What are good CEOs made of?

"It is rare for a CEO to fire himself. I appreciate such integrity." (Head of an investment bank)

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Pekka Simula 15.05.2020

The answer is, of course: It depends. Does the company need a change leader, crisis leader, growth leader, brand creator, or well-networked negotiator? A great visionary, or a driver for the visions of a strong board of directors? A tough downsizer or a gentle caretaker? The choice of a new CEO also sends a message on the visions and values of the company. And a great CEO here can be a disaster there.

Whatever the CEO’s qualifications are, the CEO shall promote the interests of the company. I have always expanded this assumption into: If things go wrong, the CEO is to blame.” Therefore, any good CEO in any company should at least be:

  • Assertive. There will always be tough decisions. A good CEO will make those decisions when necessary, based on all available information; inform others on why they were made; and assume full responsibility.
  • Communicating. Not just talking to the board, management, and other stakeholders, but also driving the internal communications so that all stakeholders not only receive but also provide the necessary information to the CEO and others.
  • Open. Bad news are best served fresh. When covered up, they will smell really bad.
  • Team builder. Structure follows strategy: CEO is responsible for having the right people in the team to execute the strategy.
  • Trustful, especially in an expert organization. Having built a team of experts, the CEO must have better things to do than micro-manage them.
  • Truly excited about the company!

It obviously takes still more to be a good CEO, depending on the company. When I joined Herantis Pharma (then Hermo Pharma) as its CEO in late 2013, the company was in a liquidity crisis and on the verge of bankruptcy. Risk tolerance, determination, humbleness (when negotiating with debtors), and flexibility were probably important qualifications for a CEO at that stage.

As Hermo and Laurantis joined forces in 2014 to create and IPO Herantis Pharma, it took collaborative and speaker’s skills, fast learning and hard work to accomplish the merger and IPO in record time. And since then, building Herantis on a shoestring budget into a clinical stage drug development company based on leading science, it’s become more important to build the team and international awareness. Right skills for each stage.

Late Steve Jobs was a legendary CEO. There were many sceptics who predicted that his death would bring Apple down. Just on the contrary: his successor Tim Cook became the world’s first CEO to increase a company’s market capitalization by more than a trillion dollars. Does that make him a superb CEO compared even to Steve Jobs? Or the right CEO for the right stage?

I’d add one more general qualification for a good CEO: self-distance. Sometimes, CEOs forget to ask what they can do for their company, and focus too much on the opposite. Objective self-assessment should help avoid that.

When a company aims at the top, like Herantis, it requires the best possible CEO for each stage. Since Herantis started to plan for possible Phase 3 and Phase 2 clinical studies, and its focus moved closer to commercialization, I once again asked myself if I was the best possible CEO for Herantis. This time I concluded that – no. Not for long, anyway.

I’ve come quite far with a Master’s degree in physics [sic], broad experience, an open mind and hard work. However, I have no experience of actually bringing new drugs to the market, which is a very heavy and complicated process. On the other hand, I believe Herantis is approaching big changes. For the past seven years we have advanced our complex biological drug candidates toward late stage clinical studies on a shoestring budget. That has required startup-like attitude, which may not be optimal for long. Will I be able to simultaneously change both my mindset and the company? I don’t know. And, in my opinion, that uncertainty suggested considering a new CEO. There, in my humble opinion, self-distance makes a good CEO – though it results in changing the CEO…

Talking about Apple: At Herantis, we also hired Mr. Cook as our next CEO. Hopefully, nomen est omen. Welcome Craig!

The author is proud and humbled to have worked with leading scientists and, as part of a superb team, helped translate their long-term research into clinical studies at Herantis.

The author soon also be looking for a job!