Q: What is "CEO Capital" and why is it so important to today's business leaders?

A: We can all generally agree that financial statements do not completely reflect the value of a company's intangible assets such as customer relationships, talent, innovation and reputation. One of those key intangibles is the CEO's reputation. The term "CEO Capital" refers to the wealth or equity created by a CEO's reputation that if harnessed properly can benefit a company's overall reputation and bottom line.

Q: Why did you write this book now?

A: I've been researching company reputations for more than 25 years now and noticed that there were limited resources that explained the relationship between CEO and company reputation. While I was at Fortune magazine, my interest in CEO reputation peaked when I first realized how the rankings in the "Most Admired Companies" list were strongly influenced by a company's perceived quality of management. At about the same time, I recognized a growing interest in business and CEOs among the public, investors, the media and other groups. These trends added up to the undeniable fact that CEO and company reputation were deeply and inextricably linked. With my strong research background and experience with corporate leadership, I set out to quantify in what ways, and for what reasons, CEOs seemed to matter so much to so many.

Q: There have been other books about CEOs as well as many news reports, articles, profiles and the like, particularly in light of recent business scandals. What's different about your book?

A: CEO Capital is unique for four reasons. First, Burson-Marsteller began its landmark CEO research in 1997 and it now allows for comparisons year over year. Second, the research reflects the current business environment because it focuses on the opinions of a diverse group of business influentials – CEOs, senior executives, financial analysts, the media and government officials. CEOs increasingly have to interact with demanding and powerful constituencies such as special interest groups (Green Peace), regulators (FDA) and the Internet (chat rooms). Third, the research uncovered evidence that the business community expects CEOs to reach specific business goals within established time frames (i.e., when they are expected to win employee support, build their senior teams, turn the company around). Fourth, the book provides real-life examples of what well-known CEOs have done at each stage of their leadership to get the job done right.

Q: What is the CEO Capital Model?

A: As I just mentioned, the presence of a CEO timetable led to the development of a working model for CEOs – the CEO Capital Model. It became clear that there are discernible, predictable stages through which each CEO passes during the course of holding office. From that early understanding, I built a five-stage CEO Capital Model for CEOs and their teams to follow. The Model begins with The Countdown, the period prior to a new CEO taking office. Of course, many CEOs hit the ground running and do not have the luxury of a Countdown. The next three stages include the First Hundred Days, the First Year and the Turning Point -- the latter stage being when CEOs must prove themselves to influential stakeholders by adding to the bottom line and delivering on their promises. The final stage of the CEO Capital Model is Revision and Reinvention and it involves executing and fine-tuning the company's strategy as well as reinventing the vision. During this final stage, many CEOs begin considering their legacies and what lasting imprint they want to leave with their organizations. Taken together, the CEO Capital Model describes how CEOs can build strong reputations to achieve greater shareholder value, employee commitment and a meaningful corporate culture.

Q: What surprises did you uncover during your research?

A: My first surprise was that business decision-makers reported that nearly fifty percent of a company's reputation is attributable to a CEO's reputation. This is not strictly an American phenomenon. In both Europe and Asia, we found that CEO reputation plays a large role in how companies are perceived. The fact that CEO reputations matter this much clearly demonstrates how important leadership is to business, the economy and the future.

The second surprise was the value placed on the softer qualities of leadership such as credibility, integrity and the ability to communicate and resonate with employees. While there is a lot of discussion surrounding CEO external visibility and celebrity, the fact remains that CEOs must first build their reputations internally. Perhaps foreshadowing Enron, ethical leadership steadily rose in importance from fifth place in 1997 to second place in 2001. Also important to a strong CEO reputation is having a top-notch management team and being able to motivate and inspire employees.

A third surprise was how little time CEOs have to prove themselves – an average of only 15 to 18 months. Not only did this alarming fact turn up in our research but it is also now quite common to read or hear about CEOs not making it beyond their second anniversaries.

Q. Why is increasing shareholder value not among the most important CEO reputation factors?

A: As I wrote in my book, financial performance is necessary but not sufficient. Business influentials have consistently placed "increasing shareholder value" behind softer leadership qualities in our research. Although this may seem counterintuitive, stakeholders seem to be saying that quality counts as much as quantity when valuing CEOs and their companies. Financial results without credibility is simply not enough.

Q. You advise CEOs to get used to life under the magnifying glass. Why do you think there is so much scrutiny today?

A: Stakeholders are paying more attention to the comings and goings of CEOs than ever before. For better or worse, people view the chief executive as a company surrogate and as the embodiment of the company's soul. In CEO Capital, I discuss several trends that are responsible for fueling this CEO-mania – CEO-driven investing, CEO firings, newly created co-CEO mergers, and the rise of a new super class of executive heroes and entrepreneurs (i.e., Bill Gates, Larry Ellison and Jack Welch). Additionally, let's not forget the impact of the media. CEO coverage in the major U.S. national media has increased seven-fold over the last decade. This percentage is even higher in Europe. The inclination for the spotlight to focus on a single human being rather than on the institution promises to continue.

Q: There's a lot of buzz in the media right now about the death of the celebrity CEO. What's your reaction?

A: The toppling of the celebrity CEO was long overdue. Many of these CEOs took their eyes off their companies and their customers. As described in CEO Capital, a strong reputation is not built on being a celebrity CEO, with a big "C", but rather on being a celebrated CEO with a small "c" – that is, celebrated by employees, customers and key stakeholders. Small "c" celebrated CEOs become that way because of their strong leadership, discriminating vision and force of character. Fortunately, charisma is now being replaced by character, or at least a better balance is being struck.

Q: Who were your sources for this book?

A: I relied on several sources in writing CEO Capital. As part of my position at Burson-Marsteller and during the course of writing this book, I met with many CEOs, communications professionals and other senior executives. Without revealing any confidences, I've learned from them about the successes and challenges facing CEOs in building enduring and lasting reputations. In addition, I interviewed several CEOs/chairmen, not necessarily clients, to capture their insights on the stages of leadership and reputation. These interviews included Miles White of Abbott Laboratories, Phil Condit of the Boeing Company, David Pottruck of Charles Schwab, Harold Burson of Burson-Marsteller and a number of CEOs who left their positions. Another principal source was Burson-Marsteller's proprietary and secondary research and the advice and counsel of my colleagues.
 
Q: What do you say to CEOs who insist they have too many fires to put out, not enough time, and too many bottom-line responsibilities to begin worrying about their reputation and building CEO capital?

A: There are definitely CEOs who will dismiss the idea of building CEO capital on the grounds that their boards did not hire them to engage in personal image making and that they have no interest in becoming imperial CEOs. This is not what building CEO capital is about. The book is written for CEOs who recognize that they are the ultimate spokesperson for their organization, the embodiment of the brand, and the official storyteller who knits together the company's past, present, and future.

Q: Which do you consider to be the most important of all the strategies recommended in CEO Capital?

A: There are many best practices that CEOs should follow, depending on where they are in their tenure. To name just a few, let's start with listening -- both internally and externally. A CEO once told me that his mother always reminded him that people were given eyes, ears and a mouth in proportion to how they should be used. Wise advice. Listening is one of the hardest skills for leaders to master but critical to avoiding insularity and surprise. With Enron, we saw what happened to Know-Nothing CEOs. Also critical is setting an agenda, getting the right senior team aboard and declaring what matters. I have examples in the book where CEOs articulated what mattered and did not leave direct reports and employees guessing.

Q: The early stages of the CEO Capital Model involve building a strategy. If so many CEOs identify strategies early on, why are so many losing their jobs?

A: Having a strategy is indeed important (where we are going and how we are going to get there) but executing on the strategy is even more important. CEOs often reach a stage in their tenure where the execution and implementation of the strategy -- the hard, day-to-day detail work required to get the job done -- is dry and dull compared to the excitement and energy generated in the earlier stages. Nevertheless, execution is the name of the game. Thus, the devil is in the details, or more accurately, attending to the details.

Q: You have a section in your book on thought leadership. Could you describe what that means?

A: The idea of thought leadership usually arises when a CEO finds that he or she needs to address a broad audience, usually including people from a wide spectrum of industries. What does the leader of this enterprise have to say that is meaningful? How does this company make a difference? How is this company different from its competitors? Thought leadership reflects on the company's place in the world and its core purpose. Frequently it falls into the category of socially responsible corporate behavior. Examples include HP Carly Fiorina's World's e-Inclusion program and BP Lord John Browne's position on global climate change.

Q: What do you want readers to learn from this book?

A: At the end of the book, I make two appeals. The first is to give CEOs some more time. Five quarters is not enough time to prove themselves. With three CEOs leaving their jobs each business day, the rush to perform and the resulting instability irrevocably and adversely affects company reputations and destinies. We have all witnessed how CEO departures have negatively affected employees, customers, partners, and investors. I like to call it corporate fatigue syndrome. The key to lengthening this compressed CEO timetable is building more involved and engaged board members. A board that is doing its job right should result in better CEO selections, tougher questions, and greater involvement in company operations and implementation.

My second plea is that we, as spectators, not judge CEOs solely on their most recent failure but by both their conquests and collapses. We all need to step back and take a more panoramic view of a CEO's performance over the long term.

Q: One last question. Is CEO Capital just for CEOs?

A: CEO Capital is a valuable resource not just for CEOs but also for search committees, corporate boards, communications and marketing professionals, management consultants, rising executives, entrepreneurs, academics and students. Everyone with a stake in leadership and reputation can find it useful.