As a result of the work I do with Vistage CEOs and Age Brilliantly, I encounter many people who realize they don’t plan to work for every and need to start planning for their next 7-10,000 days. For many company owners, this starts with doubling-down on having the best possible leaders within the company to take over when the CEO plans to leave. Effective succession increases the value of the company whether employees, outside managers or Private Equity firms are the ultimate buyer.
In “What Sets successful CEOs Apart” (Harvard Business Review, May, 2017) the authors report on a PWC study of the world’s 2500 companies that identified four essential behaviors that helped the CEOs get the top job and thrive in it. From a succession planning standpoint, looking for these behaviors in future successors is key to success, since they are likely predictive of future success.
The four behaviors are:
- Deciding with Speed and Conviction. High-performing CEOs don’t necessarily make great decisions all the time; they stand out for being decisive. They make decisions earlier, faster, with greater conviction and more consistently – even amid ambiguity. People described as decisive were 12 times more likely to be high-performing CEOs. (Note: Highest IQ is not an attribute! People who relish intellectual complexity struggle to get the “perfect answer: and as a result, they often bottleneck decision-making, which frustrates their teams. 94% of executives who scored low on decisiveness, did so because they decided too little, too late. One one-third of CEOs were fired for making bad decisions; the rest were ousted for making decisions too slowly.) In other words, it’s better to make a well-considered, but wrong decision, which they be changed, than to delay a decision when it’s really needed.
- Engaging for Impact: One a decision is made, the CEO must be able to get buy-in from other employees on and off their teams, and other stakeholders. As Google and others have found, the key to effectiveness is communication, alignment, collaboration and teamwork .(See prior blog on this topic).
- Adapting Proactively. In this VUCA (Volatile, Uncertain, Complex and Ambiguous) word, we need to adapt quickly. The most successful CEOs scan future trends on an ongoing basis so they can do so proactively. The study found that CEOs who excel at adapting are 6.7 times more likely to succeed. Further, these CEOs spent significantly more time (50% vs. 30%) thinking about the long-term. They regularly plug into broad information flows; they scan wide networks and diverse sources of data, finding relevance in information that at first glance might seem unrelated to their business. Finally these CEOs had, what Carol Dwieck calls a “growth mindset: they offered matter-of-fact-accounts of where and why they came up with the wrong decisions and gave specific examples of how they would tweak their approach to do better the next time. Non-high-performing CEOs saw setbacks as signs of failure.
- Delivering Reliably. Executives who scored high on reliability were twice as likely to be picked as CEOs ad 15 times more likely to succeed in it. the study found that 94% of the strong CEO candidates sampled, scored high on consistently following through on their commitments. In other words: making delivery of commitments a habit really matters.
Are you looking for these qualities in your senior executive team? Would they enable you to have a superior team of A+ players? Would you feel comfortable grooming them as a senior management team when you’re ready to leave? If so, that will translate into an easier way to move on – and to get a higher sales multiple for your company!