The Zero-Defect CEO

Improving that effectiveness means organizing more than just Coleman's thoughts. Stepp also tries to encourage CEOs to seize simplicity where they can: to carry a planning notebook with a running checklist in front, keeping the notes of their meetings in one spot. Stepp sends out those notes on three-holed paper. "It's easier for people to learn when you remove the obstacles," she says. Wherever possible. "I'm not likely to become prim and proper," warns Coleman, who favors jeans and is genetically predisposed to misplacing airline tickets.

What CEOs need, above all, is a firm sense that they're in control. At PGE, Stepp saw how easy it was to assign blame for the company's problems: to regulators maybe, or customers. That led to "battening down the hatches and becoming more self-referencing," and ignoring the marketplace even more. At PGE, Stepp says, "the plans I put in place really spoke to the need to be prepared for competition, because it was coming. But I couldn't get everyone to see deregulation as the future."

Stepp wasn't clairvoyant. She was simply willing to act on what she regarded as "the writing on the wall" rather than let time limit the utility's choices. Back in 1985, when she was vice-president of marketing and customer operations, Stepp had taken her management team through a yearlong program with a then-unknown consultant named Stephen R. Covey. The future author of The Seven Habits of Highly Effective People met with them one day a month, teaching and discussing readings. One book had a "profound effect" on Stepp: Man's Search for Meaning, by Victor Frankl, a Viennese psychiatrist who was imprisoned in a Nazi death camp. Frankl's message, as Stepp saw it, was that even in the most dire circumstances, a person stripped of everything could still choose how to react. "If we feel that we are victims," says Stepp, "then it's usually because we comply with the role."

By reminding CEOs that they're always making choices--even when they don't realize it--Stepp helps them recapture a sense of control that often gets obscured by day-to-day crises. It's the powerful clarity Stepp felt when she exited PGE, where streamlining had put a new CEO in charge, limiting her advancement. Having identified her own values--the work itself mattered more than the status or the paycheck--she chose the unknown instead. "I knew I didn't define myself in terms of being president of a utility," she says. "So I didn't feel I was losing any of myself to leave it."

As much as she may think of herself as "small potatoes" and her company, Executive Solutions, as "a nice little operation," Kay Stepp isn't at all casual about choosing her clients. One CEO got the heave-ho in the time it took for Stepp to deduce that he wasn't serious. "He just wanted someone to spout off to," she says. "He wanted to end meetings by saying, 'I've got to meet with my coach now.' I guess he thought it made him sound progressive." Not to Stepp, it didn't. "There's no payoff for me in that," she says.

Besides, her schedule is crowded enough. She's actively working with five clients, meaning that some weeks she's barely got time to think about, for instance, what kind of process one CEO should design to assess the company's management skills. And there are always board meetings, at which she's in a decidedly different role. "I'm available to offer advice, but I'm part of the system," she says. "I'm also in the position of evaluating a CEO's performance."

Not that she treats those she coaches more delicately than the CEOs she works with as a board member. During a one-on-one meeting at which Coleman focused on implementing a wellness program, Stepp made it clear there were more important things. "Having a coach is like having a base camp when you are trying to scale high peaks," says Coleman. "You keep coming back down to assess the route, to get refocused on what's most important." Stepp wanted Coleman to focus on managing a return to revenue growth. Merix has suffered through several quarters of disappointing numbers, boosting the perception on Wall Street that it's still a captive of five customers, including Tektronix, the high-tech giant from which it spun off in 1994. In May of that year, Merix went public at $9 a share; by May 1996, Merix had hit a high of 39 ¹/8. It has been mostly sinking since, settling around the midteens.

"Everything is trial by fire," says Coleman. "Business changes at warp speed, and you can't just download a Web site that has what you need to know."

Not that she would be likely to do so. Last year, when the Merix board reviewed her performance, Coleman, who has her assistant print out her E-mail, says she "hated the fact that they got me for not being a wired CEO. I'm a Luddite."

Abundant feedback has also made Coleman hyperaware of the fact that she loses her temper too much, retreats into her office too frequently, and tends to meet with people one-on-one when she should bring in a larger group. "You have to be open to understanding your limitations. If you are, a coach can make much more of a difference than an M.B.A.," says Coleman, who earned her M.B.A. at Stanford.

Either way, there's required reading. Stepp clips articles for Coleman--most recently, a Fortune story about using a "balanced scorecard" to measure financial performance and a story about board policies and procedures from Directors & Boards magazine. "It's a side service I offer," says Stepp. "I know Debi doesn't have time." It also shows that Stepp is "tuned in to the challenging issues Merix is facing." In any way she can be, in fact. If Coleman needs to talk, she can call Stepp at any time. She'll be there.

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