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CEO Dialogue Series

CEO

Set the CEO free if you want to be a success, says Straumann chairman 

19 October 2021 in CEO Dialogue Series

Gilbert Achermann has taken on both roles with the Swiss dental group, giving him an insight into how to make the relationship between the two work well ...

For any company being buffeted by massive external disruption — such as a global pandemic — it pays to have strong corporate leadership and governance.

That means not only having a great chief executive at the helm. It also means ensuring that the company has a highly functional board – and that its chairman or chairwoman has the right relationship with the CEO: one that prizes chemistry, communication and a shared sense of how to develop strategic priorities and ensure they are turned into action.

Gilbert Achermann, Chairman of Straumann Group – a global leader in aesthetic dentistry – is better qualified than many to know what this means: he was the company’s CEO for eight years, after joining as Chief Financial Officer in 1998. The former UBS investment banker, now 57, joined the board in 2009, eventually becoming Chairman in 2010.

One of the qualifications needed to fulfil this role effectively, he said, is having an international outlook. Coming from a small village in eastern Switzerland, and from a household that “wasn’t very international”, as he put it, Achermann seized the opportunity that his banking role presented.

“It allowed me to start seeing the differences and diversity in the world and gave me this curiosity about different industries and cultures, too,” he told IMD’s President Jean-François Manzoni.

The experience also allowed him to come to appreciate executive qualities such as perseverance, resilience and the transactional side of the corporate world. “You got to see what your decisions were actually delivering and what the outcome was. It was a very good schooling,” Achermann said.

Such lessons have stood the him in good stead as he has performed the role of chairman the turbulent past 18 months of COVID-19.

Headquartered in Basel, Switzerland, Straumann Group is a world leader in aesthetic dentistry, developing, manufacturing and supplying dental implants, digital equipment, and clear aligners for dental practitioners, clinics and laboratories worldwide. Employing more than 7,000 people globally, the company’s principal production sites are in Brazil, France, Germany, Switzerland and the US. Its heritage stretches back to the early 1950s, although the company in its present form, along with the focus on dentistry, was established around 40 years ago.

If the Chairman and the CEO don't work together or don't function, you have a problem

After a promising start to 2020 — with Straumann Group ranked top globally in implant dentistry on a market share of 26% — business suddenly came to a halt in the second quarter as many dental practices closed amid lockdowns. Revenue fell by as much as 22% in the first half of the year.

In January of that year, a new CEO – Guillaume Daniellot –took over the executive leadership of the group. Even before the impact of COVID-19 became apparent, the external environment was already changing, with trends affecting Straumann Group such as the rise of the “oral health consumer” (a new generation of better informed and more demanding patients and consumers who have shifted the decision-making power in their favor).

Like many other companies across industries, the group was also affected by digital transformation, and growing calls for businesses to be run with environmental, social and governance (ESG) factors in mind. Competitors from non-traditional fields were also entering the attractive and growing space of oral healthcare. Daniellot quickly realized that work was needed, telling the board and employees: “What got us here will not get us there.”

To stay ahead of these trends and to shape the strategy that would take the company to the next stage of growth, the CEO, with the commitment of the Chairman and the Board, partnered with IMD in February of last year in what was called the GO5 journey. The aim was to listen to the advice of IMD and learn from other leading companies before pressing ahead with their plans.

This exercise brought the CEO and the executive team together in workshops and strategy sessions with employees (the GO5 teams), with the Chairman and board members also involved at various stages. Achermann highlighted this participatory approach as he explained his view of what the role of a board should be. “I believe it’s the board’s obligation to be knowledgeable enough about any industry. And to actually help a company’s leadership and the organization. And that necessitates spending time — be it with the management team or be it in the market itself,” he said. 

“It’s dynamic because the world is changing... cyber security and ESG are much more important than they were 10 to 20 years ago ”
- Gilbert Achermann

As an example, Straumann requires board members to travel with the company’s sales representatives a few days a year, and to occasionally attend scientific or trade fairs. “We want the board to be knowledgeable about the space that we are actually active in, because only like that can you have a productive interaction with your executive team,” Achermann explained. 

When it comes to the role of chairman, he said that the first element is ensuring the right interaction with the CEO. “You obviously must have a functional relationship or partnership with the CEO. If the Chairman and the CEO don’t work together or don’t function, you have a problem.”

Part of that interaction is knowing how to let go and to give the CEO the freedom to do what they believe is right. But it’s also, Achermann believes, being prepared to accept that this new CEO will have a different perspective, will do things differently and at times — in a nod to Achermann’s own stint as Straumann Group CEO — “will even reverse some of the things you had actually implemented”.

“Having — or not having — that ability is a function of your personality. People have a bias towards either being able to do this or not,” he said. “As for me, I would say I’m able to let go. One reason is that I have diversified my activities quite a lot with other companies, even having one other chairman role at the same time. That helps you to gain a sort of distance.”

Achermann has been chairman of other publicly listed companies, such as Siegfried AG, a listed pharma service company, and privately held Vitra Holding AG, a family-owned furniture and retail company. Just as important as the Chairman’s relationship with the CEO is the relationship with the board. That’s in part because, as an article in Harvard Business Review put it: “Not only do CEOs have enormous experience to draw on, but their views are the ones boards are most likely to heed.”

So how should a chairman interact with the board? “This is not a matter of command and control, it’s leading by engagement and giving people enough space to voice their opinions, to ask questions,” Achermann said. “You try to orchestrate all these individuals who are obviously esteemed, experienced and independent-minded and proven leaders. You have to make sure that it all works effectively and efficiently for the benefit of the company and in support of the executives and the CEO.” 

Face-to-face: Achermann reveals to Manzoni, in an IMD interview, the secret of transitioning from CEO to Chairman

That is particularly important at a time when both CEO and board members are having to grapple with arguably more existentially strategic issues than ever before: ESG, cyber risks, in particular, on top of the perennial issues of competition and growth.

“It’s dynamic because the world is changing. Topics like cyber security and ESG are much more important than they were 10 to 20 years ago. On one hand, it’s making sure you have the right people, and the right organizational setup. Obviously, you need to have a commonly understood vision and strategy, but above all, you need to make sure you are able to actually execute on it or deliver on it,” Achermann said.

He also believes there are differences between the respective chairman and CEO roles depending on whether they are at private-held or publicly-listed businesses — an insight that doubtless comes from his experiences with Siegfried and Vitra Holding. “In the private markets the aim is clear: you want to deliver value and returns to the owners. And that’s really all that matters. Whereas when I was in public companies, there was more of a focus on compliance governance risks and the oversight side of things,” he said.

“At Straumann Group, obviously oversight and governance are important, and we are in a highly regulated sector, but we also have an entrepreneurial mindset. We spend the majority of our time on strategic questions such as, how do we actually develop this company to remain successful and keep relevant?”

A large part of the answer to that question is digital transformation, which has been accelerated by the pandemic, changing the way things are done, opening new avenues of opportunity, and emphasizing the need to invest further in data management and technology. To drive and lead this, the group recently appointed a chief information officer, whose role was elevated to be part of the executive management board. Another key element has been acquisitions, to move Straumann Group closer to the patient, the ultimate consumer. 

With a decade under his belt as chairman, Achermann counts as among those with the longest tenures is such a role. The average is typically four-and-a-half years, according to Spencer Stuart, a C-suite and board-level recruitment firm based in London. Asked how Achermann has retained his curiosity and edge in that period, he said: 

“If you were to ask some people, they would say it’s about time to move on. There are many examples where people have served 20, 30 years and done well. Equally, there are probably as many examples where people serve 10 years and they’ve done not so well. So it really depends on the personality. 

“I’m not a super-good implementer or manager of the nitty-gritty. I’ve always been interested in the big picture, the ‘where do we go from here?’ I think that if we achieve something, we should enjoy that success, but then in the next second, I’m thinking: what do we do next? That’s kind of how my mind works, and what I’m excited about. I think having that kind of intrinsic motivation and behavior helps you to continuously stay interested.” 

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