Month: May 2018

Your CEO’s Personality Influences His/Her Ability to Scale

Your CEO’s Personality Influences His/Her Ability to Scale

It is true. Your CEO’s personality influences his/her ability to scale (among other things). It may seem self-evident. One’s intuition may suggest such a relationship between personality traits and workplace effectiveness. Well, it is more than a hunch. Published research demonstrates a relationship between CEO personality traits and company performance.

Gow, Kaplan, Larcker and Zakolyukina used the Big 5 personality framework to conduct their research. The Big 5 personality framework consists of the following 5 personality traits:

  1. Openness: CEOs who score high in this area are intellectually curious, value uncommon thought processes, are creative thinkers, are less prone to selective perception bias, exhibit strategic flexibility and encourage experimentation and risk-taking.
  2. Conscientiousness: CEOs who score highly in this segment are achievement-oriented, results and performance-driven. They also run the risk of selective perception bias and of having a narrow field of vision. 
  3. Extraversion: CEOs that score highly in this category are energetic, enthusiastic and forcefully communicate their ideas. They are more likely to initiate a change of strategic direction and are less likely to seek input and ideas from direct reports. 
  4. Agreeableness: CEOs in this category are typically trusting, avoid conflict, may avoid making difficult decisions, prefer flat organizational structures and seek to build consensus. 
  5. Neuroticism: CEOs overweight this category are more prone to psychological stress and are prone to anxiety and hostility. They may have a negative bias when digesting new information. 

We have contemplated embedding CEO Personality Analytics into our CEORater platform for over a year. My view is that this capability could have broad application for institutional investors, Board members, executive recruiters and C-Level executives.

We are testing data as we speak. Personality trait assignment is executed using information readily available in the public domain (transcripts, public blog posts, etc.). I plan to share the output from our research in the coming weeks and months.  

 

Content Is King – Or – The Rate of Decline Is Always Underestimated

Content Is King – Or – The Rate of Decline Is Always Underestimated

Viacom founder Sumner Redstone once said that “content is king”. The time was the 1990s. Whether to own content assets or distribution assets was the question of the day. Technology, Media and Telecom (“TMT”) companies were positioning themselves for the “information superhighway”.

Today, content assets enjoy premium valuations. Look no further than Netflix (although the book of Netflix has yet to be written. Let’s see how the world views the company when Disney begins to pull content from Netflix in 2019), which is up 62% YTD, while Charter, Comcast and AT&T are down 22%, 22% and 16% respectively over the same period as consumers opt for OTT streaming services over cable bundles.

“Cord-Cutting” and “Cord-Nevers” are hardly new phenomenons. Cracks in the cable bundle began to appear years ago. Companies and analysts have modeled cable subscriber declines for multiple quarters. What is surprising is that companies and analysts are surprised by the rate of decline. Within the Technology sector history has taught us that the rate of decline is always greater than one initially estimates. When things “go south” they tend to go south quickly.

Perhaps it is human nature that companies tend to not position themselves for change fast enough. Change is difficult to accept. Thus, companies underestimate the rate of change. They are slow to on-board new DNA and new ways of thinking that may help them build muscle within the “new discipline”. As a result, disruption tends to come from new market entrants rather than from incumbents. Incumbents become observers rather than change agents. It is only logical that capital would flow toward the disruptors and away from those disrupted.

CEORater Technology Founder CEO Index has Outperformed Year-to-Date<span class="badge-status" style="background:red">Premium</span> 

CEORater Technology Founder CEO Index has Outperformed Year-to-DatePremium 

We created the CEORater Technology Founder CEO Index in 2017 in large part to illustrate our strong belief that founder CEOs are better qualified to lead Technology companies than are “hired” CEOs/ professional managers. The CEORater Technology Founder CEO Index returned 13.0% and 10.5% on a Weighted and Unweighted Return basis respectively (click here for detail) during the January 2nd 2018…

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