—

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

—

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.

For two out of three CEOs in our database, performance was lower in their years six to ten than it was in years one to five. Some gave up their gains of the first five years altogether. Results may not actually dive into negative territory, but if they do, they vacillate up and down around a mean, which only reinforces the sense that one can let up on the gas.

The danger is exacerbated when boards also become less energetic in pushing for vigorous changes in strategy or operations. As director Ann Hanley shared, “It’s easy to get into incremental mode.” A CEOs internal team may resist a continuous quick pace of change.

Building on our study findings that CEOs who lead through influence were the most effective, we followed up by conducting interviews to learn about the development advice and training these leaders had received. We asked leaders to describe how they made the journey to becoming the highly effective leaders they were. What emerged is that a leader’s evolution generally proceeds in iterative cycles, with steps forward often followed by backsliding into old habits and then a renewed effort at change. It’s a process of trial and error, and often of fits and starts, as the daily grind of immediate demands diverts attention from one’s inner work. Those who continue to progress in the journey typically go through a three-phase cycle.

First, they are confronted with a necessity for change either because they took on a new challenge that reveals the shortfalls in their leadership or through feedback from their higher-up, colleagues, or mentor.

The story speaks to how even the most talented and experienced leaders, who’ve successfullly navigated through many challenges, may overlook or misinterpret arising threats or fail to perceive them at all. That may be true even when they’ve instituted good monitoring systems, with the best data gathering and analytics, and have crackerjack strategy and operations teams supporting them. Ironically, the more success they’ve driven, the more they may be given to misreadings and slackening of vigilance.

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?