Elena Lytkina Botelho: I am an unlikely success story, or so people tell me. I was born in Russia at a time when private enterprise would land you in prison, not on a Forbes list. I grew up in a family of mathematicians, where money was as scarce as ideas were abundant. I made my way to the United States just as the Berlin Wall fell but with the Soviet Union still intact (not for long). My family’s parting words rang in my ears: “Are you sure you can learn English?” I graduated from SUNY Binghamton and eventually joined the Corporate Finance group at Arthur Andersen as the only non–Ivy League graduate, the only foreigner, and the only transfer from the far-less-prestigious audit division. I was greeted with a skeptical: “Are you sure you can model?” (Meaning, create financial models in Excel. I think. At the time, my English wasn’t good enough for me to be sure.) Later, when I was an MBA student at the Wharton School of the University of Pennsylvania, the first recruiter I encountered inquired, “How’d you get to Wharton? You must be really lucky.” From there my unlikely trajectory continued to five years as a strategy consultant at McKinsey & Company and then on to ghSMART, advising leading CEOs and boards. With this book, I aim to bring unlikely possibilities within reach for many “lucky” others.
Kim Rosenkoetter Powell: My path followed a few unpredicted twists and turns. I finished college as a history major who’d never touched an Excel spreadsheet. I had a plan in hand to save the world by volunteering for a year after graduation. Due to serendipitous events, I found myself with offers from several global management consulting firms. When I ultimately decided to join the Boston Consulting Group, I was told they “took a flier” on hiring me, given that I had no business experience, no internships, and no relevant degree. Lucky for me, that opportunity expanded my horizons and led to an MBA at Northwestern’s Kellogg School of Management. While I never intended to write a book, when I joined ghSMART and realized the gold mine of data we had at our fingertips, I couldn’t resist diving in to understand and then share what differentiates successful leaders. I’m driven to bring a quantitative backbone to executive coaching. I apply my passion to ignite amazing leaders to aim high—and, in doing so, to positively impact the world, one employee, one company at a time.
Drawing on the biggest dataset of CEOs in the world – learn the real habits of top leaders
What does it take to become a CEO?
Forget the stories of born leaders and flawless gurus – this book reveals the actual behaviours CEOs share, and shows you how to master them.
Packed with myth-busting facts and fresh insights into the CEO mindset, you’ll discover what it really takes to get ahead, the way top CEOs actually think and behave, and the traits to develop to power your career and your ambition.
To Mamulech, Baba Valya, Liolia, and Murochka—for testament that impossible is nothing.
To my number one fan. And to AJN for everything.
“Based on extensive data from 17,000 assessments and field-tested experiences, Botelho and Powell provide a compelling and concise road map to help you identify and develop your executive talent.”
—Randall Stephenson, chairman and CEO of AT&T
“Botelho and Powell have brought big data and analytics to one of the critical bastions of business: the individuals who make it to the corner office. Their insights into business leadership have the promise to be a game-changer for companies, leaders, and everyone who aspires to get ahead.”
—Thales Teixeira, associate professor, Harvard Business School
“A first-rate guide for aspiring CEOs as well as those who have already moved into the top spot. Botelho and Powell’s compelling research and real-life stories provide a practical road map to leadership and career success that readers can apply in any setting.”
—Art Collins, retired chairman and CEO of Medtronic, Inc.
“Botelho and Powell challenge conventional wisdom to deliver the most useful and credible book on career success I’ve seen in years! The CEO Next Door offers a rare view behind the scenes on how leaders get picked for coveted roles and how they really succeed and fail … Refreshingly candid and deeply researched. Whether you aspire to a CEO role or are just starting out your career, The CEO Next Door will raise your odds of success and protect you from painful stumbles.”
—Jacqueline Reses, Capital Lead and People Lead of Square, Inc.
“CEOs come from different backgrounds in terms of economic status, education, family, gender, race, color, country of origin, and sexual orientation. The majority of them do an adequate job, some of them perform exceptionally well, and a few are utter failures. Everyone has a unique story of their journey to get to this destination. So what differentiates the top performers from mediocre performers and the laggards? This seminal work by Elena Botelho and Kim Powell does an outstanding job of identifying habits and traits of superstars versus those of average performers. The frequent references to real situations and real people make the book even more credible. The book ends on the optimistic note that everyone in any leadership position with determination and drive can master the skills. A must-read for those who aspire to make a difference.”
—Raj L. Gupta, chairman of Delphi Automotive PLC and Avantor, Inc., and board member of Arconic, Inc., Vanguard Group, and IRI
“The CEO Next Door contributes much-needed research and data to a subject long dominated by anecdote and conjecture. Your probability of success will rise substantially when you put these insights into action—whether you aspire to be a CEO or simply want to reach your full potential professionally, or you are charged with developing and selecting the next generation leaders as a board member or a CHRO.”
—L. Kevin Cox, CHRO of the American Express Company
“With a ‘Moneyball’ approach to leadership, The CEO Next Door uncovers four well-researched CEO behaviors and shows the path to get to the top and stay there. A must-read for aspiring leaders, CEOs, board members, and anyone responsible for grooming future leaders.”
—Jim Donald, former CEO of Starbucks and Extended Stay Hotels
“A clear, practical guide on how to run any company, large or small. It’s not about credentials, breeding, looks, experience, or resources but about how one makes decisions, adapts to change, shows empathy, and collects information. The CEO Next Door explodes the myths behind what it takes to get to the top and provides what works, regardless of gender or background. Eye-opening and operational.”
—Stuart Diamond, serial entrepreneur, author of the New York Times bestseller Getting More: How to Be a More Persuasive Person in Work and Life, and professor, Wharton Business School
“What an invaluable book. With colorful stories and interviews, and solid, in-depth data to back up its points, The CEO Next Door is the next must-read for business leaders of all types!”
—Susan Packard, cofounder of HGTV, author, and media executive
“The CEO Next Door is required reading for anyone who aspires to the C-suite and wants to thrive there. The analytics-driven insights in the book uncover traits of effective leaders that anyone can develop.”
—Jim Goodnight, CEO of SAS
“Being a CEO is not about background or good fortune but about performance and hard work based on decisiveness, impact, reliability, and adapting boldly, which sets the stage for any future or current CEO. I enjoyed every page of this book. A must-read for all those who care deeply about leading well.”
—Vicki Escarra, former CMO of Delta Air Lines and CEO of Feeding America and Opportunity International
“This book should be read and studied by all CEOs, aspiring CEOs, and board members. It contains a wealth of practical experience for those leading organizations of all sizes, both businesses and nonprofits.”
—Patrick W. Gross, cofounder of American Management Systems, Inc.
“You had the power all along, my dear.”
—L. Frank Baum, The Wonderful Wizard of Oz
YOU WILL NEVER be a CEO. That’s the message most of us internalize from an early age. You may be extremely competent, work harder than anyone else, do everything right, but you are told that if you don’t look the part, don’t have the right institutional names on your résumé, don’t possess the right pedigree, your chances of reaching the top are slim. And so we assume that being a CEO just isn’t in the cards for “regular people” like us.
The world is changing faster than ever, but the narrative of leadership remains dominated by talk of such larger-than-life visionary prophets as Steve Jobs and such executive warriors as Jack Welch. This iconic CEO is powerful and patrician, a bold, charismatic extrovert with a flawless résumé. An oracle of business judgment who jets around the globe from Davos to Detroit with superhuman confidence. A brilliant strategist who shapes the reality in his path. It’s a story we, the public, have been absorbing for decades.
No wonder we assume that we are not CEO material! We know that this stereotypical character is nothing like us.
But then there’s Don Slager. When we first met Don in 2005, he didn’t see himself as CEO material either. Walking into the meeting with our team, Don stretched out the large hand of a laborer. Towering over six feet tall with the frame of an offensive lineman, Don looked formidable. Yet his handshake was surprisingly tentative. Don confided to us that he was uncertain he was cut out for the CEO job. He enjoyed his COO role and didn’t see himself as a CEO. He questioned whether he was a worthy candidate and didn’t think he would seriously be considered for the opportunity to be CEO.
Don is not what one thinks of when one thinks of a CEO. He grew up in a blue-collar community a short distance from Chicago and the Gary Works steel mills in Lansing, Illinois. He was surrounded by welders, truck drivers, and steel-mill workers—not college graduates. For Don at the time, there was no CEO next door. He went to vocational high school with aspirations to become a builder, but graduated into a bum market for construction. Instead, he started his career driving a garbage truck. For the better part of six years, he punched in at 2:45 A.M., started driving at 3:00 A.M., and endured the thankless monotony of his route for ten to twelve hours a shift. At the end of each week, he collected his paycheck and prepared himself to start the routine again.
But here’s the strange thing: Don is, in fact, a CEO. Don is a great CEO. Under his leadership, stock of Republic Services—a Fortune 500 powerhouse in the waste services industry generating over $9 billion in annual revenue—outperformed S&P average returns between 2012 and 2016. In 2015, Republic Services outperformed the S&P by eight times. Since Don took the top job, Republic Services’ market cap has nearly doubled from $11.5 billion to $22 billion as of mid-year 2017. Based on anonymous and voluntary reviews by Republic Services’ employees, Don was recognized with the Glassdoor Employees’ Choice Award and named to Glassdoor’s 2017 highest-rated-CEO list.1 Don didn’t learn about leadership at Harvard Business School. He didn’t even graduate from college. The foundation for his leadership success was built on the sturdy platform of his blue-collar beginnings and his six years of driving garbage trucks around Des Moines, Iowa, and Chicago, Illinois. Don’s leadership behaviors and choices—not his pedigree—propelled him to the top of the waste services industry. Don’s father, whose motto was “Show up every day,” had always given his son a long leash as long as his grades were good and his chores completed, planting the seeds for unwavering reliability, a key attribute of successful CEOs. Don’s reputation for always giving 110 percent attracted the notice of powerful mentors who pushed him to aim higher. Long hours that ended only when the trash bins were empty gave him the stamina not only to survive but to emerge as a leader during the dark days of restructuring at his company, when many others quit or were let go. More important, his roots gave him the authority to evolve the business in ways that the front line would have rejected coming from a more “typical” white-collar executive.
When Don became CEO of Republic Services, he had held almost every position in the company and had worked as the COO alongside four very different CEOs. In 2005, Don wasn’t sure he deserved or wanted to be a CEO. There were some things about the CEO role that he found off-putting, such as the need to cater to Wall Street. So when he finally said yes, it was for one simple reason. His vision for how to make Republic Services “America’s preferred choice” required him to be able to do what only a CEO can: set the strategy and build the team and culture that would take the company there.
And so it is that a garbageman without a degree becomes a CEO who is recognized by employees and competitors as one of the most passionate, respected, and effective leaders. Don’s journey from the garbage truck to the corner suite may sound unusual, but it is not an anomaly. There are countless like him who came from unlikely backgrounds. CEOs such as Aetna’s Mark Bertolini or Lear’s Matt Simoncini. Seemingly ordinary people achieving extraordinary success. The CEOs next door. How do we know? We know because, between the two of us, we have coached, advised, and vetted over three hundred CEOs. We are leadership advisors at a firm called ghSMART. Leading boards, outgoing CEOs, and investors count on our objective counsel to help them select the right CEO candidates, prepare them for the role, and coach them to perform at full potential. We deploy a rigorous analytical approach to first help our clients define what future business success looks like and the leadership profile it requires, and after that we assess candidates to help predict how they would perform if hired. We conduct extensive five-hour interviews to identify candidates’ skills, accomplishments, mistakes, motivations, and mindsets. We ask questions in a precisely defined sequence that cuts through a clever executive’s artful spin. We hear the unvarnished truth of their greatest victories, their painful blowups, their challenges, and their regrets.
Our robust technique for data collection and analysis provides a “moneyball for leadership” solution that helps clients avoid the pervasive errors of gut feel that plague so many failed hiring decisions. Our clients’ independent analysis shows that our approach is accurate at least 90 percent of the time—compared to a 50 percent error rate in a conventional interview process.2 Since 1995, our team has advised and assessed over 17,000 C-suite executives, including over 2,000 CEOs and CEO candidates. Unlike a board member or a search firm, we analyze CEOs with a fully objective perspective, not invested in any particular outcome. When our analysis of a leader’s capabilities indicates a fit with a CEO or leadership position in a company, we recommend her or him, whatever her or his pedigree, much as we did with Don.
When you encounter as many exceptional but seemingly unconventional CEOs like Don Slager as we have, you begin to question convention. If many of these CEOs had bought in to the existing stereotypes of leadership, they might never have attempted to win even the first promotion. Looking at Don’s success today, nobody would guess that twelve years ago he questioned whether he belonged at the top. “You guys did my assessment and told me that I was a walking, talking symbol of the American Dream and that I had CEO potential. You are experts on CEOs. Thanks to your feedback, I changed my outlook, gained confidence and began to work on my gaps. I decided to go for it and see what I can do. The rest, as they say, is history.”
We found ourselves inspired by these CEOs’ stories of seemingly unlikely success. And that inspiration led to the foundational question behind this book: Are the “unlikely” CEOs we know simply lucky exceptions? Or did conventional wisdom get it all wrong about what a successful CEO looks like and what it takes to get there?
In our client work, we aim to solve a $112 billion problem. Hiring or holding on to the wrong CEOs costs shareholders an estimated $112 billion in lost market value annually, according to a study by PwC.3 In May and June of 2017 alone, CEOs of General Electric, U.S. Steel, Ford, and J. Crew all stepped down under pressure from shareholders, prompting the New York Times to call the end of the American era of the baronial chief executive.4 With this book, we aim to solve a much bigger problem. These prevailing stereotypes of CEOs—arguably the most prominent people in business—offer false role models and success guideposts for leaders at any level. Even worse, they deter millions of talented people like Don Slager from ever aspiring to senior leadership roles. Stereotypical CEOs look nothing like me, so why even try? they ask. That is the real tragedy.
One of the reasons for this is that we tend to limit our thinking to the companies and leaders that regularly appear in mass media. This view—typically focused on Fortune 500 companies—is very narrow. It is also very shallow: we know little about these leaders beyond their seemingly perfect public bios. We tend to ignore the vast universe of companies of all sizes. If you broaden the lens beyond the Fortune 500, there are, for example, over two million companies with more than five employees in the United States alone.5 This means over two million CEOs: a broad, rich set of leadership experiences that don’t often get talked about in the press. These smaller companies are an important engine of our economy, generating almost half of the U.S. non-farm GDP.6 When we expand our horizons to include companies of all sizes and apply a deeply analytical approach to understanding CEOs and their paths to the top, our profile of the “average” CEO changes radically, as do the odds of attaining the corner office. Instead of a 1 in 240,000 chance of becoming a Fortune 500 CEO, it means 1 in 50 odds of becoming a CEO if you broaden the company set.7
On our mission to separate facts from fiction on what successful CEOs really look like, we started asking a few pointed questions: How does one become that 1 in 50 who gets the CEO seat—or, for that matter, the 1 in 240,000? What allowed Don Slager and others like him to beat the odds and get to the top? How did they excel? How did they get noticed? What can each of us learn from them? What distinguished those who succeeded at the top from those who flamed out?
If we could answer these questions, we thought, we could tell a far more accurate story of leadership, one that would blow open the doors of the CEO suite to any talented person who wants to reach his or her full potential and is prepared to do the necessary work. Even better, we could provide the map to get there.
To uncover the answers to these questions, we turned to the ghSMART data set of 17,000 leadership assessments. The assessment interviews we conduct typically last roughly five hours and reveal vastly more than one could gather from traditional interviews or psychometric assessments. The Wall Street Journal called this information “coveted” for its unique breadth and depth of leadership data.8 To mine this data, we engaged leading academics and researchers and deployed cutting-edge analytical techniques. For the first time ever, The CEO Next Door unveils insights on CEOs based on the world’s most comprehensive leadership data set, powered by twenty-first-century state-of-the-art data-mining techniques.
Ten years ago we partnered with professors Steve Kaplan and Morten Sørensen and their research teams at the University of Chicago and Columbia University to study our data set of 17,000 leaders. To do that, they extracted a subset of 2,600 leaders to analyze in greater depth. Kaplan’s research is based primarily on the thirty competencies measured in the ghSMART analysis.9 As we read through transcript after transcript, we found ourselves wondering whether behavior patterns of CEOs compared to those of non-CEOs, and of low-performing to high-performing CEOs, held deeper insights than the competencies data alone could offer. To uncover these patterns would require analyzing almost one hundred thousand pages of text transcripts—a daunting challenge.
Much like mapping the human genome, uncovering secrets of the “CEO Genome” required cutting-edge science and technology. The solution came from an unexpected place. In 2013, ghSMART founder Geoff Smart and Elena interviewed Dr. Jim Goodnight, cofounder and CEO of SAS, for Geoff’s book Power Score: Your Formula for Leadership Success. SAS Analytics power the predictive tools that major banks and tax agencies use to detect fraud, to name just one high-stakes application. In the conversation, it dawned on us that if the software could handle millions of tax records each year, it could handle thousands of CEO interview transcripts.10 And so we unleashed the world’s most powerful predictive-analytics software on a subset of what we believe to be the world’s richest data set of leadership behaviors.
What we came to call the CEO Genome Project broke new ground in understanding what drives leadership success, uncovering insights that typical regression analysis never could have picked up. What we discovered surprised and inspired us. Harvard Business Review found our research compelling and relevant for today’s leaders, featuring “CEO Genome Behaviors” in a cover article (“What Sets Successful CEOs Apart,” HBR May/June 2017). This article and related press coverage got downloaded over 250,000 times by readers globally. The portrait of the successful CEO staring back at us from the data looked nothing like the glossy, unattainable image we’d all come to expect. In fact, the data burst a number of the myths surrounding CEOs:11
CEO Myths
We decoded the CEO Genome with the help of Professor Kaplan, SAS, and more than fourteen other researchers from the University of Chicago, Columbia, Cambridge, NYU, the University of California at Berkeley, and ghSMART. But we still weren’t finished. To achieve the full purpose of our work, we needed to go beyond describing what a CEO looks like. Our goal was to create a playbook of tried-and-true and repeatable practices that anyone can benefit from. And so we spent an additional two years going through our findings and digging deeper with clients, cross-referencing their perspectives and ours against the insights yielded by thousands of pages of articles, transcripts, studies, books, and consolidated research. We reinterviewed several of the CEOs in our data sample and added one hundred new interviews. We documented techniques and practices we have used with the CEOs we coach. Over nine thousand people of all levels of seniority have taken a self-assessment on CEO Genome Behaviors on our website www.ceogenome.com and have found the advice immediately applicable.
Between the data and the field-tested experience, we believe we have produced a book that has the power to unveil what it really takes to get to the top—and who succeeds once there. More important, we hope this book has the power to accelerate your journey to the top of your aspirations—whatever they may be—and to protect you from some painful mistakes along the way.
If you aspire to become a CEO: You will learn how to prepare yourself and increase your odds of achieving your goal.
If you don’t know yet where your professional path will take you: You will learn secrets of professional success and how to achieve your full potential from those who have reached the loftiest heights. Just as each of us can benefit from working out with experienced trainers, you will be able to raise your game by learning from today’s successful CEOs.
If you recently landed in a CEO role: Congratulations! And fasten your seat belt! Here you’ll uncover the costly and painful pitfalls that can await a new CEO. We will offer advice to protect you from predictable crises of the CEO role and help you accelerate your success.
If you are an experienced CEO or board member: Grooming the next generation of leaders is probably one of your goals. This book offers proven steps to help you do that, as well as insights to protect you from making painful wrong choices.
Our goal is to give you industrial-strength, evidence-based advice powered by two decades of combined experience advising CEOs, investors, and boards of directors, buttressed by thousands of hours of studies and research by an interdisciplinary team. We will unveil how you get strong, how you get to the top, and how you get results once in the role.
What are the behaviors that enable one to lead like a CEO? What separates the best from the rest? What are the skills or behaviors that really matter? Our research uncovers the Four CEO Genome Behaviors statistically associated with success: Decisiveness, Engaging for Impact, Relentless Reliability, and Adapting Boldly. Importantly, these are not inborn traits. They are behaviors and habits shaped by practice and experience, and they can be developed at any time in your career. We will explain and explore each behavior in the next four chapters and arm you with practical tools to improve your game. And you will learn which one of these behaviors works double-time to increase both your odds of success and your chances of getting to the corner office in the first place.
We have mined the data across thousands of leadership careers to unveil underlying patterns of success. Knowing these patterns can help anyone advance in her or his career. We also examine the career choices and experiences that got some CEOs to the top faster. Finally, we take you behind the scenes to unveil how boards really decide who gets the CEO job and how you can increase your chances of being chosen. What on the surface looks like a highly rational process is full of emotion and biases. To give you just one example, a candidate who speaks with a strong accent is twelve times less likely to be hired as a CEO.15 We will help you anticipate and safely navigate these land mines, no matter what your background is.
A quarter of annual CEO departures are forced.16 There is little margin for error at the top. The first two years are make-or-break for a new CEO. It’s not enough to get to the top—we will show you how to succeed once you are there and how to avoid the hazards in your way. In those inevitable “lonely at the top” moments, you’ll have a trusted guide. Most of the first-time CEOs we work with see the board as their biggest challenge. And yet 75 percent of experienced CEOs tell us that their number one mistake in their first CEO job had nothing to do with the board! It was about picking the wrong people or moving too slowly to get their team in place.17 We’ll lay out how to avoid these and other pitfalls, nail the first two years in the job, and stay on course amid the distracting perks and challenges of the position. Many of the insights in this section will help you navigate any new leadership role.
We’ve helped some of the most unlikely CEOs succeed. People such as a nurse who became the first female CEO in the 160-year history of a preeminent children’s hospital. The founder of one of the most respected investment firms who started his career by losing all of his parents’ 401K savings. The son of an Italian immigrant shoemaker who ran a global helicopter company and a major technology company. A child actor and singer who ran one of the nation’s most consistently profitable banks. Don Slager. The list is long. Each of them at times felt like an outsider or an underdog. Each of them at some point—much to his or her own surprise—realized, “I could be a CEO.” Countless employees, pensioners, patients, and families are better off because these individuals stepped up to the plate despite all odds.
We believe that there are tens of thousands of leaders who could make effective—maybe even world-changing—CEOs if armed with the insights from this book. And there are millions more who can benefit from the lessons and advice and practices of those who do rise to the top to improve their own career trajectory and fulfill their career potential, wherever they ultimately land. Our personal mission is to arm you with the full advantage of an insider’s view on what separates the best from the rest.
The fact is, CEO leadership requires outstanding capabilities—but capability isn’t enough. To become a CEO, an individual must be able to see and believe in that possibility in order to believe it might be an achievable destination. That’s why people who have parents who are professional athletes are statistically more likely than the rest of us to be professional athletes themselves.
Here’s the key: Becoming a CEO isn’t necessarily about background or good fortune. It’s about performance, about behaviors that most of us can master with hard work, close attention, and the techniques we share in this book. We offer real-life stories of success and failure on the way to the top as a way of helping you shape your own career journey.
Even the most impressive CEOs often didn’t start out knowing they were destined for greatness. Nor did most feel driven to pursue the corner office until later in their career. At some point along the way, though, they had their “I can do it” moment. Often it was when they got to see real CEOs “up close and personal.”
Above all, by bringing you “up close and personal” with The CEO Next Door, we hope this book will be the “I can do it” moment for you in pursuing your professional dreams.
We’ve known for some time that the staples of talent selection—the résumé and the job interview—are essentially worthless. Since 1995, our firm ghSMART has been helping investors and boards pick the right who for the C-suite.
Throughout most of the twentieth century, businesses took a decidedly unscientific approach to hiring, relying mostly on intuition, or gut, as their primary criteria for making a selection.18 Over the past several decades, as neuroscience has revealed the biases and irrationality of our choices,19 leaders, from concert halls to baseball fields to boardrooms, have sought out ways to improve the rigor and specificity of the hiring process.
When clients call us for help on a hiring decision or to coach a CEO, our first step is to create a “scorecard.” The scorecard defines success in the role. It includes the mission, business outcomes that the CEO must deliver, and the key leadership competencies required in the role. (A mission might be to position the company as the industry leader. An outcome might be to increase revenue growth from new products from 5 percent to 15 percent annually.) Each CEO scorecard is unique to every company, based on the specific needs of the organization and the company’s performance at a given point in time. It crystallizes, often in quantitative terms, the expectations for financial, strategic, operational, product/service, people, and cultural results over an agreed-upon time frame.
The scorecard becomes the lens through which we assess the executives we interview. Our job is to determine whether a candidate has the track record, the skills, the competence, the trajectory, and the temperament to lead a particular company to success with the prioritized outcomes and to identify the ways to support and develop the executive team.
Armed with the scorecard, our senior consultants (each with at least ten-plus years of postgraduate professional experience) spend roughly five hours with each candidate conducting what we call a Who InterviewTM.20 We ask candidates what they were hired to do, what they were most proud of, what their key mistakes were and lessons learned, whom they worked with, and why they left, for every job they held over the course of their career. We start with simple questions and eventually go deeply into their history, moving well beyond the résumé to capture an intimate personal history. A candidate who is presumed to be a star, we’ll come to find out, was fired from three of his or her past five jobs. A $5 billion construction project almost came undone because of a bad call. A CFO saved a business by convincing the CEO and board to sell a marginally profitable division. Most find the process refreshing and thought-provoking—at last, they are encouraged to tell their full story. A few leave sweaty-palmed.
After completing the interview, we cull and analyze hundreds of data points to assign a probability of success against the scorecard we created. In addition, leaders are graded against more than thirty competencies, such as holding people accountable and attracting strong talent. Finally, we calibrate our findings with several colleagues and with relevant data from past assessments to ensure we are as accurate as possible. In addition, we often supplement our findings with 360-degree feedback data and factor in board-reported data about how the winning candidate went on to perform as the CEO.
After 17,000 of these executive assessments, we know who gets hired and why or why not. And we know how the candidates did once they landed the job. This allows us to connect the success we see today to the qualities we saw earlier—sometimes much earlier—in a CEO’s career. Every year, we assess an additional 250 CEOs who are added to the data set. We are unaware of any other firm that knows as much about what CEOs do, how they got the role, and how they manage the daily grind, sweat, and tears.
I’ve missed more than nine thousand shots in my career. I’ve lost almost three hundred games. Twenty-six times, I’ve been trusted to take the game-winning shot and missed. I’ve failed over and over again, and that is why I succeed.
—Michael Jordan
SO MANY STORIES and legends around CEOs involve what we call the “big decision.” This is the “bet the company” moment, where everything is on the line and the CEO must choose. If she (or he) is wrong, the company implodes, people lose their jobs, and sometimes the company disappears entirely. And, of course, the CEO’s career is over. So she gathers the facts, runs scenarios, deliberates. She confers with her colleagues and the board, wrestles with self-doubt. Finally, she calls on her experience and instinct, looks into the future, ignores the naysayers, and makes the call that saves the company and propels it into an even more profitable future.
These moments exist. We’ve watched them unfold. So our first instinct as consultants was to focus on this big decision—making the right call. We focus our advisory work on CEOs in large part because their decisions have such outsize impact. The livelihood of thousands of families may hang in the balance. At that level of impact, surely nothing could be more important than the quality of each and every decision. But, as it turns out, something is more important—dramatically more important.
When we dug into the behaviors that differentiated high-performing CEOs, the behavior that stood out wasn’t thoughtfulness, analytical rigor, or any other trait you might link to quality decision making. Successful CEOs stood out for decisiveness itself—the ability to make decisions with speed and conviction. Decisive CEOs in our study are twelve times more likely to be high performers.1
Decisive CEOs are driven by a unique sense of responsibility: “It’s on me to handle this,” they realize. While the rest of us may tie ourselves into knots, wanting to get each decision right, they make calls they know could be wrong, operating in a sea of uncertainty. What makes all this possible: deciding with speed and conviction. Knowing which decisions require nine minutes of deliberation, which require two weeks, and which don’t require your attention at all. And, above all, conscientiously learning from every call—good or bad.
“A potentially bad decision is better than a lack of direction,” said Steve Gorman, a CEO we assessed a few years back. When he led the bus company Greyhound Lines, his ability to decide with speed and conviction saved the company.
Greyhound was Steve’s first job as CEO. Taking this job was more a marriage of convenience than a dream. Reeling from an unwise career move that had taken him to North Carolina, Steve and his family were eager to relocate back to Dallas. At Greyhound, Steve inherited a company on dwindling life support. It had been years since the company had made enough money to cover the operating costs and capital investments necessary to be consistently profitable. The parent company, Laidlaw, was coming out of bankruptcy and creditors would not allow investment of more than $10 million per year into Greyhound—they felt it would be wasting money. Steve was operating on a knife’s edge, and he knew it. If he missed his targets, the creditors were ready to shut the doors on the business. And after a short and unsuccessful previous career chapter, Steve needed this new one to be a win. The stakes were high for everyone involved.
Not one to shy away from a challenge, Steve dug in to learn the business and define the path forward. It soon became clear that the biggest problem facing Greyhound was that the company had too many unprofitable routes. Company executives had lots of different ideas about how to fix the carrier’s network. Some thought they should chop up some of the regions. Others wanted to raise ticket prices on long-haul routes.
For four months, Steve listened as his executive team came up with and dismissed a growing list of options. Any change was going to be hard, and there were plenty of reasons why any approach could fail. Finally, enough was enough. Among the piles of data was a satellite map of the United States and Canada at night showing where all the nation’s lights were concentrated, a reflection of population density. Looking at that map, Steve decided Greyhound’s fate: “We cannot have miles where there are no lights.” No lights, no people. He imagined reshaping Greyhound’s service routes around high-yield regional networks, connected with a few long-haul routes. Would it work? He couldn’t know for sure. What he did know was that the company was hemorrhaging money and that people were relying on him to fix things. The network had to be reduced to profitable routes.
With the company’s future and his career on the line and with success uncertain, Steve moved forward quickly and with total commitment. The plan worked. When Steve came on as the CEO, the bus operator had lost $140 million over the previous two years. When he left four years later, in 2007, Greyhound reported $30 million earnings, leading to a successful sale of the company for more than four times its 2003 value.
Steve had pushed forward decisively—not because he knew he was right. He did it because he understood that a potentially bad decision was better than no decision, especially when decisions on the route structure could be modified if needed.
What differentiates CEOs like Steve Gorman is their recognition, their firm belief, that when you need to get somewhere, even having the wrong map is better than no map at all. Art Collins, the former CEO of Medtronic and board member at Boeing, U.S. Bancorp, and several other leading corporations, told us, “It’s like calling a play. I was a quarterback when I played football. You didn’t always call the right play, but, boy, once you called the play, you’d better have all your teammates execute against it.”
Success here rests on action more than pure intellect. Often CEOs with the highest IQs struggle with “decisiveness.”2 They can get bogged down in analysis paralysis and struggle to set clear priorities. Their teams and their shareholders pay the price for their generally earnest desire to get it right.