The McKinsey company examined the records of some outstanding top executives. The survey involved approximately 600 CEOs at the largest global companies according to S&P 500, with particular emphasis on their activities between 2004 and 2014.
A detailed analysis was made of the steps taken by 20 of the best performing CEOs (namely those who increased the returns for shareholders by the highest amount). All in all, it seems that the key is not to let oneself be limited by the inertia that sometimes restricts internal hires at one and the same company.
Size doesn’t matter
In some cases, there were unusual circumstances, such as guiding a company through bankruptcy proceedings and all the complications that involves. Other CEOs managed strategically to change the position and operational discipline of the company. When it comes to the 20 best CEOs, it seems that neither the branch of industry nor size of the company were relevant factors.
Objective facts and assessment of the existing company culture
McKinsey had previously discovered that externally hired CEOs frequently outperform their internal counterparts.
Their percentage in the group of top performing CEOs is much higher in comparison to their percentage in the base group of 600 CEOs. Nevertheless, 55% of the exceptional CEOs were hired internally. Therefore, it is apparent that insiders also know how to be assertive and succeed.
Just like external managers, they are able to cultivate an independent and dispassionate perspective of an outsider. This then enables them to do the same thing external hires do, namely challenge the company culture. Their objective view allows them to overcome the inertia that may be present in some companies.
The next article will describe how cutting costs during their first years can sometimes be a really good move for a new CEO. And it is by no means only a question of cost reductions.
-jk-