The history of business is rife with examples of leaders who have lacked the capabilities associated with executive intelligence—the capacity to accurately analyse situations and solve problems, work with and through people, judge oneself and adapt behaviour accordingly —sometimes with disastrous consequences for their companies and shareholders:
• Leaders who have failed to recognize or have ignored changing market or competitive conditions that make the company’s business model unsustainable.
Illustration: Jayachandran / Mint
• 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.
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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 judgements about market direction, 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, they 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 Llc., or BET, explains, 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 says. “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,” observes Andrea Jung, chairman and CEO of Avon Products Inc. “You can’t grow a business around two-three good thinkers any more 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 their leadership teams. 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.
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 analyse and make judgements 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 analyses 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 instantly.
The interview questions should not cue the person to the aptitudes necessary to analyse 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 analyse 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 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 in measuring an individual’s fundamental business aptitude.
The right approach
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.
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, strategic mindset and exceptional communication, and interpersonal skills are all 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 behaviour when necessary—the set of skills that constitute executive intelligence.
Companies looking to improve the quality of their talent will increasingly 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.
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The article is drawn from a paper authoredby Cathy Anterasianand Gerhard Resch-Fingerlos, Spencer Stuart consultants, andJustin Menkes andRobert Stark,co-founders of the Executive Intelligence Group (which was integrated into Spencer Stuart in 2007). The executives’ quotes originally appeared in the book Executive Intelligence:What All Great Leaders Have by Justin Menkes.