, CEOs will most likely not see innovative opportunities. They will tend to repeat sub-optimal routines to solve a specific problem encountered in the past. Bringing someone in that could have a fresh look at the known issues and offer a new perspective on how to tackle a given problem could definitively offer a true boost, and even re-energize an initiative.

·  Work with someone whom is not involved in day-to-day politics of the organization and has no agenda - From experience, it could take some time to reach the right level of trust while working with a consultant, but for a CEO to be able to tell the Truth (with a capital "T") with no frictions or unnecessary storytelling, no matter how ugly, is not only orgasmic (no less), but also key to truly mapping all the existing alternatives present in the solution space. Being able to isolate and formulate a specific problem and all its implications to someone you trust, and you know will not judge you is half the problem solved. Furthermore, in some cases where the CEO needs to deal with sensitive topics, such as succession, major re-organization and project reshuffling, or how to re-energize the senior team, it may not be appropriate to involve or consult with his/her senior management team for obvious reasons.

·  Not to have to manage the consultant - Working with a clever and performing consultant on a specific area in the long run could be fun; you focus on one thing only: getting the value you need... you don't have to care about career development, incentive schemes, formal performance reviews, or personal conflicts with peers... and the icing on the cake is you don't have to go through the heavy bureaucratic processes to get him/her on board or to terminate the collaboration.

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·  A pretext to stop the day-to-day, and think strategically - Sometimes the external advisor is only a necessary pretext to get out of the office, clear your mind, and focus all your brainpower on a given task so you can reach a decision. The consultant could be leveraged for the initial data collection and for facilitating the decision-making process. For instance, a general manager we have been working for has insisted on having our weekly sessions in our Tel Aviv offices, despite the fact he had to drive 40 minutes.

·  Leverage external capabilities for a predetermined period - In some cases, the CEO and his/her management team don't have the expertise to address a specific issue. No worries... no-one knows it all... This is also a common practice to reduce execution risk for first timers or unusual corporate events: the first acquisition... the first time dealing with a new regulation, an IPO, a de-listing event, etc....

·  Handle unpleasant processes , such as staff reduction, more effectively - Most of the time the external advisor is not emotionally involved in the process and can help you look yourself in the mirror and make the agonizing decisions promptly. In terms of execution, in the case of a re-organization or a staff reduction process, acting fast is a decisive factor in making the process less painful for the firm.


· 
Being told you are on the wrong path - Assuming you are hiring a good consultant that doesn't believe "clients are always right," the consultant will tell you when heor she  thinks you are wrong despite the fact you are paying him. Personally, it happened many times, I told my executive clients what I believed was in their best personal interest despite their originally expressed views. If the consultant is capable of showing you the data that backs up their point, you can save a tremendous amount of money, time and energy. Due to groupthink and their personal agenda, your direct subordinates will tend not to fight too much. This obviously depends on culture... I had the chance to work in many countries... In Israel, for instance, people will tell their truth whether you would like to hear it or not ;-)

·  Get very long hours during a condensed period which you may not be able to request from your existing
managers -
 The short-term nature of the relationship could have its virtue. Don't push too much on this front though,

 

In conclusion, as a CEO, and in business in general, time is never on your side. Being able to leverage a trusted external advisor could be a true game-changer to generate the outstanding results you are looking for, only faster.

The author is the CEO of DataToCapital Consulting, an active member of The Israel Advanced Technology Industries (IATI) Association and of The Israel's Directors Union. The company offers strategic solutions for CEOs, boards, executives and start-up founders.


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