The pervasive stereotype of a CEO, shaped in large part by the official bios of Fortune 500 leaders, holds that a successful CEO is a charismatic individual with a degree from a top university who is a strategic visionary with a seemingly direct-to-the-top career path and the ability to make perfect decisions under pressure. However, new research suggests there is a fundamental disconnect between what people generally think makes for an ideal CEO and what actually leads to high performance
Based on an in-depth analysis of over 2,600 leaders drawn from a database of more than 17,000 CEOs and C-suite executives, as well 13,000 hours of interviews, Elena L. Botelho and Kim R. Powell’s book to be published in hardcover in March called “The CEO Next Door: The 4 Behaviors That Transform Ordinary People into World-Class Leaders” challenges many widely held assumptions and overturn the myths about what it takes to get to the top and succeed. Their groundbreaking research was the featured cover story in the May-June 2017 issue of Harvard Business Review.
Realizing how few successful leaders actually fit the stereotype led Harvard to conduct the CEO Genome Project, a 10-year study to identify the specific attributes that differentiate high-performing CEOs. Partnering with economists at the University of Chicago and Copenhagen Business School and with analysts at SAS Inc., Harvard tapped into a database created by its leadership advisory firm, ghSmart. The database contained more than 17,000 assessments of C-suite executives, including 2,000 CEOs, with in-depth information on each leader’s career history, business results, and behavioral patterns. The researchers sifted through the information, looking for what distinguished candidates who got hired as CEOs from those who didn’t, and those who excelled in the role from those who underperformed.
The findings of the research revealed that while boards often gravitate toward charismatic extroverts, introverts are slightly more likely to surpass the expectations of their boards and investors. Additionally, virtually all CEO candidates had made material mistakes in the past. 45% of them had at least one major career blowup that ended a job or was extremely costly to the business. Yet more than 78% of that subgroup of candidates ultimately won the top job. Educational pedigree (or lack thereof) in no way correlated to performance: Only 7% of the high-performing CEOs had an undergraduate Ivy League education, and 8% of them didn’t graduate from college at all. And when the qualities that boards usually respond well to in candidate interviews were compared with those that actually help leaders perform better, the overlap was negligible. The researchers found, for example, that high confidence more than doubles a candidate’s chances of being chosen as CEO but provides no advantage in performance on the job. In other words, what makes candidates look good to boards has little connection to what makes them succeed in the role.
The most important discovery was that successful chief executives tend to demonstrate four specific behaviors that prove critical to their performance. It was also found that when boards focus on those behaviors in their selection and development processes, they significantly increase their chances of hiring the right CEO. Research and experience suggest that when leaders who aspire to be CEOs (87% of executives, according to a 2014 survey from Korn Ferr) deliberately develop those behaviors, they dramatically raise the odds that they’ll become high-performing chief executives. The report concludes that although the four behaviors sound deceptively simple, the key to success is to practice them with consistency which is often a great challenge for many leaders.
Deciding with speed and conviction
Legends about CEOs who seem to know exactly how to steer their companies to success seem to abound in business. However, the Harvard researchers discovered that high-performing CEOs do not necessarily stand out for making great decisions all the time; rather, they stand out for being more decisive. They make decisions earlier, faster, and with greater conviction. They do so consistently – even amid ambiguity, with incomplete information, and in unfamiliar domains. People who were described as “decisive” were 12 times more likely to be high-performing CEOs.
Interestingly, the highest-IQ executives, those who relish intellectual complexity, sometimes struggle the most with decisiveness. While the quality of their decisions is often good, because of their pursuit of the perfect answer, they can take too long to make choices or set clear priorities—and their teams pay a high price. These smart but slow decision makers become bottlenecks, and their teams either grow frustrated (which can lead to the attrition of valuable talent) or become overcautious themselves, stalling the entire enterprise. Looking more closely at the executives who were rated poor on decisiveness, the study found that only 6% received low marks because they made decisions too quickly. The vast majority of 94% scored low because they decided too little, too late.
Decisive CEOs recognize that they can’t wait for perfect information and understand that a wrong decision is often better than no decision at all. But once a path is chosen, high-performing CEOs press ahead without wavering. And if decisions don’t turn out well? The analysis suggests that while every CEO makes mistakes, most of them are not lethal. The study found that among CEOs who were fired over issues related to decision making, only one-third lost their jobs because they had made bad decisions. The rest were ousted for being indecisive.
Engaging for impact Once CEOs set a clear course for the business, they must get buy-in among their employees and other stakeholders. The Harvard researchers found that strong performers balance keen insight into their stakeholders’ priorities with an unrelenting focus on delivering business results. They start by developing an astute understanding of their stakeholders’ needs and motivations, and then get people on board by driving for performance and aligning them around the goal of value creation. CEOs who deftly engaged stakeholders with this results orientation were 75% more successful in the role.
The researchers also found that CEOs who engage stakeholders do not invest their energy in being liked or protecting their teams from painful decisions. In fact, both those behaviors are commonly seen in lower-performing CEOs. Instead, the skilled CEOs gain the support of their colleagues by instilling confidence that they will lead the team to success, even if that means making uncomfortable or unpopular moves. These CEOs do not shy away from conflict in the pursuit of business goals. In fact, the analysis showed that two-thirds of the CEOs who excelled at engagement were rated as strong in conflict management.
The ability to handle clashing viewpoints also seems to help candidates advance to the CEO’s office. Among leaders who had become CEOs significantly faster than average, one of the qualities that stood out was their willingness to engage in conflict. None of this means that CEOs should behave as autocrats or lone wolves. Typically, says the report, “take no prisoners” CEOs last only as long as the company has no choice but to submit to shock therapy. These CEOs often get ousted as soon as the business emerges from crisis mode. They lose the support of their teams or of board members who’ve grown tired of the collateral damage. It’s no coincidence that the careers of turnaround CEOs are frequently a series of lucrative two- to three-year stints. They put out the fires and then move on to the next assignment.
For evidence of how important it is for businesses and leaders to adjust to a rapidly changing environment, the Harvard researchers looked at the aftermath of the Brexit vote in the United Kingdom and the recent U.S. presidential election. Analysis showed that CEOs who excel at adapting are 6.7 times more likely to succeed. When asked what differentiates effective CEOs, Dominic Barton, global managing partner of McKinsey & Company, said: “It’s dealing with situations that are not in the playbook. As a CEO you are constantly faced with situations where a playbook simply cannot exist. You’d better be ready to adapt.”