How peer groups help CEOs make meaningful change in their companies

“Former GE Chairman and CEO Jack Welch once said, ‘When the rate of change on the outside of a company exceeds the rate of change inside, the end is near,’” says Jim Jelinek, a chair at Vistage.

Today, companies are facing major forces of change that are generational, economic and technological. CEOs must position their companies, and just as importantly, themselves, to embrace those changes. They must effectively answer the question: What must we do differently?

“It takes unbiased thinking, and open and honest discussions with peers, to dig in and find solutions that keep a company on top,” he says.

Smart Business spoke with Jelinek about how peer groups can help CEOs break out of long-held ideas and institute meaningful change in their companies.

What are some examples of challenges facing companies today?

The way to go about hiring has changed completely, yet some companies believe they can successfully recruit today’s talent with ads. They risk missing out on bringing the best people into their organizations.

How companies bring a product to market has also changed, and yet there are still companies that use dated methods for this critical function.

CEOs can be insulated, often without knowing it. They lack the perspective that would otherwise help them realize they’re not keeping pace with changes in the market. Sometimes it’s the case that CEOs don’t believe their company is getting left behind until they start to feel the pain. Then they think they can just work harder and fix it, but that’s not the case. Pretty soon their company is in crisis.

What challenges come with instituting organizational change?

Denial is a powerful force and it commonly manifests in thoughts such as, ‘My industry is different. We don’t change as fast.’ CEOs need a push to get through that denial. And that, as is the case with most change and challenges to closely held beliefs, is painful. But CEOs have to face that pain and work their way through it.

Another issue is that CEOs often think change can happen fast. They’re good with the initial push, but tend to give up too easily when momentum stalls. Depending on the type of change, it can often take a while for the initiative to be realized at the bottom of the organization. CEOs often don’t take the time to ensure everyone in the organization understands why change is necessary and why they should embrace it.

Every change is behavior change, and it’s tough. If the leader isn’t progressing and growing and thinking differently about what an organization can do, it stunts a company’s growth.

How can CEOs become less insular?

It’s helpful to meet with other CEOs in a peer group. It allows a person to share his or her plans and get honest feedback. This interaction can help those who may not realize a problem exists come to understand that they need to change.

A peer group can ask CEOs tough questions. Finding the answer leads the CEO to dig deeper, challenge his or her initial thoughts, and that typically leads to greater awareness and understanding.

Having their ideas challenged is just one aspect of a peer group. The other is discovering new options and perspectives that come from the group that may not have been considered. Really tough issues need tough questions and tough evaluations. In a peer environment, CEOs can test drive ideas. They may hear others say they’ve tried an approach and learn the outcome — it worked, it didn’t work — and offer support or an alternative.

There’s also the benefit of working with CEOs in different industries, which helps to avoid industry-think. It’s a chance to see how others do it.

Behind every business problem is a personal challenge. And every change means a loss of something, even if it’s just familiarity. CEOs who don’t deal with the emotional side of change and understand the difficulty of dealing with the associated fear of loss often fail to change. A high-performing group can identify and unpack that and help a CEO confront his or her issues to get past them and bring about change in his or her company.

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