Come on in, gather close. Let’s huddle around the campfire. It’s time for a tale.
I’m going to tell you a story that’s almost 400 years old. It’s a story that starts off slowly, where things happen over hundreds of years, then builds up speed to a frenzied blur in just the last few. It’s a story for which we don’t know the ending, because we’re living it still.
This is a story of money and power. Of envy and greed. Of fortune and loss.
This story has robber barons who amassed untold wealth. It has presidents and pretenders. It has valiant figures whose hopes and dreams are dashed at the very moment they think they’ve realized their lifelong goals.
This is the definitive corporate story that reminds us to be careful of what you wish for, because you might actually get it. This the story of life in the modern C-suite. And that’s what this is all about.
This is Leading Smart, the show about Managing in the Brainpower Age. It’s a field guide to the joys and challenges of leading and working in the modern workplace.
I’m Chris Williams, your guide to the stories and ideas that I hope will inspire you to be a better leader in the world of knowledge work.
In this episode we’ll explore why the C suite life isn’t always so sweet. This is Episode 216 — Suite Story.
Our story begins in 1650, 370 years ago. It starts with the formation of America’s oldest corporation, the Harvard Corporation, which is formally known the President and Fellows of Harvard College. Besides being the oldest corporation, it was among the first institutions in the western hemisphere to use the title of President for its top executive. The term had been used a bit in Europe, but it really gained footing in the colonies in the late 1600s.
A hundred years later, in the late 1700s, when the drafters of the United States constitution were looking for the right title for the leader of the executive branch, they too settled on President. It was certainly better than emperor or king or many other alternatives. Following in Harvard’s footsteps, companies had been using the title President for a century, and it seemed an appropriate title for the new government’s top executive.
It wasn’t until another hundred years later, in the late 1800s, that the title of President became problematic. This was the industrial revolution, the Golden Age, and thanks to the birth of the corporate conglomerate, there was immense wealth and prosperity — at least at the top. This was the era of the of the ruthless corporate raiders, the famous robber barons who built the biggest fortunes and the largest mansions. Think of John D. Rockefeller and Standard Oil, Andrew Carnegie and US Steel, Jay Gould or Cornelius Vanderbilt and their railroad empires. These behemoths were created by consolidation, by merging together many already existing companies. Companies that already had Presidents. Presidents who didn’t relish the idea of being called anything less. Yet, the combined corporation needed a title for the topmost officer, and thus the term Chief Executive Officer was born.
The title of CEO was sparsely used for a while, and it was nearly a hundred more years, mostly in the post World War II era, that the title of CEO really hit it big. The depression and the war that followed led to extensive corporate consolidation. Companies huddled together for cover during the depression and leveraged their strength during the war, resulting in ever larger corporations. With this growth more and more titled their top executive the Chief Executive Officer. Soon, regardless of size or corporate structure, largely for pure status alone, the top executives of most firms insisted on the title. Today we see even tiny startups with employees numbering in mere handfuls lead by someone who calls themself the CEO.
The rampant inflation that lead to the birth of the C-Suite, with its myriad of Chief titles, however, took far less than another hundred years. It began in the late 1960s, about 300 years after the formation of the Harvard Corporation. And like a virus run amok, it began slowly, accelerated logarithmically, and is now fully out of control.
The 1960s were a heady time for American business. The economy was booming and the companies that had succeeded in the post-war economy were growing ever larger. They were also becoming wildly diverse. They were no longer single industry focused like railroads or steel, but broad conglomerates involved in huge arrays of dissimilar businesses. Tracking and accounting for them was hard and complex. This was the case not only within the company itself but for shareholders and regulators trying to get a clear, honest picture of these enormous enterprises.
The Securities and Exchange Commission stepped in in the 1970s to provide some clarity. Among their many rules about how these companies reported their results was an insistence that they have a single executive responsible for the financial reporting at a company. Someone whose signature vouched for the voracity of the filings. And thus, the Chief Financial Officer or CFO was born. Before long the title was used not only in the original targets of banks, insurance companies, and other financial institutions. Soon every large company had a CFO to go along with their CEO.
It was inevitable that this change led to some title envy. Companies whose main function was not financial had senior executives who felt slighted. The head of operations at a large manufacturer, arguably the most important line executive, insisted they be called the Chief Operating Officer. The head of marketing at large consumer companies became the Chief Marketing Officer. In tech companies, you started to see Chief Technology Officers. In the 1980s and 90s peer pressure across companies led to crazy title inflation. Every topmost executive for nearly every major discipline in a company became the Chief <whatever> Officer. And the C-suite was born.
This is where our story veers off track. Our tale that has been filled with fairly predictable lust for glory takes a darker turn. We start to see the expected title inflation used not for elevation but for more ruthless or at least cynical purposes.
Moving beyond an internal focus filled with simple peer envy, a more recent trend has emerged in the executive suite. It’s the use of C-suite titles as a PR stunt and a means of deflection. It is how the C-suite became not such a sweet gig.
It’s not clear where or when it began, but the erosion started with the use of C-suite titles outside of the main line of businesses. It might be my tech industry bias showing, but my suspicion is that it started with information systems. As computers were more widely used, and as companies became dependent on them, it became clear how vital information technology was to the health of the business. Just like the CFO and the financial flow, information flow seemed to cry out for a single point of focus. Soon a Chief Information Officer or CIO was born. It was as much an acknowledgement of dependency as it was a legitimate need for a C-suite voice.
Here again, inflation soon took hold. Before long, the head of HR complained “we say people are our most important asset”. And the Chief Human Resources Officer, or more fashionably, the Chief People Officer was born. Similarly followed the Chief Legal Officer, the Chief Business Development Officer, Chief Customer Officer, Chief Compliance Officer, Chief Creative Officer, Chief Product Officer, Chief Innovation Officer, Chief Risk Officer…
To this point, it was simply title inflation. The Senior VP of HR became the Chief People officer, the Lead Counsel became the Chief Legal Officer, and so on. If you needed to hire a great top designer away from another firm, you magically created a Chief Design Officer role. Sure, this inflation is regrettable. But it is, after all, relatively harmless. Or so it seemed.
The underlying issue is, however, that unlike the head of operations at a manufacturing company, or the head of marketing at a consumer products company, most of these other roles are not line functions. They aren’t really vital to the day-to-day success of the business.
Before all this inflation, a C-suite meeting meant just the crucial elements of the business. That meeting was just those who made the decisions that effected the core business strategy and tactics. Having all these other chiefs in those meetings made little sense, they didn’t really have input into the business strategy. Still, as long as there were just a handful of these pretenders to the C-suite, and as long as they mostly just observed, the true top executives just quietly put up with it.
Then, as the ranks of these C-suite pretenders swelled however, so did the problem. You can’t have a meeting with 20 or more people and get anything done. Scheduling is complex. The meeting is huge. And, let’s face it, in a room filled with people who feel powerful, everyone has to speak up at some point. And so meetings with the entire C-suite – what once was a small team and now is a large crowd – became useless.
As a result, most executive teams are now stratified, although discretely. The core team of the CEO and the few truly functional executives meet, frequently every Monday morning, to set the course of the business. This is where the real work of setting strategy and making decisions happens. The formal C-suite meetings, where all the people with a Chief title, if held at all, are monthly affairs where a lot is said, and little is done. Being in the C-suite has evolved into a title, not a role.
And once that happened, it led to the final rot in our story.
By this point in our story, we’ve seen a cruel reality. The goal for so many, that coveted C-suite title, had been revealed to be just a ruse. The very thing they worked decades for was just a title with little real impact on the way the organization actually worked. All that was left was for dark cynicism to finally wash over the gunwales and sink their dreams for good. That wave came in around the turn of the 21st century.
Once a C-suite office became just a title, and with it came no power, it wasn’t long for those with the real power to realize it could be used as a tool. Here again, I’m not sure exactly when it happened, but I think the first time the C-suite was used for pure pandering was with the creation of Chief Diversity Officers. This trend started in the late 1990s and reached full speed in the early 2000s.
Faced with mounting pressure to get more proactive about diversity and inclusion, CEOs and boards were faced with some uncomfortable truths. These issues are systemic, they involve deep changes in organizational culture, and they take years to address. But shareholders and the public wanted visible change yesterday. So they created a Chief Diversity Officer and called it done. “See”, they said “we’ve made this important role at the top of the company and chartered them with making it happen.”
Outside of some wonderful publicity, this promotion offered some serious benefits to the CEO. Naming a Chief Diversity Officer offloaded and compartmentalized all concerns about diversity and inclusion to that one person. The CEO could conveniently dodge all uncomfortable questions on the subject and deflect them to the CDO. When some terrible event happened inside the company, they would trot out the CDO, and not blame the CEO. Finally, when the board of directors called the CEO in to question the lack of progress on these important issues, the CEO had the perfect patsy to point to.
I’m not cynical enough to think this was the original intent, but I can assure you these glorious side effects did not go unnoticed. Soon, every company had a CDO. Every Director of Diversity, who usually reported to the head of HR, was promptly promoted to the C-suite. With a press release and news conference announcing it. Companies proudly proclaimed new emphasis on diversity, spearheaded by this new role. And yet here we are, years later, with little or no progress to show for it.
The Chief Diversity Officer was just the tip of an enormous iceberg. In the year 2020, where our story stands today, there are over 50 commonly used C-suite job titles. One to match every hot button issue that raises its head.
You have a massive data breach that costs millions and deeply damages the corporate reputation? Great, create a Chief Information Security Officer. You face criticism about the climate effects of your operations? Poof, create a Chief Sustainability Officer. Ugly complaints about child labor in your pipeline? Chief Supply Chain Officer. Bankruptcy is looming? Chief Restructuring Officer.
Or maybe you’re Facebook with major threats to the company over the privacy of users’ information? The company has not one, but two Chief Privacy Officers.
With all this power at the C-suite level, with all these issue-focused czars, you’d think these many challenges would be well under control. But every one of these issues needs the line operations to change. Want more diversity? That means that at hiring time, each hiring manager needs to weigh the benefit of a diverse team over more tactical needs. For sustainability, the product team needs to choose different components, that are likely more expensive. For information security, the coders need to do time-expensive audits to ensure their work is robust. For privacy, they need to coordinate across dozens of other teams to lock down user data. Each of these things costs money or time, and unless prioritized by their own C-suite leaders, they will be ignored.
As a result, virtually none of these second tier C-suite officers have any real power or control to effect major change. They have a title, sure. But each and every line manager who has a job to do reports up to someone who doesn’t give a hoot about sustainability, or diversity, or information security, or privacy. They care about getting products out the door and making money. They won’t say it to their face, but whenever one of these second-tier C-suite people comes knocking, the response is empty. The line managers listen politely, nod quietly, and get back to their real job.
As our tale wraps to a close, I want to pause for a moment to consider the poor dedicated souls in these terrible second tier C-suite roles. They are, to a person, dedicated earnest people who desperately believe in their mission. They are true champions of diversity, dedicated to sustainability, deeply concerned about information security or data privacy. They are undoubtedly qualified and well versed in their fields, and passionate about the issues.
They have worked their entire lives to get to a position where they can actually make something happen. They finally get there, they get that C-suite title, that corner office, with all the trappings. And then slowly realize that there is no there there. They have no impact. No one listens. Nothing changes. Their dream of the C-suite was just a mirage. They rarely last more than a year or so in the job. Promptly replaced by another starry-eyed optimist ready to charge haplessly ahead.
And that’s where, after almost 400 years, our C-suite story draws to an uncomfortable and clumsy end.
Leading Smart is from me, Chris Williams. You can find out more about the show and discover other resources for leaders at my web site CLWill.com.
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That’s it for this episode. The next episode is another of my conversations with leaders. We’ll talk with Laura Butler, Microsoft’s first female technical fellow. But her life is about far more interesting than that, filled with lessons on change and leadership. I hope you’ll listen. Until then, please remember that each of the several dozen decisions you make today are part of Leading Smart.