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Gut Check: Are You Leading At Clock Speed?

There was a time not so long ago when CEOs were all-powerful.

They could count on the complete and unwavering support of the board no matter what the situation. And they could count on having a long tenure with the company they led.

It seems those days are gone forever.

In a recent New York Times article, NYU law professor Marcel Kahan was cited as saying that shareholders and boards have more power today over the direction and operations of companies, and they are willing to use it whenever they don’t like the way things are working out. The result is that CEOs are more vulnerable now than they have ever been before.

Just look at the news coming out of Ford Motor Company last week.

Former CEO Mark Fields was fired and replaced by James Hackett, an experienced executive who had been heading up the company’s self-driving car unit.

For Fields, it was a sudden and unceremonious dumping. He had only been on the job for three years and did not seem to be in immediate peril. However, a steady slump in stock prices and concerns that the company was not keeping up with technological advances apparently prompted the board to act.

According to Board Chairman Bill Ford Jr., the automaker needed a chief executive who could make faster decisions and find deeper cuts in overhead. “The clock speed at which our competitors are working requires us to make decisions at a faster pace,” Ford said.

Ford strongly felt that the company was acquiring a CEO who would “transform Ford for the future.”

Was this a prudent and timely intervention, or evidence of a venerable company panicking in the face of technological disruption? Opinions seem to vary widely on what prompted Fields’ termination.

As noted above, Ford was in a stock slump and has not been keeping up with Uber, Google and Apple in the race to mass-produce self-driving vehicles. On the other hand, other commentators have noted that Ford, like other automakers, is in the grips of a period of great uncertainty that likely will not be settled through self-driving technology alone.

Daniel Gross noted in Slate Magazine that U.S. automakers are coming off a period of nearly unprecedented success, where sales increased every year for seven consecutive years. And the cars they are making are better than they have ever been before. Over the past 16 years, the average age of passenger vehicles in the U.S. has risen to 11.4 years from 9.1 years. When cars last longer, eventually that will eat into sales, Gross theorized.

Following that logic, firing Fields without much advanced notice or planning may not make Ford look like a better investment going forward. Certainly, the market will have a lot to say about whether a new CEO is a blessing or, based on how it was done, a curse.

For all leaders, this is a cautionary tale about the peril that currently surrounds anyone with the courage to lead. Leadership has always been a high-stakes, high-risk occupation. However, it seems that the stakes and the risk factors have gone up significantly in recent years.

It seems now that speed is of the essence, and not just any speed. Ford’s use of the term “clock speed” – literally the speed at which a computer microprocessor makes decisions – is quite important.  Ford’s stated expectation is that the leadership of his company must be able to make decisions with computer-like speed and precision.

Much of this is due to so-called digital disruption. Faced with constantly and rapidly changing technological opportunities, businesses today need leaders who are both quick to plot course changes and decisive in their strategies – just like a microprocessor. Failure to confront those challenges head-on will likely result in disaster. Just ask Fields about that.

In previous generations, leaders had months – maybe even years – to make fundamental decisions about the direction of their organizations. Today, the amount of time for decision-making has been significantly compressed. Leaders must be able to read the market, devise a strategy, and deliver a decision in real time.

This condition requires leaders to be vigilant about the challenges facing their industries, and constantly and quickly thinking about their next move. If they can’t move fast enough, it’s quite likely that someone may move them out.

This week’s gut check question is inspired by the board at Ford: are you leading at clock speed?

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About the Author

Vince Molinaro is a speaker, consultant, executive at Lee Hecht Harrison, and author of the New York Times bestseller The Leadership Contract now in its second edition.

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