strategy+business is published by PwC Strategy& Inc.
 
or, sign in with:
strategy and business
Published: May 25, 2010
 / Summer 2010 / Issue 59

 
 

CEO Succession 2000-2009: A Decade of Convergence and Compression

The Evolving Role of the CEO

The trends of convergence and compression that emerged from our CEO succession studies over the past decade provide data about, and suggest implications for, the CEO’s evolving role. They also raise questions about how CEOs themselves view their role. How do they manage to move confidently over uncharted terrain? How do they strike the right balance between leadership and management? Between strategy and execution?

Based on our observations from the data and our own work with senior managements across a variety of sectors, we’ve identified four game-changing practices that can substantially contribute to success for new CEOs: Do only what only a CEO can do; engage with the board as a strategic partner; find the right pace of change, and get the culture working with you. As part of this year’s CEO succession study, we discussed these practices during in-depth, in-person interviews with 14 sitting CEOs in a variety of industries around the globe. We talked to them about the overall nature of the job, the unique requirements of the role, and the counsel they’ve received and would offer their successor, comparing their views with the results from our 10-year study. We have put their observations together to create a “virtual guide” to the evolving role of the CEO.

1. Do Only What Only a CEO Can Do

The CEO’s job, as we’ve noted, has become all-consuming, so it’s imperative that you delegate. Let others do the rest of the company’s work. The job of the CEO
is unique. You must be rigorous in selecting the issues you choose to address, and focus on doing what no one else can do.

Ian Livingston (BT): I think my job is to set the agenda, find the right people, and ensure that change happens. Only the CEO can do that.

Greg Wasson (Walgreens): A CEO has a larger institutional responsibility, focusing on shareholder value, driving EPS and return on investment. As a manager, you’re focused on P&L, whereas in this role, you’re absolutely focused on driving strong shareholder return.

Doug Oberhelman (Caterpillar): The bucks that you have to stop as CEO are very different in nature. There’s only one person that gets to adjudicate those. Sensitive international or inter-business issues are one. The way in which shareholders are treated is another. And big strategic changes in the company only come here.

• Shape the company’s definition of success. It’s up to the chief executive officer to articulate where the company is going. To rally your people around a coherent course of action, you need a clear recognition of the way people throughout the company define success now, so you can communicate effectively with them. And you need an even clearer articulation of where the company needs to go, so they can see how they need to change.

Severin Schwan (Roche): We took a very conscious decision to go for highly innovative businesses in very specific segments — pharmaceuticals and diagnostics. Our innovation is high-end innovation. If you want to be successful in developing new drugs, new diagnostic tests, and potentially integrating the two, you need to be absolutely cutting-edge. You need the best people in the world. If you are the second-best, there’s no market for you anymore. If I’m able to create an environment to which the most creative, most courageous, most innovative people are attracted, then I can sleep well.

Luiz Carlos Trabuco Cappi (Banco Bradesco): During the first month in the position, a team and I selected six keywords to guide the changes we wanted to implement. Those words — which included trust and colegiado [collegiality] — also reflected the most important aspects of our existing corporate culture. I also prepared and shared internally a personal commitment letter.

 
 
 
Follow Us 
Facebook Twitter LinkedIn Google Plus YouTube RSS strategy+business Digital and Mobile products App Store

 

Resources

  1. Corporate Leadership Council, “Creating Talent Champions, Volume I” (2008) and “Hallmarks of Leadership Success” (2003), Corporate Executive Board: The source of research on leadership development.
  2. Ken Favaro, Per-Ola Karlsson, Jon Katzenbach, and Gary Neilson, “Lessons from the Trenches for New CEOs: Separating Myths from Game Changers” (PDF) (Booz & Company, 2010): The practices that will substantially contribute to success for new CEOs.
  3. Per-Ola Karlsson and Gary Neilson, “CEO Succession 2008: Stability in the Storm,” s+b, Summer 2009: Last year’s study documented how the financial crisis had held down the rate of CEO turnover, except in hard-hit industries like financial services and energy.
  4. For more thought leadership on this topic, see the s+b website at: www.strategy-business.com/strategy_and_leadership.