New CEO and the art of success

Written by Pollari & Partners

McKinsey Quarterly recently examined nearly 600 new CEOs in well- and poorly performing companies in order to find out what makes a CEO successful. They quantitatively reviewed the major strategic moves the studied CEOs made during their first two years. The study showed that a new CEOs game plan was surprisingly similar, despite the company and the context. M&A, management reshuffle, cost reduction and new business / product launch were typical strategic moves for each CEO. However, the effectiveness of those moves varied significantly in well- and poorly performing contexts. For example organizational redesign was a valuable act in well performing companies, while it effected negatively in low performing context creating a huge mess. However, the low performing companies benefited from management reshuffle, but in well performing companies that action destroyed value.

The research showed that outside recruits tended to make faster and bolder moves than internals. The finding doesn’t speak on behalf of outsiders, but highlights the importance to resist legacy approach and views.

Major takeaways for new CEOs:

  • Know your business context – it is the context, not your past successful game plan that should define your strategic moves
  • Focus on few bold moves suited to the context. Be fast and aim high enough.
  • Remember outsider’s view. Resist legacies.

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