Tag Archives: McKinsey

The First CEO

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For some time now, I have been wondering when and how the acronym “CEO” came into general use. This isn’t just a matter of idle etymological interest. CEO is one of those rare acronyms – like scuba, radar, and snafu – that have become words. And in the course of becoming a word, CEO has redefined our world.

I was intrigued by the entry in Webster’s Dictionary that seemed to pinpoint the date: 1975. Only Webster’s didn’t provide a citation or attestation. So I wrote to the publisher at the beginning of March to ask where this first CEO might be found. A mere two weeks later, a reply came from Joanne M. Despres, Etymology Editor at Merriam-Webster. She informed me that Webster’s researchers had found that first illustration of CEO in a British publication, Neville Osmond’s Handbook for Managers, volume 2 (London, 1975).

But it turns out they had not dug deep enough: “In reviewing the standard sources we use to research dates,” Despres wrote, “I noticed that the Oxford English Dictionary now reports pre-1975 evidence of the word’s existence.” The 2011 online edition of the OED reaches back across the Atlantic, to America, and a little further back in time, a few years earlier, to the March-April 1972 issue of the Harvard Business Review: there we discover “a technician in his early forties who joined the company three years ago as president but not CEO.” (In light of this new evidence, Despres has requested that Webster’s “date for CEO be revised at the first opportunity.”)

I hoped to find but I didn’t find an even earlier illustration yesterday, when I went to the New York Public Library to track down Despres’ OED reference and review past editions of the Harvard Business Review on microfilm. I still have a number of leads to follow. But in the course of my reading it became tolerably clear that someone at the Harvard Business Review made an editorial decision in late 1971 or early 1972 to start using – or allowing the use of — the acronym CEO. This was right around the time Ralph F. Lewis was named editor of the Review (in 1971). Lewis instituted a number of important changes at the Review; this fateful concession to shorthand may have been one of the more minor changes he made, but it had immediate consequences.

Once the term is allowed into the Review, it begins to populate the pages of the journal. There is no turning back. Along with the instance cited by the OED editors, there are a number of early illustrations of CEO in the Review of 1972. This one appears in Myles L. Mace’s article on “The President and the Board of Directors”: “I use the title ‘president’ to mean the chief executive officer, recognizing that in some corporations the CEO may have the title ‘chairman of the board.’” (Mace’s earlier articles for the Review, in 1965 and 1966, use “chief operating executive,” “chief executive,” and “president,” but not CEO. His Directors: Myth and Reality, published in 1971, adheres to the same long form usage.) We find the newfangled acronym, again, in “Conflict at the Summit: A Deadly Game” by Alonzo McDonald. Here, McDonald takes some care in introducing it:

Leaders are still consumed with the problem of how to organize the summit. Inevitably, it is the first topic that a newly appointed chief executive officer (CEO) wants to discuss with his most trusted counselors and confidants.

And then he can use it freely:

Many CEOs who sincerely see themselves in the role of moral leaders are perceived by others as confirmed and passionate addicts of power.

The point is not that the Harvard Business Review foisted the term CEO on us. It had most likely been in use, in the MBA classroom and in the corporate boardroom, for some time. The Review certainly helped disseminate the acronym; and it’s worth remembering that readers, subscribers and contributors were then, as now, influential, powerful and connected to other influential and powerful people. McDonald, for instance, would be named Managing Director at McKinsey in 1973. Lewis came to the Review from accounting firm Arthur Young and was “director of several prominent corporations”; at the time of his death in 1979, he sat on the boards of Houghton Mifflin, Twentieth- Century Film Corporation, and Paine, Webber, among others. Mace was one of the leading lights of Harvard Business School and served, as well, on a number of boards.

Mace’s work on the role of directors (in Myth and Reality) was especially influential and timely. There was then, as now, an urgent need for new bearings – a new orientation; and the sense that it is time to dispense with institutionalized illusions and find new direction goes well beyond issues of corporate governance. New, big, disturbing questions about the role of business in society, the counter-culture and the emerging global economic order are coming to a head. It’s not without significance that it’s at this moment – at the dawn of late twentieth-century neoliberalism — that CEO makes its first appearance.

It is only a matter of a decade or so before the word is regularly in the newspapers, on the TV, and on everyone’s lips, and the CEO has become what he is today: a cultural icon, celebrated and hated, creator and destroyer, a symbol of American success or the villain behind America’s current woes.

UPDATE: For a slightly earlier (1970) illustration of the acronym and some further discussion, see this post.

What Can Make You Soft?

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A short while ago the bright lights at McKinsey and Co. announced that they had been thinking seriously about the role of business in society, and were prepared to go beyond the usual bromides about corporate social responsibility. An article by Ian Davis in The McKinsey Quarterly focused on the need for CEOs and other executives to wield “soft power” — which Harvard’s Joseph Nye describes as “the ability to get what you want by attracting and persuading others to adopt your goals.”

With carrots and sticks you can coerce people to do what you want; but carrots can get expensive and people resent too much stick. The soft leader takes a different and more subtle tack, entering into controversy to set or re-set an agenda, to frame the discussion, to gain credibility on an issue, and, above all, to lead by persuasion.

For Nye, whose book deals mainly with the exercise of American political power, soft is the road not taken by the Bush administration after 9/11 and in the war on terror. (If anything he is far too soft in his criticism on this point, but maybe he is just practicing what he preaches, persuading gently rather than berating and bashing.)

For Davis, soft power may not be the be all and end all of contemporary business leadership, but it’s an important ingredient. Though business leaders have been historically reluctant to enter into social and political discussions for fear of being compromised or caught up in controversy, Davis writes, they “are particularly well positioned” to exercise soft power on local, national and global issues.

Why? Partly because CEOs and other business leaders are used to dealing with “complex trade offs”; surely, Davis reasons, they can readily apply those skills to the “big social issues from climate change to health care to poverty. Business, particularly big business, has a vital role in resolving these immense challenges.” Not to mention a vital interest in directing the outcome of public debate.

You’d think that lobbying Congress, investing in some feel-good PR, and pulling the honeywagon up Capitol Hill would be enough. But it’s not. In an article in the Economist magazine, Davis makes the exercise of soft power out to be the fulfillment of a Rousseauist social compact; but it’s less a social obligation than a prudent calculation, to be involved in real world issues, risking some public controversy, perhaps, but in the long run putting oneself in a better position to manage risk.

The thinking here is that by directing social and political change, or at least having a hand in it, you will be better positioned to anticipate it, exploit it, profit from it, turn it to your advantage. That all sounds very compelling — as long as you don’t worry too much about the tendency of history to take unexpected turns. Still, it’s worth considering how many times an unforeseen twist, or an unintended or unanticipated consequence, has undone even the best generals, politicians, diplomats, revolutionaries, dictators, bosses, organizers and televangelists.

Enter at your own risk. My main concern is this: how do you learn to wield soft power? Where do you learn how to exercise it? Who teaches soft skills? For the ancient world, there were schools of rhetoric to teach the art of soft power or persuasion. In the early modern and modern worlds, there were schools of liberal arts. But where do you learn those arts now?

Certainly the business schools are ill-equipped to teach rhetorical prowess and the practice of soft power in any real way; language and constructive use of language (in dialogue, in persuasion), the ability to translate, literally and figuratively, among different languages or different ways of seeing the world, the ability to parse a conversation or to frame a conversation at the outset, to place events and people and positions in historical context so as to better understand them — all this requires a kind of patience and diligence that has not exactly been institutionalized in our MBA programs.

So what about the liberal arts? What about the humanities? Can they make softer leaders? Maybe. If the deliberate and careful study of language, history and language arts has an important social and civic function, it surely must be something like this.

But it’s the rare CEO who has spent much time studying the humanities, except to fulfill a set of requirements or to play at business ethics; and, what’s worse, it’s the rare humanities program or humanities curriculum which thinks that its business is to teach anything practicable in the practical world. Teaching “critical thinking,” as many humanities programs claim to do, may be a start, but when thinking is captive to a particular cultural and political agenda, as it too often is, it ceases to be critical; and learning to use theoretical jargon is no substitute for learning how to parse a sentence in Latin or Russian or French — or English, for that matter. Grammar always trumps theory.

Peter Drucker was aware of this deficit in our educational system. In Managing in the Next Society, Drucker saw the need for a third way — a way in between the mix of practical education and new age sophistry of the business schools on the one hand and the narcissism, self-destructiveness, and ethical irresponsibility of liberal arts programs on the other. In the meantime, those who want to soften themselves up to lead in the real world will have to be autodidacts, or — more likely — flush with money to hire people who know how to institute softness. And that is the rarest kind of business consultant. It’s a hard world out there.