They hire competent managers for their units, set goals and establish clear metrics for evaluating performance. As in politics, competition in business is tough and CEOs must set ethical boundaries for their managers' conduct.
In all this, the CEO's personal conduct is critical.
Early in his presidency, Barack Obama flaunted U.S. constitutional tradition by pushing through major social legislation, Obamacare, without a bipartisan compromise and consensus. And he relied on a legislative sleight of hand to pass the U.S. Senate.
Simply, Obama's hard left agenda requires him to treat the constitution and Congress as mere inconveniences -- expediency is his ethical standard.
For example, unable to obtain congressional approval, even among moderate Democrats, for limits on carbon dioxide emissions and other environmental goals, the Environmental Protection Agency -- at his public behest -- has written regulations imposing new and onerous requirements on business.
The Obama Credo of Management: We'll do as we please, stop us if you can.
His failure as a CEO, now with grave political consequences, was to impose no limits on managers' behavior and implement adequate controls -- mechanisms for the CEO to monitor the performance of units and head off emerging threats to the survival of the organization. Regarding the latter, of paramount importance is to insulate the president from any fallout from their actions.
Cabinet secretaries and agency heads took their cues from the boss -- at State, Justice and the Internal Revenue Service senior management would have had us believe they were unaware of what was happening in Benghazi, with the Associated Press or at the Cincinnati office of the IRS.
And the president only learns about many problems when reported in the news?
Obama simply has been too busy giving speeches, raising money and trying to turn every event to political advantage to keep tabs on his managers, as any good CEO would do.
CEOs periodically meet with their principal managers -- in groups and where necessary individually -- to check their tactics, offer assistance from their own wealth of experience and discern areas where managers may be planting problems that will burgeon into crisis.
Failing at this, the president has managed to countenance management failures that cost the lives of Americans abroad, weaken our national security, rock public confidence in government and threaten our constitutionally guaranteed liberties.
Obama has a lot in common with one predecessor, Jimmy Carter -- both failed as CEOs. The man from Plains, Ga., is a decent and ethical man but micromanaged too much, whereas Obama acquired his moral compass in the Windy City and simply can't manage at all.
Americans shouldn't be surprised. Obama went to Washington with profound campaign skills but virtually no record as a legislator or manager. He spent seven years in the Illinois Senate as a virtual non-participant, bored and seeking higher office and his four years in the U.S. Senate running for president.
Prior to his presidency, Americans never observed Obama running anything other than a campaign. He hadn't been a governor or a congressional committee chairman. In military terms, we made him a five-star general before he even served as a lieutenant.
By his own actions, he is arrogantly ambitious but sadly incompetent. He has corrupted the foundations of our republic and for that he gets a failing grade.
(Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, and a widely published columnist. Follow him on Twitter: @pmorici1)
(United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)