Why Do So Many Bright Business People Fail So Impressively As CEO? Jul 21st 2013, 10:00
Why is it that our most successful business people – who have excelled in every other role they held – often fail when they reach the CEO chair? A new CEO's average lifespan is only around five years. Many people think that the CEO job is just the next progression after being a senior executive in a business. I would argue that the CEO job is actually a unique role with challenges that don't often arise in other executive roles.
The CEO position's uniqueness is why so few people are prepared for it, no matter how well they've performed in other executive roles. Very few new CEOs spend time studying and preparing for the role, partly because there's little content that addresses the challenges specific to the modern-day CEO job among the vast quantity of business books and research published every year. And only occasionally are people groomed for the CEO position by being moved around the company to gain the appropriate breadth of knowledge and experience.
As a result, many new CEOs struggle, because they don't have a clear picture of what is required. Before taking the position for the first time, they have only observed a small fraction of the things a CEO does and can be overwhelmed by all the demands on their time once they are in the fray. It's dangerously easy to fall into a tactical routine, confronting each problem as it comes their way. Being reactive rather than proactive is not the right way to build a great company.
Let's look at the typical career progression of a sales executive. She starts out in a bag-carrying role selling a product. With success in that role she is promoted to sales manager. After many years of climbing the corporate ladder, she might reach the pinnacle of her sales career by being named vice president of worldwide sales. At each step along the way she has developed more and more expertise in the area of sales and sales management.
As VP, the problems that reach her desk almost always involve an issue that she has experienced at some point in the past. This means that she is often the expert in the room and even when facing tough decisions, she doesn't necessarily have to depend upon someone else to explain the issue. Success will often depend upon her ability to pass along this experience and train her team to be equally successful.
Now imagine what happens when that person is one day made CEO. She will not have the relevant expertise and experience for most of the issues that cross her desk. She will be asked to make decisions on areas as diverse as human resources, technology, real estate, legal, and many others. Her success will depend not on passing her experience along but in leveraging the expertise of others both inside and outside the organization. She must think about the implications of her decisions beyond just a single group in the company to all shareholders, employees and customers.
This level of decision making and accountability is what makes the CEO job so different than any other position in a business. We must take full responsibility for the company's performance while acknowledging that we have little control. We are responsible for the whole enterprise and must balance a massive array of needs, demands, interests, and perspectives if we want to be successful. We are the arbiters of internal disputes, balancing the needs of all departments and divisions. We have to be constantly on the lookout for new talent who can add the right missing ingredient to balance the executive team.
Every day we have to fight to avoid being drawn into tactical issues that cause us to neglect more strategic activities. And while all of these fires are burning, we are the only employee in the organization who has no day-to-day boss to provide guidance or to act as a sounding board when we are making these decisions. As CEOs we are expected to self-diagnose our weaknesses, because rarely will subordinates directly point out our shortcomings.
Most people accept that the CEO position is a difficult job that requires a wide range of skills. If you want to learn more about marketing, sales, accounting or any other major area of business specialization, opportunities are plentiful. The problem is that a business cannot just be looked at as a combination of individual parts. Running a good business requires interweaving unique specialties in just the right way to maximize productivity and profit. It's big-picture balancing.
I believe that the CEO training in the U.S. is woefully inadequateto prepare executives to transition into the modern-day CEO role. Where are the courses with the right mix of theory and practice that teach a person how to be a CEO or at least give them a good foundation?
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