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The Life Cycle of a CEO— Claudius A. Hildebrand & Robert J. Stark

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Introduction

In fact, Dave hadn’t been the first choice for the CEO position, or even the second or third choice. Word was five others had been offered the job before him. What’s more, a couple of years earlier he’d been unceremoniously fired from his position as divisional president at a leading competitor. No one would have suggested from his educational background, either, that he was CEO material. Not only did he not have a degree from an elite school, but it also took him six years to graduate. He hated college and he’d dropped out for a time.

As Dave’s first year in the CEO seat progressed, the sneering assessments of that Florida night prevailed on the Street; the company’s stock slid 40 percent.

Though Hay planned from the beginning to transition the company into largely renewable production, he shared with us at the time, “The vast majority of the players in our industry thought it was a fool’s errand. There was still skepticism as to whether renewables were just a fad and government incentives would go away.” In his first few years, he focused on bringing in a team of innovative thinkers with entrepreneurial experience. “We had some of the best utility people around,” he shared, “but they were very risk averse.

He started building renewables capacity right away, but with small steps. “In the very early days,” he recalled, “I had to downplay what we were doing and say, ‘Hey, it’s kind of a nice little niche for us, and we’re making some money, but it isn’t a core element of our strategy.

The CEOs who are most successful in this middle stage come to understand that they won't be able to lead the transformation envisioned for the company without a personal transformation. Larry Merlo had never spearheaded strategy. Terry Lundgren came up in retail as a master of in-store merchandising, with no experience in online sales or in technology generally.

As former Intel CEO Andy Grove wrote in his influential book Only the Paranoid Survive, “Business success contains the seeds of its own destruction.” CEOs who make it to the Complacency Trap stage have navigated the rough-and-tumble of the Launch, Calibration, and Reinvention stages of the first few years. One unintended consequence of leading their firms adroitly can be an overly assured attitude about the course they’ve set and the organizational improvements they’ve made.