5. Complacency Trap
Shortly after sunset on November 29, 2014, the sixty-five-foot sailing sloop Vestas Wind was speeding through the choppy waters of the Indian Ocean, 268 miles from the nearest coast, that of the island of Mauritius.
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When it comes to TSR over their full tenure, marathoners were hands down the strongest performers, accounting for eighty-eight out of the top one hundred. But when it comes to CAGR, the sprinters were the winners with forty-five out of the top one hundred. The mid-distance group trailed on both of these measures. These findings reinforce the observation that during the years of the Complacency Trap, years six through nine, CEOs’ performance may be less than stellar, dragging down the overall performance numbers for CEOs who stay on through those years.
But Nicholson and his navigator had determined this stretch of ocean posed no grave danger. Except, that was, for the thousand-mile-long string of coral reefs the Vestas Wind had unwittingly sailed straight into.
When CEOs depart during the Complacency Trap stage of the life cycle, generally from years six to ten, inefficiencies that have crept into the organization and problems that have been festering— such as an underperforming unit or product line— constitute much of the low-hanging fruit their successors immediately go after. This invites the question: If those problems are so apparent to new leaders and boards that appoint them, why haven’t they been more effectively addressed?
Chapter Five: Complacency Trap
- John Clarke, “A Twenty-First-Century Shipwreck,” New Yorker, December 10, 2014, www.newyorker.com/sports/sporting-scene/twenty-first-century-shipwreck.
James was twenty-seven and never had a boss again. Until that moment, he and Roland had lived as employees, as if in the warm, dark, cosy-fetid hold of a ship. What happened up at the helm was not their concern. Their preoccupations were how to get a better position, and the whims and characters of their superiors and colleagues. Even James had never cared about what was best for McKinsey. Now, however, they were up and exposed. The wind blew away the comfy indoor reek; the horizon was a wide blue empty circle around them, as if the ship were the fluttering needle on a gigantic compass. And they had to choose the direction.