Leaders Of The Pack

Founding an organisation for CEOs might seem like trying to herd cats (make that lions). Sixteen years - and many lessons - later a thriving membership model is running Australia-wide.

Entrepreneur: Ken Gunn, Chairman Company: The CEO Institute Business type: Peer group learning and networking membership organisation for CEOs Founded: 1992 Employees: Turnover: (2006 - 2007) $5M +  Head office: Melbourne, Australia. Company Divisions in Sydney and Melbourne. Licensees in other states. Contact details: +61 3 9885 5122 Web site: www.ceo.com.au  The CEO Institute Story Ken Gunn was sitting on a beach in Perth at Christmas in 1991 when he had the idea that changed his life and career. Now Chairman of The CEO Institute, Gunn was then running his own human resources consultancy in Melbourne. As the sun blazed down on him and waves lapped the beach, he was reflecting on the old truism that ‘It's lonely at the top'. And then he thought "Why should it be lonely at the top?". That thought lead him to eventually found The CEO Institute. By definition, CEOs lack peer colleagues in their own businesses and finding mentors can be a delicate process. Professional or industry associations can provide some peer contact but not people who you can necessarily nut out problems with. Gunn says: "In a professional body, the other people are typically your competitors. You're hardly going to sit down and say ‘Our business is facing a real problem with X and I'm not sure what to do about it'."

Key learning points: Cashflow - Yes, it really is king. By introducing quarterly in-advance payments, Gunn has been able to stabilise cashflow, minimise late payers and cut debtor days. Branding - Is your brand name a door-opener or a relic of the past? Your brand should immediately communicate the central offering of your business in a way that makes target customers pay attention. Distribution - Do you need company-owned operations or licensees? A real advantage of the right licensees can be their local contacts and their commitment to the success of their operation. Sales calls - What else can you offer the customer on a sales call? By adding extra services, you can increase the chance of a sale on each visit.

Gunn's dream for a CEO peer organisation was that it should be a place where CEOs could bring their problems, fears or concerns as the head of a business and talk about them with the only other people who can understand the pressures they face - fellow CEOs. He also wanted an organisation where CEOs could network with each other, socialise, find mentors and get briefings from experts in management, leadership and other fields.

Since that day on the beach in 1991, Ken Gunn, together with his then offsider (and now national chief executive of The CEO Institute) Andrew Dalziel, have grown the Institute from an idea to a thriving organisation with more than 800 members around Australia. Members meet regularly to thrash out problems, mentor, learn and have some fun. About 130 members - more than 16% of the membership - have been with the Institute for more five years.

The Challenge 

Chief Executive Officers are an elusive bunch. They are constantly being contacted by charities, banks, credit card companies and others to join them. But they are also usually very time poor. To make The CEO Institute idea work, Gunn had to develop a model that would be attractive and valuable to CEOs.

The Solution 

Gunn quickly sketched out how the organisation would work. It needed to act like a combined brain-storming and group mentoring session for the CEO members. Members would need to see clear value - help solving business problems, networking and social opportunities and peer-to-peer education - in a way that was totally confidential, non-competitive and time efficient.

Those requirements dictated a structure that would separate competitors from each other, put CEOs of similar-size organisations together, provide a confidential group structure, and be responsive to members' needs and problems.

Gunn soon realised that a syndicate system would solve all these problems. Members would be invited to join syndicates of 15-16 other CEOs of similar-size businesses. The syndicates would be chaired by a senior retired CEO who could command the respect of his fellows as well as run meetings and organise speakers or experts that the group might require.

Getting members wasn't easy at the start. Gunn says: "Calls to CEOs in the early months were difficult. Many would say: ‘How long have you been in business? How many members do you have?' When the answer to those questions was ‘Not long' and ‘None' you could feel the call slip away. Many said: ‘When you're successful, call me back'."

But not all said that. By networking his connections in Melbourne, Gunn managed to get the first syndicate in operation - with eight members - by June 1992. Andrew Dalziel chaired the group. By 1993, there were five syndicates, with Gunn acting as business development executive (getting new members) and Dalziel chairing the meetings. The model has comprehensively proved its attractiveness to CEOs and been steadily refined to meet their needs.

Business Principles 

Having an idea for a service that will add real value for customers is one thing, but creating and running a successful business to deliver that service is altogether another thing. It is a trap that has felled many an entrepreneur whose visionary flights of brilliance have not been grounded on the hard facts of cashflow management.

Here is where Ken Gunn's accounting background shines through. One attribute that Gunn saw in a membership organisation was the possibility of consistent cashflow rather than the project-by-project revenue roller-coaster of a consulting business. He has developed a refined system for keeping the money rolling in and debtor days as low as possible. All Institute members pay their accounts quarterly in advance and there are no statements of account. By cutting annual payments from 12 to four and not issuing statements, membership fees are not treated as monthly bills that can be delayed.

Expenses are also tightly controlled. The unnecessary corporate extravagances that can sneak in when success flows are not in evidence at the Institute offices. But that does not mean being parsimonious either. Staff work in a bright, airy space with all the equipment they need to comfortably and efficiently get the job done plus there is good coffee and nice biscuits.

Gunn's management style is personal and friendly. He admires professionalism, reliability, loyalty and commitment in team members - and believes they deserve the same from him. He certainly has no delusions of grandeur: when we arrive to do the interview, Gunn is busily cleaning up the kitchenette.

Fabulous branding has been central to The CEO Institute's success. Gunn started the operation as part of his ASTA Management operation but later registered The CEO Institute name and branded it with dark blue and gold colouring. The name is an instant door-opener and provides cachet for the members who proudly belong to it. Experts and guest speakers are far more interested in talking to The CEO Institute than ASTA Management.

Meeting Needs 

The heart of the Institute's success is its syndicate operation. Each month, members begin by giving each other a debrief on what has happened with their business in the previous month and what is bugging them. One or more of the problems may be taken up by the group and discussed in detail. "It's like having 15 other mentors," says Gunn. "You get the benefit of many other peers' experience and ideas."

Members are allocated to syndicates according the size of their turnover. There are three main revenue bands: $2-10 million; $10-100 million and $100 million plus ("We call them our centurions," says Gunn). Any member of a syndicate can veto the entry of a new member without having to give a reason. "But usually it's because of some perceived competitive issue," Gunn says. "The key to the syndicates is feeling absolutely comfortable with everyone else in it." All syndicate members are asked to sign a confidentiality agreement before entering.

Often the group will feel the need to get an expert opinion or a presentation from a leader in a services field such as human resources or legal or technology or marketing. The chair of the group will help the Institute's member services administrator find an appropriate person and bring them in for the next session. About two out of every three syndicate meetings feature a guest speaker.

Gunn says that the role of the chair is pivotal as the convenor of syndicate meetings and organiser of expert speakers and advisers. Typically, they are former CEOs who are heading into retirement but are still on boards. Chairs are paid for their work and have no other role in the Institute.

The quality of the speakers is vital. Gunn says: "Our only instruction to them is that this is not a sales pitch to a group of chief executives - that goes down like a lead balloon." Every speaker is rated by the group members so that a cadre of highly rated speakers has been steadily developed over time.

Members also have the chance to meet in larger groups and get to know others beyond their own syndicate. The quarterly breakfast meetings are very popular ("We always make sure everyone is sitting next to someone not in their syndicate," Gunn says.) And there are also charity golf days and some sort of special end of year event, such a cruise on the harbour.

Future Focus 

From the formation of the first syndicate in 1992, the Institute has grown to 56 syndicates and more than 800 members. The issue now for the organisation is continuing growth and refining the value of the membership offering. The organisation now has company-owned operations in Melbourne and Sydney and licensees in other states. But replacing annual attrition of members keeps the Institute's business development managers busy.

Gunn may clean up the kitchenette sometimes, but he very much believes in working on the business rather than as a technician in it. Of course, he knows all the roles inside out - from business development manager to accountant - because he has done them all when the Institute was smaller. But his focus is now on strategic growth by adding new products and services while Dalziel handles day-to-day operations.

Furthering the Institute vision means continuing to broaden and expand it. One recent expansion is the Institute's new M5 program. This is for emerging leaders (as identified by CEO Institute members). It works much like the syndicates, with groups of non-competitive peers who meet regularly in chaired groups where they can raise problems and get expert briefings. Currently there are two groups up and running in Melbourne and one in Sydney, each with about 12 members.

Gunn likes the added benefit these add-ons have for improving the productivity and efficiency of the operation. He says: "About one in every eight calls results in a new membership. Our new offerings are proving very popular."

In 2007, the Institute introduced a mentoring program in Sydney as an optional extra. Mentors can include the syndicate chair, or the chair of one of the other syndicates. Gunn says: "In a sense, the syndicates provide peer group mentoring, but some people want a one-to-one mentor relationship. If members feel they need that and have to look elsewhere for it, we could lose them as members."

The Result 

In 16 years, The CEO Institute has grown from an idea to more than 800 members in 56 syndicates around Australia. Another 36 emerging leaders are catered for as well.

Revenue has grown from zero to in excess of $5 million in 2006-07, with all membership subscriptions paid quarterly in advance "We never issue statements," says Gunn.

The Institute is focused on expanding its membership numbers nationally and later internationally. It now has a professional sales team working to sell memberships and services.

Case study by Performing Words www.performingwords.com.au
First published: 3 October 2007.
Last updated: 3 October 2007.