What are your expectations for a CEO's knowledge? - 12240

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  • Posted on: Sat 07 Jul, 2012
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The business I researched in week 2 was a small business from my community, Prasada, which would not make it a good candidate for an IPO.  However, there are some aspects of the business that Gene One could learn from to make the change effort more successful.  First of all Prasada discusses changes with the entire staff to let them know what to be ready for in the future and how it will help.  I found the CEO in the simulation to be severely lacking in his planning skills as he did not do his due diligence to figure out if his company met the SEC requirements for taking a company public.  Prasada also talks with their employees on a personal level, the CEO should have discussed the possibility of going public with his team before he mentioned it to the board or let it get out into the public.  The fact that he did not know that the CTO and VP of technology were against going public could have been discussed previously.  He could have taken their concerns into account and possibly found ways to address their concerns while still taking the company public. Yukl explains that mistrust is a "basic reason for resistance to change," by not communicating with his staff before setting the IPO wheels in motion he created a lack of trust with his employees (Yukl, 2010). On the other hand Prasada's employees trust the owners because they communicate constantly both in person and through social networking like Facebook.   

One thought that came to mind while reading your response was the expectation that the CEO have the knowledge of what is required to go public. My thought was, how many young CEO's know this and are they really expected to? This is why there are levels to an organization, a big idea starts at the top and at each level it cut into smaller pieces until it gets to the level where the pieces can be completed by people. In this case I'm thinking, the CEO says, hey let's go public. He then goes to his team and tells them this and leaves it up to them to figure it out from there.


I don't know how often the scenario I describe happens, but I'm sure it does happen just from seeing the interaction with mid-level management in my company. I just wanted to get your feeling on this too. What are your expectations for a CEO's knowledge?

Solution Description

It is true that mistrust is a basic reason for resistance to change. When team members do not trust their leader, they resist change (Velaction Continuous Imp