“The two most common mistakes CEO’s make upon entry are not taking the time to learn their new organization and not following their instinct on executive talent fit.”
First impressions matter and they endure. This is no more true than the arrival of a new CEO. The impression door swings both ways. Being intentional about arriving makes all the difference.
Start with the Ending
The first phase of transitioning is leaving the current position and organization. How do you want to close? Closure is undervalued in most organizations. In the rush to move on to the next shiny thing, appropriate closure is overlooked. Unfortunately, the end is where learning takes place. Be intentional about how you close. This is for the organization’s benefit as well as for the departing executive. What have you learned from this assignment/experience? We learn from experience, but having experience is no guarantee that one will learn from it. Often the difference between having an experience and learning from it is articulating the learning, at least to one’s self if not a confidant or coach. Being intentional and explicit anchors the insight and makes it more available for use going forward.
We are doomed to repeat what we haven’t learned, evidenced by executives and organizations who distinguish themselves by their predictable mistakes as much as their performance (e.g. politicians: “the cover-up is worse than the crime.”) It is rarely wise to burn bridges behind you. You never know, so depart on a high note with the people and organization you are leaving. Give people something of yourself on the way out – your admiration, gratitude, feedback. At the least they are part of your network going forward. Things, and people, have a funny way of cycling back around.
Closing with intentionality provides process integrity and builds trust, but it doesn’t eradicate ambivalence about the move. Ambivalence is the natural state. It is a dimmer switch, not an On/Off. No matter how much you want to leave, a part of you wants to stay. Accept that and move on.
The Peace Corps Morale Curve refers to a “Crisis of Arrival.” Organizations and individuals naturally put their best face forward during the courtship. After the courting and exploring, the new executive arrives to face the gap between expectations and the reality of what she inherited. The executive’s discernment and response to the way things really are here is conducted under the spotlight. Everything you do and don’t do, say and don’t say, as well as how you do all this, is fodder for interpretation. Be deliberate about your entry style. As the new leader ask lots of questions and take the time to make your own meaning about what is happening and what needs to be done. Some in the receiving organization will be more than eager to share their views of what’s important and what you should do. As in “The Godfather,” pay particular attention to the first one who gushes forward with a passionate declaration of what needs to happen. Acknowledge everyone’s point of view but reserve the right and time to form your own conclusions. It can be helpful to declare that you are in ‘taking in’ mode and will not be sharing your first impressions until a certain date or when you are ready. This announcement of intent reduces people’s anxiety. At least they won’t make their own movies about what your silence on crucial issues means.
There is heightened sensitivity to the new leader, especially if he or she is an unknown quantity from outside. It is generally better to err on the side of over-complimenting, connecting, including and engaging at the beginning. There will be plenty of time for the critical observations, which people will expect, yet still be bruised when they hear them. Generally, people appreciate the new executive’s interest and openness more than they need their first major marching orders. It is impossible to overestimate the level of anxiety about how the new CEO sees and values the existing players. Whether it’s visible or not, acknowledged or not, “what does this mean for me?” is the dominant dynamic in the receiving organization. This waiting period to find out if one is valued by the new regime is often some of the most unproductive time in organization life. It’s as if the entire top of the organization has been put on ‘Airplane Mode.’ Take whatever time you need to decide who’s in and who’s out, then quickly declare and take action.
The two most common mistakes CEO’s make upon entry are not taking the time to learn their new organization and not following their instinct on executive talent fit.
With impatient Boards expecting results quickly, it is tempting to fast cycle through the process of getting to know the new organization, how it really works, and what it needs from leadership. Shortcutting this process will come back to haunt you. The faster you move through this process, the more likely you are to overlay approaches that made you successful in the last position. No two organizations are exactly alike. While you will recognize traits of previous companies (“I’ve seen this before,”) you have to factor in the uniqueness of this organization in shaping your assessment. Even if you are a quick study and are accurate in a snap assessment, you still lose credits from those in the organization who feel you didn’t even take the time to get to know them before slicing and dicing. In those cases where triage evaluations are necessary, make your getting acquainted process more visible.
A New Team
The most common misconception when a new member joins an executive team is that the team is an old team with a new member. In fact, it is now a new team. Not only do new relationships form between the new member and each existing member, but the relationships among all existing members also change as a result of the new member’s addition. This is especially true when the new member is the new leader.
Compressing the Learning Curve
Direct reports and organizations spend much time figuring out the new leader – what he expects, what he really means, his preferences and distastes, spins and body language and how he is different from his predecessor. While this happens naturally and eventually, many organizations today can’t afford the time it takes or the expense of misinterpreting. An intentional effort to fast cycle the calibration time significantly enhances the senior team’s performance. Allocating time for building the new team (getting better acquainted, clarifying roles and expectations, agreeing on shared goals, determining how the team will work) is the best investment a new CEO can make.
This Too Will Pass
There is a fundamental dilemma for the new leader. She must at once establish her presence and make her mark, while also building on the initiatives of her predecessor. The simultaneous need for change and for continuity presents a balancing challenge for the new leader. Failing to create a sense of refreshed leadership loses the energy and excitement of the leadership change. Failure to connect in some way to the former leader’s vision and strategy breeds a lack of confidence in the institutional continuity of the business’s leaders.
The Influence Window
There is an optimum time (varies for each situation: generally 2 – 6 months) for the new leader’s exerting influence. Moving too quickly doesn’t give the leader an opportunity to fully appreciate the situation from this new vantage point. It invites overlaying solutions from another organization or situation that may not fit here. It also deprives the new leader of a chance to let members of the organization educate him about issues and concerns. Moving too slowly can miss capitalizing on the opening created by a change in leadership. Excitement and anticipation in the organization can turn to disappointment in the absence of timely changes.
Parachutes and Promotions
The new CEO steps in to the role with issues based on his last position. Issues external appointees have to deal with include:
- A steep learning curve about the company and maybe the industry Ø The press from their former company
- Credibility in the new environment
- Acceptance and inclusion by the insiders
- Discovering the norms (unwritten rules) of the new culture Ø
- Decisions about when and where to bring in people they trust
Issues CEO’s promoted from within have to deal with include:
- Moving from peer to boss of the executive team
- Senior team members who felt they should have gotten the top job
- Living under a vision and set of rules they may now choose to change. How do they do that and still be respectful of the past they were part of?
- Their reputation in the company – how will their history in the organization influence how they are seen and what is expected of them as leader?
- Elevating – scaling up their perspective and behavior with the broader responsibility
- Cashing in chips – the expectation (likely not articulated) that organization members may have that they supported the new leader in his/her climb and now the leader ‘owes’ them
Never Follow the Banjo Player
It is an especially difficult transition to follow in the footsteps of an iconic leader. How do you follow a Bill Gates, Nelson Mandela, Jack Welch or Steve Jobs? Deliberately, with respect but not reverence, and on the new leader’s own terms. Iconic leaders are honored by their organization, so their successors must tread lightly on the still sacred ground. Changes must be made to establish the new leader’s presence, but they must be implemented thoughtfully with the right mix of building on and taking off from the ground prepared by their predecessor. Most importantly the new leader must not try to imitate the iconic predecessor. She must establish a different presence, unique to her style and approach. It’s all about authenticity. Efforts to mimic the predecessor are ultimately resented by the organization, because ‘no one can replace’ him. So why try?
The Cavalry and the Mafia
One of the crucial choices for an executive new to an organization has to do with bringing in help. When does he call upon old friends and proven colleagues to support the implementation of his agenda? Who and how many are equally crucial choices. Bringing in too many too soon can create an inner circle of power which excludes members of the new organization. Art Ryan of Prudential appointed a number of people from his time as CEO of Chase to key positions within a few months. They quickly became known as the “Chase mafia.” Prudential people felt excluded and resentful. This does not facilitate commitment for change. On the other hand, Carly Fiorina, after three years at the helm of HP, had only brought along one communications executive from Lucent. One can ask where was the support from the old guard at HP for her change agenda? Without the built in support of known and trusted colleagues, change can be an uphill and lonely struggle.
The Critical 1-1 Relationships
Forming new relationships quickly is crucial for the new CEO. As the ultimate reporting authority internally and the primary link to the external stakeholder environment, everyone wants to get a read of the new leader. Initiating gracious outreach, reassuring the value of relationships and inviting counsel go a long way to getting off on the right foot. But, of all the crucial relationships for the CEO, two stand out as most critical: the CFO and the Board Chair. The CEO-CFO dyad must be a true strategic partnership in order to guide the organization with consistency of spirit, strategic intent and execution. The CEO-Board Chair dyad needs to be aligned in a way that breeds confidence within the Board and among all key stakeholders. The CEO’s relationships with the CFO and Board Chair will go along way in establishing confidence among the investor community and the broader leadership domain. The Chief Human Resources Officer can also be a critical relationship, especially when the new CEO plans on implementing a change agenda. In the best cases, the CHRO can function as a transformation consigliore. If you don’t have one who fits that bill, consider finding a new one.