|… of all the things that can cause ripples in our ‘pond’ changing CEO’s should be considered the equivalent of doing a cannonball dive into the water …
A quick note from Steve:
This article focuses on the new CEO or ED, but the discussion can apply to anyone taking on the role of ‘New Boss.’
As leaders, we often consider changes within our organization that impact our culture or our progress towards successfully achieving or goals.
The change could be a location change; IT changes, new strategic plans, economic downturns or a myriad of organizational changes that can cause ripples in our corporate waters.
In my experience, one of the least managed organizational change is a leadership change.
And of all the things that can cause ripples in our ‘pond’ changing CEO’s should be considered the equivalent of doing a cannonball dive into the water.
An additional complication is that boards of directors are increasingly seeking leaders from outside of their organization.
In 2017, 44% of US companies & organizations searching for new leadership hire from outside the organization.
Often outsiders are chosen to deliver strategic course corrections, restructures, mergers, culture change, or digital transformation and under short timelines incoming CEO’s need to have a deep understanding of their leadership competencies and effectiveness.
The new CEO as an organizational change challenge.
Most incoming senior executives, internal or external, get off to a rocky start.
Society for Human Resource Management research shows that 58% of senior leadership hires still struggle in their new positions after 18 months on the job.
Therefore, it’s crucial to plan a new chief executive’s integration carefully.
What is the key to success?
Success must be gained by building momentum across the whole organization.
Not by acting frenetically, but by thoughtfully choosing the speed that will help the whole organization mobilize, execute, and transform effectively.
The incoming CEO must need to:
- gain knowledge of board expectations,
- understand the bench-strength of the leadership team; and,
- appreciate the organization’s culture.
This will help the CEO understand when to gather insights, when to make fact-based decisions and when to execute at pace.
Five steps to speed up new CEO integration
In my experience, new CEOs who take the following five steps have the best chance at successful acceleration.
- What are your unique strengths
The characteristics that have served you well so far may not lead to success in a new role as CEO.
Success in your new role is dependent on the ability to navigate the organization’s current cultural context and to quickly understand what the roadblocks to performance are.
Self-awareness is crucial. The ability to reflect upon and assess your strengths and weaknesses and leadership style will enable proper planning on how to change the culture and increase performance.
Consider the following questions to help align your and the organization’s unique strengths:
- Why was I hired for this role; what is my differentiation?
- What is my vision for this organization?
- What distinctive strengths can I leverage in this context?
- What might derail me within this organization?
- How do I become more self-aware and plan for my blind spots?
- What do I hope my legacy will be?
- Build an effective influence base
External CEOs are typically brought in to drive transformational change.
Everyone is expecting change, so the new CEO’s every move is evaluated and scrutinized for meaning.
Understanding of the formal and informal sources of influence within an organization takes time.
You need to talk to your people to get a clear view of what people love, what they hate, what they see as most broken, what gets them excited.
As a new CEO, there will be a lot of pressure—from the board, from your leadership team, from the culture itself—for you to show up and make change happen quickly.
Don’t fall into the trap of making big decisions too quickly—you don’t know enough to know if they are the right decisions or not.
By getting to know the key stakeholders will help new CEOs develop a plan to build the relationships that can quickly transform influencers into advocates.
Addressing the following questions is a significant next step:
- How do I identify the key influencers?
- Where are the real influencers within the organization below my leadership team?
- What questions should I ask key constituents to build my knowledge base?
- How do I effectively structure a listening tour?
- How will I structure my personal story and share my vision for the organization?
- Define success and priorities
Incoming CEOs typically have high-level alignment with the board and other senior executives on what constitutes success and what the priorities are.
The new CEO needs a detailed definition of what success will look like and what needs to be addressed first.
Taking the time to define the high-impact opportunities that impact customers, products, systems, and people is essential.
Careful management of the first 100 days to be critical to the new CEO’s success.
This is the time when stakes are highest for both the organization and the reputation of the incoming CEO.
Ideally, the 100-day playbook will accelerate the new executives’ integration into their new environment, while prioritizing quick wins and longer-term, strategic capabilities.
Addressing the following questions will get CEOs started on this step:
- What are the performance indicators for this role?
- How will my performance be evaluated in six months and a year?
- How (and from whom) will I receive feedback?
- How will I get oriented to our markets, customers, and organization?
- How will I get clarity on and manage board expectations?
- Mobilize the top team quickly
Most often, a new CEO makes changes to the senior team.
In 2017, 91% of S&P 500 companies indicated that the CEO change would be accompanied by additional changes at the director or senior executive levels.
Given the change agenda, new external CEOs need to develop an understanding of the senior team’s performance and quickly make decisions on how to bolster the team’s effectiveness.
Addressing the following questions will help new CEOs shape and mobilize their top teams:
- How will I assess my team’s baseline level of performance?
- What are the business goals or outcomes are my team members mutually accountable for?
- How will I determine membership on my top team?
- What operating norms do I think are needed on this team?
- Who will support me on the development of my team to accelerate performance?
- Shape the culture
Organizational culture is both a key driver of change and a barrier to execution.
In my experience, everyday cultural strengths and liabilities have become so ingrained and automatic that they are not questioned.
If the cultural fit between the new CEO and the organization is off, execution can feel like pushing a rope.
This challenge has been defined as Culture eating Strategy’s lunch because dysfunctional cultural habits can chew up any improvement the new CEO is trying to make.
A major study shows that 70% of all change efforts fail to achieve their intended objectives.
The new CEO must get up to speed quickly on the cultural values, the unwritten rules, and the practices for how work gets done in their new organization.
Addressing the following questions will give new CEOs a cultural grounding:
- What are the strengths and liabilities of the current culture?
- How do I shape the culture to align with our new strategic direction?
- How do I improve high-performing behaviours such as accountability and collaboration?
- How can I better understand the shadow of my leadership team?
- What is the execution effectiveness of my organization?
Newly appointed leaders are at risk of failing unless they take steps to address the speed bumps that get in the way of the organizational and personal success the CEO seeks.
If poorly made, the initial set of decisions and actions that a new CEO makes will create unintended consequences that will be difficult to reverse.
Therefore initial actions and decisions must be carefully planned.
An acceleration requires new CEOs to:
- assess and develop themselves to be most effective in the new context;
- understand their organization’s influencers and culture,
- how to leverage both for success;
- develop a detailed and shared understanding of success and priorities; and
- mobilize their top team.
Those who take the time to do so put themselves on the best path toward lasting success.