Give new CEOs a chance to "diagnose" before "doing"
Internally promoted CEOs face a transition period that is "incredibly fraught with risk and peril", says leadership expert Stephen Miles.
New CEOs should set expectations, not inherit themDuring this "diagnostic period", CEOs should consider the structure of their company, with particular focus on their team, he says. Most have been promoted through their peer group and will need to establish themselves as a new leader.
New CEOs should also proactively set expectations early on, Miles says. "It's the only time, the only time that you can set the bar. Everybody around you has their own bar set, everybody above you has their bar set, and you need to set the bar so you can exceed expectations."
Miles says it is not about "sandbagging" but about setting realistic expectations against what the business requires.
Inside versus outside when implementing strategic changeA recent US study has found that the advantages of having an "inside" CEO are most apparent after the first three years.
Conducted by academics from the University of Southern California and Rice University (Texas), the study examined how the relationship between strategic change and firm performance differed between "outside" and "inside" CEOs by comparing the tenure histories of 193 CEOs with company performance.
The relationship was similar in the early years of tenure, but over time higher levels of strategic change proved less effective in companies led by outside CEOs.
While outside CEOs are "prized" for their non-company-specific but "relatively novel" knowledge and skills, the company-specific knowledge and skills that inside CEOs had gained through prior experience were of significant long-term value, the researchers said.
Because inside CEOs had "a deeper understanding" of their company's internal resource conditions, and were "constrained by their past experience", they were more likely to implement strategic changes incrementally and continuously, the researchers found. Their approach proved less disruptive and more effective than their outside counterparts, who were more adept at implementing lower level change.
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