How to Use Leadership Behavior Patterns in Competitive Intelligence - dummies

How to Use Leadership Behavior Patterns in Competitive Intelligence

By James D. Underwood

Although all completive intelligence needs to be future focused, you can predict a great deal about how a person or organization will react based on how it responded to similar challenges in the past.

How to gauge a CEO’s decision-making predictability for competitive intelligence

How a CEO and the organization he leads makes decisions can often help you gauge how predictable the organization is. For example, if a CEO always consults with the board of directors, the CI team, and other key players within the organization prior to making a decision, predictability is low, because anything can happen.

On the other hand, if the CEO is insular and rarely seeks out input from others, you can usually predict his decisions based on past decisions. Here are some descriptions of real-life CEOs along with assessments of the predictability of their decisions:

Leader 1 listens to the board of directors but generally is so forceful that the board rarely challenges his proposals or decisions. This leader’s blind spot is the people factor, and most decisions can be tracked to numbers and cost strategies.

Leader 2 tends to be a collaborative, people-focused CEO, but the board of directors for this Fortune 100 company frequently overrides her proposals with demands to cut costs and increase short-term profits. Conflict with the board is likely to compromise your ability to predict the organization’s behavior based solely on the CEO’s behavior.

Leader 3 frequently appears in the company lunchroom to spend time with employees and conducts monthly conference calls with employees from around the world. This leader has a history of making decisions that focus first on employees and customers. Predicting this CEO’s decisions and direction can be difficult because they rely so heavily on input from others.

Recognizing the key behavioral patterns and decision-making approaches of competitor CEOs is important. CEOs with seven-factor assessment scores lower than 10 (out of a possible 35) tend to be egocentric decision makers. They may be very smart people, but emotional factors drive their decisions.

CEOs who have an agility index of 45 or higher are much more difficult to predict. They tend to be much less egocentric and less emotional because of their tendency toward collaborative decision making. Due to their fact focus and their understanding of the motivational role of people, they’re tough to predict and make formidable competitors.

How to analyze control patterns of an organization for competitive intelligence

Occasionally, an organization is led by a CEO who’s part creative genius and part control freak. More often than not, however, the CEO is all control freak with no creative genius thrown in. As a result, the organization has no creative drive and the organization’s decision patterns become very predictable.

To determine how much of a control freak a CEO is, answer the following questions:

  • How much control does the CEO exert when making key decisions?

  • What’s the turnover rate for subordinates relative to the turnover rate in similar organizations? (High turnover is often a sign that a my-way-or-the-highway CEO is in charge.)

  • How creative are the ideas coming out of the organization? (Lack of creativity is often a sign that the CEO isn’t very creative and doesn’t listen to people who are.)

  • Does the CEO actively seek out the opinions of others internally?

  • Does the CEO include the board of directors in the decision-making process?

Consider your answers as a whole to arrive at a verdict of how controlling the CEO is or isn’t. Then take a look back at the CEO’s seven-factor assessments score, which should confirm the answers to these questions.

How to analyze the role of the board of directors for competitive intelligence

Close collaboration between the board of directors and the CEO is a good sign that the CEO listens to the opinions of others. A board that seems invisible or that is in conflict with the CEO could be a sign of trouble. When reviewing the SEC filings of a publicly held company, look for answers to the following questions:

  • How stable is the board in general? What’s the turnover rate?

  • Do you observe high turnover among the independent directors?

    When internal strife appears in the form of the departure of independent directors, be sure that you determine what’s going on at the company.

  • Do you observe any indicators of conflict between the board and the CEO of the company? (If problems exist, you can usually find them noted in analyst reports.)

How to examine an organization’s decision-making approach for competitive intelligence

The agility index provides a very accurate indication of how an organization makes decisions and how well it can execute new initiatives. For further confirmation of the results of the agility index answer the following questions:

  • How instrumental is the CEO (and has she been historically) in the final outcome of decisions as compared to the board of directors? The CEO can ultimately force her view on corporate management, and in most cases, the board of directors. Investigate the CEO’s historic behavior related to just how hard she pushes toward a personal view in making a decision.

    Conversely, if you determine that the board of directors exercises its power over major decisions, you need to understand how each party thinks and make a judgment as to which one will prevail.

  • Can you identify any historic patterns of decision making that may relate to how the firm will make decisions in the future? If so, what do the patterns show?

  • Does the organization have a strong, well-defined set of values that controls decisions and behavior throughout the firm? Look to the organization’s mission statement and for other clues. Does the organization generally act in accordance with its principles?

Reality-test your information. An organization may tout itself as “customer first,” but your research may reveal that the company has a poor record of following up on consumer complaints. Remember: Actions speak louder than words.