When I started working with Sam, he had just joined a B2G startup as the new CEO. Previously, he was a promising young executive in an enterprise software company, leading the Sales function in one of the regions.
The former CEO believed in him. The board believed in him. The startup team didn’t.
The former CEO believed in him. The board believed in him. The startup team didn’t.
Sam's new role began with significant conflict within the team. He ended up firing one of the executives and bringing in his own people. But despite his tireless work, the company lacked an agreed-upon strategy, new sales and new partnerships.
Sam's experience was common to many first-time CEOs when stepping into their new role. According to McKinsey, "between a third and half of new CEOs are considered to be failing within 18 months of taking the role. More than 90% of those CEOs confess that they wish they had managed their transition differently."
Common CEO Pitfalls
How a CEO performs significantly impacts overall company performance. In the book CEO Excellence: The Six Mindsets That Distinguish the Best Leaders from the Rest, the authors show data from the McKinsey database demonstrating that CEOs who rank in the top 20% of financial performance generate, on average, 2.8 times more total return to shareholders during each year of their tenure than do average performers.
However, several issues that are unique to CEOs and often overlooked complicate or even cloud good decision-making. First, many new CEOs think they need to be on top of everything.
Second, in a role without peers, they often lack constructive feedback, which can create an illusion that their new title will automatically generate trust and respect. I recently spoke with a startup advisor who shared with me that in his view, too many startup CEOs don't view themselves as serving the company. They should be leading with humility, but ego all too commonly stands in the way.
Five Focus Areas
When I coached Sam and many first-time CEOs after that, we focused on five areas that helped them transform the challenges of the new role into opportunities for growth for themselves, their teams and their organizations:
Sam's experience was common to many first-time CEOs when stepping into their new role. According to McKinsey, "between a third and half of new CEOs are considered to be failing within 18 months of taking the role. More than 90% of those CEOs confess that they wish they had managed their transition differently."
Common CEO Pitfalls
How a CEO performs significantly impacts overall company performance. In the book CEO Excellence: The Six Mindsets That Distinguish the Best Leaders from the Rest, the authors show data from the McKinsey database demonstrating that CEOs who rank in the top 20% of financial performance generate, on average, 2.8 times more total return to shareholders during each year of their tenure than do average performers.
However, several issues that are unique to CEOs and often overlooked complicate or even cloud good decision-making. First, many new CEOs think they need to be on top of everything.
Second, in a role without peers, they often lack constructive feedback, which can create an illusion that their new title will automatically generate trust and respect. I recently spoke with a startup advisor who shared with me that in his view, too many startup CEOs don't view themselves as serving the company. They should be leading with humility, but ego all too commonly stands in the way.
Five Focus Areas
When I coached Sam and many first-time CEOs after that, we focused on five areas that helped them transform the challenges of the new role into opportunities for growth for themselves, their teams and their organizations:
1. Get to know the people before the role.
During your initial one-on-ones with your C-suite, prioritize understanding the personalities behind the titles. Learn about their ambitions, what they care about and what they expect from you.
Erik Visser, the CEO of Hamlet Protein, shared in an interview with me that new CEOs need to explore, listen and not assume: "Spend time with individual executive members to understand their specific agenda; where do they see the key challenges and opportunities." And he stressed that new CEOs don't just need to listen to senior management; they should also take time to speak to representatives of all levels of the organization to truly understand the company.
2. Understand the culture before making decisions.
While many will expect quick decisions from you, the organization will benefit more if you take the time to listen and understand its unique culture. This understanding will help you navigate the company's unwritten rules, values and expectations, allowing you to make more informed and culturally aligned decisions that are more likely to be accepted and implemented successfully.
Research by Deloitte suggests newly appointed CEOs should partner with the board to familiarize themselves with the company’s culture, policies and organizational dynamics.
3. Manage expectations.
Ensure you have a clear understanding of what the board expects from you. Actively reach out to gain insights into long-term goals and immediate expectations.
As Davidson Oturu, Nubia Capital Managing Partner, pointed out in an interview I conducted, "There needs to be consistent feedback. You as a CEO need to consistently keep your board on track with where you are and provide them with the right type of updates. And there has to be that transparency and consistent communication with the board so they understand where you want to go and if you are achieving your desired purpose."
4. Explain your leadership style.
Communicate to your team members what they can anticipate from you. Describe your leadership style and the best ways to interact with you. Be transparent about your agenda and timelines.
In the article "Four Steps to Success for New CEOs," McKinsey points out that when a new CEO joins a company, it creates an enormous change for the whole organization. It is important not to make this transition about you, but to focus on your team's and the organization's needs. The article recommends: "Instead of asking, 'How will I get the organization on board with my vision?' ask, 'How will I engage the organization in creating our shared vision?'" And you can start creating this engagement by sharing your leadership style.
5. Connect with key partners and customers.
Your success as a CEO hinges on the trust you build with key stakeholders.
And don't limit your focus to internal stakeholders; foster external relationships with your essential partners and customers as well. This external engagement not only provides valuable insights into market dynamics and customer needs but also helps you identify potential opportunities for growth and innovation that may not be apparent from an internal perspective alone.
Final Thoughts
Navigating the complexities of a CEO role, especially as a first-timer, can be intimidating. However, by focusing on understanding your team, understanding the company culture, managing expectations, communicating your leadership style and building relationships with key stakeholders, you can turn initial challenges into chances to grow.
Concentrating on these key aspects not only contributes to your success but also fosters a positive atmosphere for your team and organization. Remember, leadership is not about asserting dominance but about serving your company with humility and strategic insight.
During your initial one-on-ones with your C-suite, prioritize understanding the personalities behind the titles. Learn about their ambitions, what they care about and what they expect from you.
Erik Visser, the CEO of Hamlet Protein, shared in an interview with me that new CEOs need to explore, listen and not assume: "Spend time with individual executive members to understand their specific agenda; where do they see the key challenges and opportunities." And he stressed that new CEOs don't just need to listen to senior management; they should also take time to speak to representatives of all levels of the organization to truly understand the company.
2. Understand the culture before making decisions.
While many will expect quick decisions from you, the organization will benefit more if you take the time to listen and understand its unique culture. This understanding will help you navigate the company's unwritten rules, values and expectations, allowing you to make more informed and culturally aligned decisions that are more likely to be accepted and implemented successfully.
Research by Deloitte suggests newly appointed CEOs should partner with the board to familiarize themselves with the company’s culture, policies and organizational dynamics.
3. Manage expectations.
Ensure you have a clear understanding of what the board expects from you. Actively reach out to gain insights into long-term goals and immediate expectations.
As Davidson Oturu, Nubia Capital Managing Partner, pointed out in an interview I conducted, "There needs to be consistent feedback. You as a CEO need to consistently keep your board on track with where you are and provide them with the right type of updates. And there has to be that transparency and consistent communication with the board so they understand where you want to go and if you are achieving your desired purpose."
4. Explain your leadership style.
Communicate to your team members what they can anticipate from you. Describe your leadership style and the best ways to interact with you. Be transparent about your agenda and timelines.
In the article "Four Steps to Success for New CEOs," McKinsey points out that when a new CEO joins a company, it creates an enormous change for the whole organization. It is important not to make this transition about you, but to focus on your team's and the organization's needs. The article recommends: "Instead of asking, 'How will I get the organization on board with my vision?' ask, 'How will I engage the organization in creating our shared vision?'" And you can start creating this engagement by sharing your leadership style.
5. Connect with key partners and customers.
Your success as a CEO hinges on the trust you build with key stakeholders.
And don't limit your focus to internal stakeholders; foster external relationships with your essential partners and customers as well. This external engagement not only provides valuable insights into market dynamics and customer needs but also helps you identify potential opportunities for growth and innovation that may not be apparent from an internal perspective alone.
Final Thoughts
Navigating the complexities of a CEO role, especially as a first-timer, can be intimidating. However, by focusing on understanding your team, understanding the company culture, managing expectations, communicating your leadership style and building relationships with key stakeholders, you can turn initial challenges into chances to grow.
Concentrating on these key aspects not only contributes to your success but also fosters a positive atmosphere for your team and organization. Remember, leadership is not about asserting dominance but about serving your company with humility and strategic insight.