David Nadler, consultant to boards and senior executives, suggests that the secret to long-term CEO success is viewing CEO tenure as a performance with a series of distinct acts. “The successful [CEOs] are those who are able to make the transitions.”
According to Nadler’s model, a CEO’s tenure follows a natural arc, which begins when the CEO takes the stage and has to solve the problems presented. “The problem comes after the CEO solves that first issue; then it is on to act two and something else is needed.” Many CEOs fail because they become wed to a certain way of doing things that worked before, then charge ahead with the old game plan no matter how the context has changed. (“Leading for the Next Act: Why CEOs Must Evolve or Step Aside,” Knowledge@Wharton, August 8, 2007).
The McKinsey Quarterly offers A Guide for the CEO-Elect (2005 Number 3). Based on interviews with 15 current and former CEOs, the authors sugggest the following for improving CEOs' chances of success in the vital period between accepting the job and the first day of work:
As soon as he resumed the reins of Dell CEO, Michael Dell declared a two-month "amnesty" to encourage people to discuss problems and deal with them quickly, without fear of being fired or demoted. (The New York Times, September 9, 2007)
When she became CEO of Pepsico, one of Indra Nooyi’s first priorities was a trip to India, where she spoke widely of Pepsi’s initiatives to improve the water used to make Pepsi and the environment, as well as her own fond memories of growing up in the country. One of her many themes: “This is a company with a soul.” Indian media praised her and soda sales improved. (BusinessWeek, May 31, 2007)
Hewlett-Packard’s newly hired leadership laid out a 100-day road map to make deliveries of personal computers to stores reliable again, helping make H-P the world’s leader of PC sales again. (The Wall Street Journal, June 4, 2007)
The Detroit Free Press reported on the down-to-earth management style of Ford's new CEO, Alan Mulally. Here are some highlights:
Prior to taking helm at Lenovo, CEO William Amelio competed head-to-toe with Chairman Yang Yuanqing. While overcoming history could have posed an obstacle in forging an effective working relationship, Mr. Amelio tells The Economist that he shares a "great alignment with the chairman." Immediately deciding on the division of labor, with Mr. Yang in charge of the board of directors and setting the strategic direction and Mr. Amelio controlling operations, helped expedite the transition.(The Economist, February 17, 2007)
The New York Times reported that Frank Blake, new chief executive of Home Depot, is working to distance his management style from his ousted predecessor. Examples of his symbolic acts include:
In their book, You’re in Charge, Now What?, Thomas Neff and James Citrin point out that the first 100 days is essentially a honeymoon period. It’s a time when CEOs are expected to make changes and bring a fresh outlook to the position. That said, it is also a time for establishing a sturdy foundation for the future. They set forth 8 simple rules for establishing a CEO’s first 100 days agenda:
Dan Ciampa and Harvard Business Professor Michael D. Watkins, in their book Right from the Start: Taking Charge in a New Leadership Role offer some heady warnings for CEOs so that they start off on the right foot. Among their recommendations – avoid being isolated: it is critical to establish relationships and seek out key sources of information. The idea of locking one’s self in a room to make a decision or figure out a problem is a sure fire way to maintain distance from colleagues. And that distance can hurt a new CEO’s connection to their team around them.
Adding to this perspective, Michael Watkins in his latest book The First 90 Days: Critical Success Strategies for New Leaders at All Levels makes the point that “[l]eaders, regardless of their level, are most vulnerable in their first few months in a new position. They lack detailed knowledge of the challenges they will face and what it will take to succeed in meeting them. And, they have not yet developed a network of relationships to sustain them.” Watkins created the STARS framework, which stands for startup, turnaround, realignment and sustaining success and developed it as a way to help new leaders navigate their new situations and transition appropriately.
Watkins argues that the thorniest challenge is learning the culture and politics of an organization. Becoming trapped in these pitfalls can really affect one’s credibility. As Watkins points out “I advise new leaders to spend some time learning about culture and politics, even if they think they have been brought in explicitly to change them.”
Jonathan Schwartz took over as CEO of Sun Microsystems when founder CEO Scott McNealey stepped down after 22 years. He was interviewed in The Chronicle about his early tenure. Some of his answers are illuminating. When Schwartz was asked what was the toughest part, the new CEO said that “Physical endurance probably ranks at the top of the list (laughs). We are a global company that serves some very important customers, all of whom would like to sit down with me and talk about the future of computing. That requires a lot of energy and stamina.” Schwartz's response to the question of how it felt dealing with other CEOs, customers and investors for the first time was that“It was terrifying. For me. Here is the guy who established a reputation and created the company that we are today, and (to)have him throw the keys to me and say, "I'll talk to you in six months. Call me if you need me." was pretty daunting. We have a perch in the industry, we have a presence and a reputation which I don't want to just uphold, I'd also like to amplify. Any new CEO who says he is not scared on the first day of his job is lying.”
The CEO position, with its pitfalls and do’s and don’ts is also a landscape for surprises. In fact, Michael E. Porter, Jay W. Lorsch and Nitin Nohria of Harvard’s Graduate School of Business Administration have identified seven surprises new leaders should expect (and the warning signs to tell whether an adjustment needs to be made):