To answer your question, I assume you are referring to the role of the CEO of a public company. CEOs of different kinds of organizations have different fiduciary obligations. In the case of a public company CEO, the answer is simple to state, but difficult to define precisely: the role of a CEO is to maximize value for the company’s shareholders. There are a handful of states, like Ohio, in which there are additional duties for CEOs to deliver value to customers, employees and the community. The concept of delivering value to multiple stakeholders is more imbedded in European corporate governance, but the US typically focuses CEOs on shareholder value creation.
The question of how to “maximize shareholder value” is far more complicated than it first appears. Shareholders hold stock in public companies for intervals ranging from seconds to decades. I would suggest that no CEO can lead a company to support someone who holds stock for very short time periods. Relative to the longer time period shareholders, CEOs orchestrate their employees, vendors, and customer relationships to produce profitable revenues. They distribute those profits through either dividends or share repurchases, or they reinvest them in the business.
Many experts on corporate governance would say that CEOs must focus most on allocating the company’s human and financial capital in the most intelligent way. Some experts focus most on strategy and business development. Still others focus on customer relationships. There is no one uniform way to orchestrate value delivery.
In my case, the most important task was to insure that the external regulatory environment was as favorable as possible and that it enabled our industry to survive and prosper. Between 1996 and 2006, postal reform regulations and legislation was most important, and I succeeded in helping the industry advocate for comprehensive postal reform legislation, which was enacted in December, 2006.
There were many people who thought that the Internet would make obsolete our business. It did not. There were effects from the Internet, such as the ability of our customers to find our competitors proactively, without those competitors having to do anything other than creating a web site. E-mail did not replace physical mail, but it did severe damage to our facsimile products business, with the result that we exited that business, along with our copier business in a 2001 spin-off.
The Internet created a whole new business opportunity for us in shipping products and services through an emerging global e-commerce market.
The biggest threat to mail, as it turned out, was the collapse of the consumer credit market in 2008, after the financial crisis hit. If I were running the company after 2008, I would have needed to operate the business very differently from the way I led it between 1996 and 2007.
The reason I make this last point is that any definition of CEO duties changes over time, based on what happens in the external market. The same leader who stays in the job often has very different duties after a cataclysmic event than he or she did before that.
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