Do you really know what’s going on—inside your company and in the marketplace? Chances are that if you’re not getting the business results you expected, the answer might well be no. Understanding reality, current and probable future, is one of the things all CEO’s need to own. It’s only from that understanding that you can determine whether the business model you have in place is appropriate to get you where you want to go or whether it’s time for a modest or major redesign.

You’d think that understanding what’s really happening would be simple. After all, it’s all around you. All you have to do is pay attention, right? Not so easy. What complicates things is that there are two important dimensions of reality you need to grasp—things you can readily measure (“objective reality”) like sales, profit, and service level, and things more intangible (“subjective reality”) like employee concerns, growth opportunities, brand reputation, and competitive threats. Many companies do a reasonable job of tracking objective reality with “key performance indicators” of one sort another. But these measurements often tell you only what’s happening—not why it’s happening, how much better you could be doing, or what’s creeping up on you behind the scenes.

To get the full picture, you need to monitor both reality dimensions. Unfortunately, subjective reality is not as easy to uncover. In fact, there are probably people working hard to hide the “story behind the story” from you. Or, you may actually be inadvertently making it difficult for them to communicate with you. That includes your suppliers and your employees. And, even your customers are not going to go out of their way to tell you how they really feel and are likely to paint a rosier than true picture if you ask them. The problem is only compounded as you grow and add management layers. So what can you do?

Every business model should include a feedback system that not only gives you the numbers you need but also makes it super easy for employees, suppliers, and customers to provide you with crucial subjective feedback as well. Here are some suggestions to help you keep your fingers on the subjective pulse of your business.

·         Make honesty, transparency, and continuous improvement part of your culture. This has to be step one.If you really want to know what’s going on, your company’s culture has to encourage visibility of the good, the bad, and the ugly. And, this has to be a two-way deal. You won’t hide important information from your employees and they won’t hide things from you and each other. It also has to be understood that top management’s job is to ensure that what’s supposed to be happening is actually happening at all levels of the company. The rationale for all of this is continuous improvement—something that is essential to the ongoing success of the company and therefore in everyone’s best interests. You can’t fix things if you don’t know they’re broken.

·         Make it easy for employees at all level to tell you what’s really happening. I used to gain a lot of insight into the tenor of the times at my company through a monthly “lunch with the president” with groups of randomly selected employees. Another practice is to hold so-called “skip-level” 1:1 meetings with your direct reports’ direct reports. If done right, these and other techniques can be very valuable for both gaining insight into how well your direct reports are managing as well as recognizing up and coming talent. With both of these initiatives, you need to be sensitive about what you ask and how you react to what you hear or you’ll risk discouraging the very openness you’re looking for.          

·         Get out of your office and look around. There are some things you can only observe on the “battlefield”. “Management by Walking Around” (MBWA) is nothing more than another mechanism for staying in touch with subjective reality. Your personal schedule should have set times to visit key venues and mingle with the troops and customers. Sam Walton is famous for annually visiting every store in the Wal-Mart chain until there were too many to visit. When there, he walked around observing, talking to everyone (including delivery truck drivers), and taking notes. When he got back to Bentonville, he fixed what needed fixing.

·         Check in regularly with your retail customers. Even though your sales force has primary customer relationship responsibility, do you make a habit of periodically phoning or visiting key retail customers without the salesperson present? This can be difficult if you’re an introvert, which many CEO’s are, but I believe it’s critical. Retail buyers and managers will tell you things they’d never tell the person calling on them—especially if you ask probing questions or solicit reactions to possible new policies or services. Above all, you don’t want to find out you have a problem by losing an account. 

·         Find ways to engage with consumers. Social media is changing the dynamics of communication to and from consumers. Certainly you should find out where in cyberspace existing and potential customers are talking about your products and regularly listen in to what they are saying. But there’s also no substitute for a dialogue where you can present specific product or service ideas, get reactions, and follow up. While your staff will handle the bulk of this activity, you’ll find it both revealing and stimulating to periodically dialogue directly with consumers yourself—either online, in focus groups, or even at baby fairs.

Even large, seemingly well-established companies have failed because the CEO assumed he or she knew what reality was rather than always obsessively seeking it. The one thing you can be sure of is today’s reality will not be tomorrow’s. Are you as the CEO doing what you need to do to stay in touch with both your company’s objective and subjective reality?

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