Why 82 CEOs Failed

Accountability Management Thought leadership

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Key Point: My last few blogs have been about the acute importance of continuous personal development to remain valuable and relevant to the company and boss we’re working for. The following is an excerpt from an interview with Ram Charan, one of the world’s preeminent advisers to CEOs and boards. Charan has spent the past 35 years watching hundreds of executives deal with their toughest challenges. He is a highly respected academic, consultant, speaker and author of several best-selling books. I pay attention to his insights:

“When I studied 82 CEOs who failed, I saw that the most common reason for failure was putting the wrong person in a job and then not dealing with the mismatch. I’ve seen CEOs take staff people who are in the succession pool because of their brilliance, energy, and business acumen, and give them big line jobs to test them. Then the CEOs get busy and lose sight that these inexperienced people are killing the company. In one situation the person put in charge of the largest division took the company into a negative position in less than two years.

It’s usually obvious who needs to go, and most of the time CEOs know it in their gut but don’t do anything. It’s hard to admit the error, or they have a psychological bond with the person or think they can coach him or her. Sometimes it’s a matter of misjudging performance, because they don’t dig into the causes.

Today most if not all industries are impacted by digitization—mobile technology, big data, and the like. It has a tremendous effect on which people are more critical than others…”

The impact of Charan’s advice to you and me is that CEOs will be moving and replacing more executives at the top faster than ever before. This is not the classic shuffling of the “deck chairs,” but connecting leaders with the skills (and attributes) to where the company must go. And of course the environment is changing so rapidly that skill requirements change accordingly. So when the top shuffles, it ripples down to every role in the organization, including your’s and mine.

Character Moves:

  1. Write down the key strategy and challenges facing your organization. Clearly define how you fit in, add value and help now, as well as preparing for the future. As you do this, if you cannot understand digitization, big data and mobility and their impact to your business, you’re likely not preparing for where you and your organization must go.
  2. It is YOUR responsibility to understand the big strategic picture and how you align at a daily level. Do not expect that it will be handed to you in a clear, nicely stated brochure and/or the annual report. By the way, most annual reports and strategic plans are out of date the day they are published.
  3. If you have people who report to you, make sure you are not caught into the same trap the 82 failed CEOs made. Hopefully you will be fair, and highly respectful when you replace people BUT make the changes you need to. Otherwise, someone may conclude that you are unable to make the tough assessments and decisions.
  4. Understand digitization, big data and mobility at a consumer level. For the first time consumer trends are often more advanced than industrial trends. That’s why you and I need to understand leading technology and how it has relevance to our personal work skills. Being “old” will not be defined so much by chronological age, but by our use and understanding of technology. 

Tough decisions in the Triangle,

Lorne