Spoiler alert: wrong. Very, very wrong. We don’t live in Tinsel Town, and in the real world, being brutal in the boardroom doesn’t make someone a better CEO. So what does?
That question intrigued William Thorndike, the founder of a Boston-based private equity firm. He spent years researching CEO behavior and compiled his findings into his 2012 book The Outsiders, which aimed to understand just what it is that makes great CEOs so great. Thorndike spotlights eight CEOs — some household names (perhaps you’ve heard of Warren Buffett?) and others less known — who each proved they could repeatedly and meaningfully outperform both their peers and the market.
Forget the Hollywood tropes: these men and women are pragmatic, flexible, opportunistic and analytical — or, as Thorndike phrases it, “radically rational.” Sure, they see the big picture, but it’s not about being a grand visionary; it’s about seeing the details that get you there. As a CEO myself, I take every opportunity I can to learn from people who are getting it right — and how I can use that to inform my own business. Here are the book’s key points that had me reaching for my highlighter:
Three Lessons from Successful CEOs
- Focus on capital allocation. Generating profits is one thing, but what you do with those profits can make all the difference. Top CEOs grow their empires through carefully calculated acquisitions, creating greater value for consumers and shareholders alike. When looking to make a move, these leaders aren’t afraid to patiently wait out opportunities that aren’t quite right — only to pounce without hesitation when they are.
What this means for us: As Amazon buyers, our world is becoming increasingly competitive, with over $3B raised in the past 18 months. Investors want a piece of the action and are eager to fund deals, but the onus is on us to strategically deploy capital into the right assets, at the right time, and then grow them efficiently to achieve long-term success. That’s why a seamless acquisition process is a top priority for us. We’re committed to a fair and transparent 30-day close — and we’ve never come up short.
- Money matters. Successful CEOs know that profits, not revenue, are what translate into shareholder returns — and at the end of the day, that’s what counts. A company’s margins point to its potential for smart growth, and a bigger company doesn’t necessarily mean a more profitable company. Still, leaders need to keep their eyes on cash flow. Fancy accounting and explosive growth-projections fall away if you don’t have the money to operate.
What this means for us: When we win big for our stakeholders through profitable growth and returns, it spurs the cycle of success for all our partners, and it affords us the capital to make smart reinvestment decisions. Further, we can leverage company profits to team with entrepreneurs from all sorts of diverse backgrounds, because we know that “equity” has two different meanings.
- Don’t be afraid to be contrary. If you think like everyone else, you’ll get the same results as everyone else. The CEOs who stand out are independent thinkers who aren’t merely unafraid of swimming upstream, but relish in it. They seek to uncover what the speculators overlook, then set their course and execute from the top-down flawlessly.
What this means for us: For us, no business is off-limits. We don’t mind obscure niches or complicated supply chains. We pride ourselves on staying curious, running down leads and looking where others aren’t, because we know that the biggest results come from our competitor’s missed opportunities. Skyrocketing potential is everywhere, and it’s up to us to seek it out.