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Five CEO myths – and what every manager can learn from them


By Neil Amato

Chief executives today must operate in a more intense, more intricate business environment, and new CEOs are particularly under pressure. During their first months on the job, CEOs will study company structure, immerse themselves in company culture, and develop a plan suited to their vision for the organisation’s long-term success.

A report by the Boston Consulting Group, Debunking the Myths of the First 100 Days: The Right Way and the Wrong Way for New CEOs to Approach Their Role, takes a look at the mistakes CEOs tend to make in their first 100 days, mistakes based on preconceived notions of how CEOs should behave – the “myths.” It also sets forth the realities to help CEOs get off to a smoother start.

CEO turnover is fairly common – a Booz & Co. report in 2012 noted that 14.2% of CEOs at the world’s top companies were replaced in 2011 – and poorly executed succession planning can hold back a company’s ability to grow.

Traditionally, the first 100 days is a honeymoon period for a new boss – “a time of being feted … and indulged, perhaps, but also of being tested,” the report says. “During this grace period, they are expected both to orient themselves and to make a favorable impression and instill confidence among internal and external stakeholders.”

The report says that CEOs will use their initial time on the job to identify challenges, determine key objectives and develop a timetable. To do this, the report says, CEOs often will create a 100-day plan, preferably before they begin work.

The danger for new CEOs is basing that 100-day plan on best practices instead of learning the specifics of the company.

Here are the five myths of a CEO’s first 100 days:

Myth No. 1: New CEOs should direct their attention outward and study the old way of doing things, in preparation for deciding what to keep and what to modify. Corrective measures are based on the intense study of how the company has done things. The leadership approach of the new CEO tends to be more reactive.

“They take their lead from the status quo (often in order to oppose it), rather than from their own strengths,” the report says. “Keen to make their mark, they might be tempted to alter the company’s previous direction more sharply than is justified.”

Change for change’s sake is not the way to go. The report uses a specific, though anonymous, example of a new CEO who spent his early time finding fault with the work of his predecessor. The employees referred to the new CEO’s style as “I’m-not-the-other-guy leadership,” and the new CEO had not clarified what his goals were, even after a year on the job.

Myth No. 2: New CEOs prove their mettle by performing bold actions right away. One CEO in the report made so many changes, including a substantial downsizing, that the company’s board viewed the moves as “heavy-handed and insensitive.” A backlash ensued, according to the report, and the CEO’s credibility took a hit.

Myth No. 3: New CEOs should establish a team by seeking out the top talent. Recruiting the best and brightest from different companies is not always the best way to build a team. Every team needs role players, and if each member sees himself or herself as a superstar, the team won’t function well.

The report’s example of a dream team yielded this reality: “It is not a team at all but an assemblage of superbly able individuals with little in common other than a sense of their own superb abilities.” Instead of being a leader, the new CEO has taken on the role of peacemaker.

Myth No. 4: New CEOs should immediately set tough standards for everyone at the company. Sometimes new leaders feel the need to show toughness. They set high expectations and establish performance metrics. The targets set by a new CEO can be unrealistic – or worse, those targets aren’t in line with shareholder expectations or with the board’s understanding of company strategy.

Myth No. 5: A new CEO should be the smartest person in the room. The report cites an example of a CEO of a health-care corporation who took it upon himself to take crash courses in subjects he didn’t know well, perhaps because he feared not being well-versed on all topics. CEOs subscribing to this myth will “try to master every aspect of a problem in order to give the definitive answer,” the report says. “Cold expertise is the best basis for making decisions, they believe, and they strive to acquire it.”

Countering the myths

The report includes five guidelines it says can counter the common missteps:

Look inward as well as outward. The newcomers who are more effective, the report says, are the ones who reflect on how they want to lead before deciding what others should do. The report cites an example of a CEO who wanted to effect change in the company’s “flagging engagement of the management ranks.” The CEO knew that he wasn’t cut from the same mould as his predecessor, a “town-hall style” speaker; he preferred smaller groups. So he set up a council of second- and third-layer leaders who then reported to him. That revived the middle managers and provided a strategy that suited the CEO’s style.

Act boldly, but first see clearly. Action is fine, but it should follow a thoughtful evaluation. “Quick wins certainly are desirable, but only if they smooth the path for further wins,” the report says. The report quotes one CEO who exercised patience, getting to know stakeholders before embarking on a plan. “I was bursting with ideas,” the CEO said. “But I put them on hold, just in case they clashed with the bigger picture.”

Build a team of team players. A key quality for an executive’s inner circle is suitability, according to the report. The team members should each fit into a role. “The optimal team is one in which the members complement one another’s skills,” the report says. Think about a basketball team. A team of five great shooters might win some games, but it won’t be outstanding if no one’s willing to rebound and play defence.

Judge as you will be judged. CEOs shouldn’t set metrics for the workforce until defining the indicators of success for themselves. The report cites the example of a global manufacturing company’s new CEO, who interviewed stakeholders first to find out their expectations of her and “what indicators they would consider appropriate for assessing progress.” She had her own ideas, but after hearing theirs, she modified her success indicators. “The executive team, heartened by this freedom, then attempted several untested procedures, and the company emerged with a world class supply chain in a remarkably short time,” the report said.

Be wise by being attentive, not just smart. The most successful CEOs are not always the smartest. They are the leaders who create the best team, set forth a coherent plan for that team’s success and inspire it to make good on the vision.

Related CGMA Magazine content:

Top Companies’ CEOs Generally Rise Through the Ranks”: Companies generally regarded as the world’s best have at least one thing in common: CEOs who are no stranger to their organisation. Hay Group research says the top 20 companies’ CEOs have averaged 25 years of service at their organisation.

Neil Amato (namato@aicpa.org) is a CGMA Magazine senior editor.

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