Executive search and consulting firm Spencer Stuart works closely with corporate leaders, and regularly puts together reports about the feelings of leaders and the future of leadership. After collecting data to analyze the performance of every S&P 500 CEO during the 21st century, the firm’s CEO analytics leader Claudius Hildebrand and co-leader of its CEO succession practice Robert Stark, turned their findings into a deeply researched book, The Life Cycle of a CEO. This book, which becomes available this week, explains the job trajectory of a CEO, from the time before they are appointed, to when they leave and are succeeded.
I talked to them about their book and its lessons for leaders of all sorts. This conversation has been edited for length, clarity and continuity. It was excerpted in the Forbes CEO newsletter.
Who is this book for?
Hildebrand: This is a book about leadership. It’s a book for CEOs, but it’s not a book exclusively for CEOs. We just happened to choose to study leadership in its most complex form. And when you look at CEOs and the situations they encounter, that really is the perfect Petri dish where the most ambiguous, most convoluted, most complicated questions land. The questions that nobody else dares to answer, and CEOs have to confront them. Many of the lessons learned will be applicable to anyone who’s aspiring to be a leader, and obviously very helpful to all the CEOs in their day-to-day and as they navigate their careers. But the bigger point of the book is really around how do you grow as a leader, and how do you evolve over stages?
We have the benefit and the privilege through our work [to] work with many CEOs on a day-to-day basis. We have the privilege to access that group and study through their lens, but the intent has always been to share these messages on a broader basis. I was at [University of California] Berkeley yesterday speaking to a group of MBA students, and they found those insights just as helpful as they are aspiring and dreaming. Not every one of them will be a CEO, but it will help them guide their actions towards those goals.
Stark: There’s no doubt that CEOs are in the bullseye. We have the opportunity to work with individual CEOs, new CEOs, and long-serving CEOs. We have so much wisdom from working with those individuals, then gathering insights from the quantitative research and the qualitative. We use all of that in our work with individuals, and it seemed like the perfect moment to A: Go from working with several, to sharing with many CEOs, and B: To integrate all those into one stage-by-stage framework for development for the CEO. The CEO, I think, is audience number one.
We also, in all of our research and work, learned a lot about the years leading up to the CEO job. Those were really powerful stories that we felt like we had to tell. There was always an intention to make this accessible and helpful to people even earlier in their careers. We have that particular chapter, but the whole arc of the book is helpful for people to think about their own development.
Six years ago, when we first discovered this nonlinearity and the ups and downs of the CEO’s tenure, I’d been at Spencer Stuart at that time about 10 years, and the first thing I asked myself when I saw the chart was: Where am I on this chart? Am I in a complacency trap? Have I just been unwittingly settling in and not noticing that my performance and energy might be waning? Do I need to renew? Do I need to do something different? I think it has a lot of applicability for anybody where they are and as they think about what comes next.
Hildebrand: It’s very applicable to CEOs, but also those surrounding CEOs. Think of CHROs who aspire to be a confidant. It’s helpful for CHROs to understand the challenges that their leader might go through. It’s great for boards who want to empower the CEO, make them better and understand their perspective: where they can help but also inform their decision-making. It’s great for those observing leaders: the financial community, investors, the media. To understand, to take perspective and sometimes maybe even empathize a little bit with the role that they’re filling.
What made you decide to pursue this book, and where did the idea come from to write about leadership in this way?
Stark: I’ve been advising and coaching CEOs and senior leaders for a long time. It’s the thing I really love to do is to have breakthroughs with these people. To help those leaders, we as a firm and me individually, have been really determined to be able to provide more insight to those individuals, get beyond some of the myths and fallacies about what it takes to be successful. That was really what drew me into the research.
Hildebrand: I’ve always felt a deep dissatisfaction with the way we think about leadership. We all agree that leadership is an incredibly important lever to guide our societies and our fortunes. At the same time, it is all story-based. It’s all narratives, conventional wisdom. Don’t get us wrong: Stories have their place, and the book is chock-full of stories to illustrate some of the principles. But what’s really been missing is a different lens to study leadership that integrates the stories and the conventional wisdom, but also checks it through the transparency of big data.
Over the last seven years, Bob and I have been spearheading this effort to understand patterns over time by aggregating big data sets and studying the performance patterns of leaders and what makes them successful, to parse facts and fiction, and to validate some of these stories that are out there, and to prove those that are not so helpful, or wrong.
Both of you work with executives and leaders all the time. What were some of the things that you found through the research for this book and also talking to former and current CEOs and board members that surprised you, or stood out as being more important than you had thought?
Stark: I think the big initial surprise was from the quantitative research. We all assume—I, too, had assumed, most directors and CEOs we surveyed assumed—that once someone gets in the job, their growth, and therefore their performance, both follow a linear trajectory. And the data totally upended that. It’s not linear at all.
If you ask people today about CEO tenure, and performance of CEOs over time, they will paint a picture of an inverted U, where each year is better than the last, until around year eight, nine, or 10, when their energy wanes and the U starts to curve down. The big reveal of the initial research was that it’s not linear at all. There are these headwinds and tailwinds, these sharp ups and downs that are, I think, for most people, completely unexpected.
Hildebrand: It’s that cult of the charismatic leader. The idea that just because someone has been given a title, suddenly they know it all. They’re wiser, they’re funnier, they’re taller. This is the way we portray these leaders in the media. It’s also the way we as a society want to see these leaders. We don’t want to have a self-doubting leader. That’s not very reassuring. It’s also in the advice that’s currently out there for leaders: This idea that you have to have these four traits, or these five behaviors and these six mindsets. What we find time and time again is when we work with executives and CEOs and advise and we [find there are some] who question their decisions, who have to rely just as much on gut as they have to rely on information. And to Bob’s point around this idea of continuous growth, we found there’s no model of leadership that focuses on a set of growth or development stages.
But at the same time, you never step into the same river twice. Just because someone is the leader doesn’t mean that they don’t change over time. And that’s what we found. The challenges that leaders face might have similarities, but they manifest themselves differently depending on where one is in their tenure, and then where one psyche is in those moments. The book’s not only about what CEOs do to be great, but it’s also how leaders feel along that journey.
Going through the different stages of the CEO’s life cycle, as well as the before and after periods, is there any one area that you think CEOs or other leaders should be taking a closer look at and reassessing how they are responding to challenges?
Stark: My initial response is that across the life cycle, every one of these stages, there’s a critical moment for self-reflection. It can happen in the first year. There are moments in a CEO’s first year, there are moments pre-CEO, there are moments when you’re the new CEO, where if you’re not reflecting on where you’re at, what you’re doing and what comes next, you can be tripped up.
The place that we really shine a light on where people can get sideways is in the second year in the calibration, which we sometimes talk about as a ‘sophomore slump.’ You’ve got to be ready at every turn for what is next and how stakeholders will be viewing you, given their expectations at every stage.
For most CEOs, before we started writing about this, a moment of reinvention that was really unknown is when they get to that year three through five and they’re doing really well, they kind of have a sense that, ‘Oh, I’ve figured this out. I’m good at this now. My team is humming. People see the results that I’ve created in the moves that I’ve made earlier.’ It’s very easy at that point to settle in.
I remember when we first talked to CEOs about our findings years ago, I was in front of a big group, and a CEO put up his hand and said, ‘Every role I’ve been in before CEO was three to five years, so I never had to reinvent in place. I’m in year five right now, and I’m trying to figure out how do I start over in this role?” That’s a huge moment because people are used to: I get a new role, I figure out how to do that, create some value, get the new team going. But if you’re going to go past five years, you’ve got to in-place reinvent, without external stimulus.
Hildebrand: There’s so many different points in time to highlight that it’s really hard to single out any one of them. Leaders who use the life cycle as a framework, I think that’s the benefit of it: to identify where, for you personally, you might see that challenge. It’s a lot about foreseeing the challenges. The key message of the book is preparedness beats preparation. This idea of anticipating what might be coming your way, to be then taking the appropriate actions and avoiding some of the pitfalls.
You broke out the experience of a CEO in a private-equity-owned company into its own chapter. What made you decide to address it that way?
Hildebrand: Private equity is a really interesting place. When you think about it as a sector, it’s only been around about 50 years. These days, there’s more privately held companies than publicly held companies. It’s a really important part of our economy that we did want to address.
We did find significant differences in that sector that are different from the public sector. Holding periods in private equity have increased. It used to be more like three to five years. These days, the average holding period is close to seven years. When you look at the median tenure of an S&P 500 company CEO, that’s also seven years. What can they learn from each other to get better? What we hoped to do in parts of that chapter is compare and contrast a little bit.
One thing that we found that one can learn from the other is private equity has a really interesting governance model. We talk about it in the leadership triad. In a public company situation, boards are far removed from the inner workings of an organization, and the CEO is in the middle of this holding the power. When information flows and doesn’t flow from one or the other, much depends on that one individual.
In a private equity setting, you have a triangle, where the deal sponsors and the boards are much more involved with the executive team. There’s oftentimes operating teams that also report to the board and the CEO. The CEO finds themself in a triangle in the middle of a triangle where information flows. That sounds simple at first, but when you go to sociology and social networks, it’s a fundamental principle: It’s basically the DNA of social networks, and leading in those is very different. In private equity, the ability for information to flow more freely has many advantages over the more staid, more procedural theater that comes through your regular board meetings. It delays many things. I think public companies could improve on their governance.
On the other side, private equity is running into a fundamental challenge. It’s very difficult to quantify the ROI on investments into talent, and they’re running on a very strict scenario plan over a seven-year period. Any day that you wait to invest in talent, you’re losing the half-life of the return on investment. But at the same time, the way that private equity has developed, it’s no longer about the leveraged buyouts and loading a balance sheet full of debt and selling it off in a matter of months or years. Leadership is the next frontier, and the best private equity companies understand that, but they’re still struggling with how do you develop leaders internally, and how do you set them up for success in the same way that some of the iconic companies that are in the public realm have done.
If there’s one lesson, story or example you would like readers to take from your book, what would it be?
Stark: The CEO job is interesting to study because it’s so complex. But the complexity of the role also reveals that for all of us, even in roles less complex, we shouldn’t assume that the role that we’re in is static. It actually unfolds over time around us. In any job that we have to do, our particular job is to develop and adapt as the job is unfolding, notice how it’s unfolding and be adaptive to that unfolding. That’s what happens to CEOs. Those who figure out how to adapt and grow in the role can thrive, and those who don’t struggle mightily.
Hildebrand: Challenges exist at every stage. What’s different is how they manifest themselves throughout the progression of tenure. If we think about our personal lives and the challenges that we encounter in our 20s and 30s and 40s and 50s, they’re very different.
Back to this idea of how do you anticipate how to be prepared for those moments and have the ability to reflect on it, that’s a key element in all of this. This understanding of evolution over time and growing together within.
For a new CEO stepping into the role, the amount of information that’s thrown at them, we all say it is like drinking from the firehose. You don’t know what is important and what is urgent. Everything seems to be important and urgent. How to deal with this? That’s a very different challenge than what some of the veteran CEOs might feel when they’ve been in that role for 12, 15 years, when they feel like they no longer have real access to information. Yes, they can get the information, but the board is, at this point, deferential to them. The team, at this point, thinks they know it all. They’re now in a sort of echo chamber, where it’s hard to peer through.
What’s constant is the importance of information, but how the challenge manifests, it’s very different. Understanding where one is on one’s journey, and how all these different challenges manifest themselves, that’s hopefully the big contribution to anyone reading the book, as they work on taking their game to a higher level.
Is there anything else you wanted to add?
Hildebrand: It feels often from the outside that we look at organizations as these rational, logic-driven places. Fundamentally, what we encountered day-in and day-out, is that we’re all human beings. Many of those challenges are as much psychological and sociological challenges as they are economic challenges. What we hope for this book is not only to help leaders anticipate challenges and get better at it, but it’s also an attempt to showcase what it feels like. The job is lonely, but [we wanted to] provide a platform to see, you’re not alone in this. Any other leader is facing these challenges, and just because they appear on stage as the confident person that we want them to be doesn’t matter. It doesn’t mean that they might be struggling mightily internally, and with how to take that inner game forward.
This post was originally published on here
