Answering Peter Drucker: on defining what a chief executive really does.

What is the work of the CEO? That was the intriguing question Peter Drucker posed to CEOs gathered for a university symposium last fall.

I believe the most important responsibility of chief executives today is to transform their organizations continuously to succeed in the face of unrelenting change. A CEO can make bold strategic choices for long-term growth, but these choices alone are not sufficient. Unless the top leadership and employees are likewise motivated and equipped to lead change with courage, capability, confidence and discipline, the most brilliant of CEO-driven strategies will fail.

So what are the unique responsibilities of CEOs who want to create these kinds of self-sustaining organizations? First, the CEO must create the conditions that are necessary for an organization to attack problems and seize opportunities. Most importantly, they have to get people comfortable with seeing things as they are, not as they'd like them to be. CEOs can play a pivotal role in this, by role-modeling the behavior at every opportunity. In his comments, Peter Drucker noted that CEOs are the link between the reality of the outside and the insularity of the inside. I could not agree more. CEOs, when willing, are in a unique position to bring outside reality in.

I have tried to do this from my first day as Procter & Gamble's CEO. Whenever I meet with P & G employees, at any level, I take time to talk about the world around us--the consumers who are our bosses, the customers with whom we can and must jointly create value, the competitors who challenge us, and the trends that create both opportunities and challenges for our business. I spend very little time talking about purely internal issues.

The second CEO responsibility is to set the right goals for sustainable leadership growth. In fact, I believe it's as important to get the goals right as it is to get the strategies right. The best goals are realistic while also stretching an organization's capabilities, often demanding changes in behavior.

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Goals must be grounded in the structural realities of a company's industry. Stretching goals too far beyond what industry leaders have typically delivered can lead to irrational choices in the pursuit of growth that can rarely be sustained. The CEO must have the courage to say what is possible and sustainable in his or her industry. It often takes painstaking effort to explain the rationale for goals that investors may feel are too low and employees may feel are too high, but knowing what those goals should be and explaining them to every stakeholder is the work of the CEO.

Identifying the right goals will lead to clear choices, sometimes tough choices. Clear choices that can be explained simply and memorably enable an organization to know what's important and execute it with excellence.

There is a final responsibility for CEOs who want to lead change, and it is the most enduring. CEOs must develop leaders who not only can lead and inspire change themselves but, even more importantly, are capable of building other leaders. I spend a significant amount of my time every week on leadership development. I know every one of P & G's 100 general managers. I know every one of the 20 presidents they work for. I follow about 300 top-development candidates in the company. I meet with P & G's senior human resources officer every Sunday night to work on leadership development opportunities and issues.

We focus not only on ensuring these leaders get the experience and coaching they need to grow, but also that they are developing the skills for growing other leaders. Nothing I do will have a greater impact on the long-term health of P & G's business.

I'm still evolving as a leader, still learning, both from experience and from our employees and customers. The more I learn, the more I become convinced that these three responsibilities--seeing reality, setting the right goals, and developing generations of future leaders--are the true work of the CEO in the 21st century.

A.G. Lafley is CEO of Procter & Gamble based in Cincinnati.