The most successful business leaders consistently recognize opportunities,
pursue the right ones, identify and overcome obstacles, manage
potential risks and mobilize their organizations to act. These executives,
according to Jack Welch, are “constantly looking around corners, anticipating
and ‘smelling out’ issues.” And he says, “Asking the right questions
and anticipating problems is a big aspect of leadership.”*
Why are some executives better equipped to get at the heart of important
issues and effectively anticipate and manage challenges that arise?
What skills do these leaders possess?
Management theories abound, but years of research and interviews with
scores of successful business executives show that the most effective
leaders possess a quality that we call Executive Intelligence. This vital
component of business judgment and leadership refers to an executive’s
capacity to accurately analyze situations and solve problems, work with
and through people, judge oneself and adapt behavior accordingly.
Having leaders with these capabilities
always has been critical to the success of
companies. In today’s business environment,
where growth is more difficult to
achieve, competition is more intense and
scrutiny of business practices is greater, it
is more important than ever that organizations
identify the individuals who possess
these critical thinking skills and
ensure that they rise to the company’s
key roles.
What is Executive Intelligence?
Executive Intelligence is related to, but
not the same as, academic intelligence.
Academic aptitude in language, math and
spatial reasoning, which are measured
through standard IQ tests, has little relevance
to many of the day-to-day demands
of business. As Jim Kilts, former CEO of
The Gillette Company, explained: “Many
of the top business leaders have attended
elite academic institutions, and this education
can serve as a good foundation —
the ability to think critically and understand
concepts. So a doctorate can be an
indication of intellectual horsepower. But
in a business setting, you must be able to
not only generate ideas, but translate
those ideas into results. That is the hardest
thing and requires abilities that go
beyond academic skills.”
Specifically, business leaders must excel
in three areas: accomplishing the tasks of
leadership, working with and through
people, and evaluating their own attitudes
and behaviors and making adjustments
when necessary.
Leaders with a high degree of Executive
Intelligence are able to better assess complex
economic environments and identify
appropriate responses to the key business
issues. They anticipate likely obstacles
to achieving objectives and identify
sensible ways to circumvent them. These
leaders critically examine the accuracy of
underlying assumptions and recognize
what is known about an issue, what more
needs to be known and how best to
obtain the necessary information. They
also are able to examine issues from multiple
perspectives to identify possible
unintended consequences of various
plans.
In working with other people, these executives
are able to recognize the agendas
and motivations of individuals and
groups who are involved in a particular
situation. They anticipate the possible
emotional reactions people may have to
actions or communications. They accurately
identify the core issues and perspectives
that are central to a conflict and
balance the different needs of relevant
stakeholders.
Skilled leaders also are able to look objectively
at themselves. They pursue and
encourage feedback that may reveal
errors in their own judgment. They recognize
their own personal biases or limitations
in perspective and use this understanding
to improve their thinking and
plans for action. They recognize when it
is important to acknowledge their own
flaws or mistakes and make a change,
and when it is appropriate to resist the objections of others and remain
committed to a certain course of action.
In practice, great leaders not only conceptualize
and formulate strategy, but also see
initiatives through to completion. This
requires them to make adjustments based
on new information or early results, understand
challenges and potential consequences,
ask thoughtful questions and
probe the assumptions of others. A senior
telecommunications executive explained it
this way: “Clear thinkers — the ones that
can cull everything down to the right point
— can be very hard to find. But if you get
yourself a team of clear thinkers, the possibilities
are endless. ... They are good listeners
and are thoughtful, and they apply
those traits to any set of issues with which
they are engaged. They have the ability to
listen openly, reflect on varying viewpoints
and rapidly synthesize what is useful or
meaningful when dealing with a particular
issue. They quickly get to the core of a
problem.”
Leaders without these skills fail to question
conventional wisdom or underlying
assumptions, and don’t anticipate unintended
consequences. They do not recognize
the motivations or agendas of others
and how these might impact the way decisions
are made or applied. Finally, they are
unable to look critically at their own biases or limitations in perspective and
make
adjustments.
Understanding the horsepower of the team
The history of business is rife with
examples of leaders who have lacked the
capabilities associated with Executive
Intelligence, sometimes with disastrous
consequences for their companies and
their shareholders:
- Leaders who have failed to recognize
or ignored changing market or
competitive conditions that made
the company’s business model
unsustainable
- Executives skilled in technology and
operations, but unaware of the
internal politics and cultural issues
that threaten the company’s future
- Executives who — intentionally or
not — isolate themselves from contrary
points of view that could
improve their decision making
In today’s volatile and highly competitive
business environment, the risks of poor
decision making are greater than ever.
CEOs and their top leaders must make the
right judgments about market direction, the
competitive landscape, and investments in
products and technologies. When decisions
are made without a proper understanding
of the risks, potential complications and
underlying assumptions, a company may
jeopardize its reputation with customers,
miss important opportunities or misdirect
scarce financial or human resources.
By contrast, strong leaders not only make better decisions themselves, but
also help attract other exceptional leaders.
Together, these executives demand
the best from each other and improve
overall decision making.
As Robert L. Johnson, founder and former
chairman and CEO of Black Entertainment
Television (BET), explained, success in
business does not come down to one person
but requires the collaboration of many
people. “Even the sharpest thinkers need
teams of sharp people around them. And
these high-performing teams develop over
time. It is one of the basic laws of attracting
talent: the more talented people you
have, the more talented people you can
attract,” he said. “You get the highest level
of input in decision making and the best
critique of things you should or should
not undertake when you are surrounded
by such individuals. Once you reach that
critical mass of talent, there’s literally
nothing you can’t undertake.”
In addition, today’s flatter and more dispersed
organizational models require that
people throughout the business operate
at a higher level. “Decision making in
today’s business environment is decentralized.
Decisions are made at a local
level or at a functional or operating level,”
observed Andrea Jung, chairman and
CEO of Avon Products. “You can’t grow a
business around two to three good
thinkers anymore, because your success
depends on quality decisions at every
level — sales people, marketing people,
strategy people and so on. Everyone has
to be able to think smart.”
Certain high-stakes periods in the life of
an organization require even more attention
to talent decisions. At one time or
another, all companies will face a critical
strategic event that raises questions about
the strength of its leadership team. These
events and transitions — ranging from
mergers and acquisitions or a CEO transition
to a new strategy implementation or
reorganization — provide opportunities to
step back and evaluate whether the right
individuals are in each role.
Assessing Executive
Intelligence
Given the importance of making sure the
most skilled executives are in key roles,
particularly in times of transition, how
can companies evaluate the capabilities
of individual leaders and identify the
most promising executives for the future?
Unlike standard intelligence tests that are
written in multiple-choice format and
have only one right answer, the best way
to measure Executive Intelligence is
through a live interview that takes the
individual through a series of situations
that he or she must analyze and make
judgments about. The situations must be
unfamiliar to the executive, so he or she
cannot draw on past experience or knowledge
of similar situations.
The interview format exposes the executive’s
problem-solving approach and the
cognitive skills used to reach an answer.
This is crucial because a candidate’s final
answer to a question is not an adequate
indicator of Executive Intelligence. Rather,
it is the thinking process leading to the
conclusion that exposes the person’s
strengths and weaknesses.
In an Executive Intelligence evaluation, the
interviewer provides realistic business scenarios
and poses questions that call for
the use of certain problem-solving skills.
For each scenario, the individual analyzes
the situation, draws a conclusion and justifies
his or her reasoning. In a sense, the
interview imitates the job itself; questions
and problems are posed on the fly and the
individual has to provide skilled guidance
to others in the moment.
The interview questions should not cue the
person to the aptitudes necessary to analyze
the situation. For instance, a question
meant to reveal a person’s ability to identify
the flaws in other people’s suggestions
would not prompt the person to do so.
Instead, the executive would be asked to
analyze a situation; someone with this
capability would identify the essential flaw
in another’s suggestion as part of the
response. In follow-up questions, executives executives
would be asked to explain why they
would take a certain course of action,
revealing the quality of their thinking skills.
The Executive Intelligence evaluation represents
an important breakthrough in executive
assessment because of its effectiveness
at measuring an individual’s fundamental
business aptitude. However, it is
just one piece of the assessment puzzle.
Research has shown that the most accurate
approach to executive assessment
combines an evaluation of intelligence —
in this case, Executive Intelligence — with a
competency-based interview, which measures
an executive’s proven skills in relation
to a specific role, and third-party referencing
to verify the individual’s statements and
interviewer’s observations. For this reason,
Spencer Stuart’s executive assessment
service combines these three methods.
Conclusion
Facing a far more complex set of challenges
than in the past, companies require
leaders with a broad set of experience and
competencies; international experience, a
strategic mindset and exceptional communication
and interpersonal skills all are
leadership characteristics that have grown
in importance in recent years. In addition
to these requirements, the best leaders
also have the ability to evaluate opportunities
and risks accurately, work effectively
with and through internal and external
audiences, and assess and adapt their own
behavior when necessary — the set of
skills we call Executive Intelligence.
Companies looking to improve the quality
of their talent increasingly will evaluate executives not just on their past
performance,
but also on their level of Executive
Intelligence to understand their ability to
take on new challenges and perform over
the long term.
About the authors
Cathy Anterasian leads Executive Assessment
Services for Spencer Stuart in North and South
America, and is a member of the firm’s Technology,
Communications & Media and Consumer Goods &
Services practices. Justin Menkes specializes in leadership
assessment and development. He was a
founding member of the Executive Intelligence
Group, which was integrated into Spencer Stuart in
2007. Gerhard Resch-Fingerlos leads Executive
Assessment Services for Spencer Stuart in Europe,
South Africa, the Middle East, India and Asia, and is
a member of the firm’s Technology, Communications
& Media and Industrial practices. Robert Stark, a
founding member of the Executive Intelligence
Group, specializes in leadership assessment and
development.
* Executives’ quotes originally appeared in the book Executive Intelligence:
What All
Great Leaders Have by Spencer Stuart’s Justin Menkes.
Notes
This article is included in Point of View 2008.
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