Courtesy of McKinsey & Company

by Carolyn Dewar, Scott Keller, Vikram Malhotra and Kurt Strovink

Key takeaways

Some experiences in life you simply can’t prepare for. You can imagine how you might feel and what you might do, but you can never actually know how you will respond in a situation until it happens. For a select few who successfully climb the corporate ladder, becoming CEO can be added to this list.

What makes the top job so different from the leadership roles that come before it? To start with, new CEOs discover quickly that they are accountable for everything, that their reporting relationships have changed dramatically, and that the job is extremely lonely.

In fact, one-third to one-half of new CEOs are considered to be failing within 18 months of taking the role, and more than 90 percent of those CEOs confess that they wish that they had managed their transition differently. Those who get it right realize early on that they will need to lead differently than they did on the way to the top. They know that their success will depend on whether they can reinvent themselves by rewiring the many work habits they built up over decades (on average, new CEOs have worked for 24 years before taking the role).

Savvy CEOs recognize that the renewal opportunity isn’t just for them but for the entire organization. A CEO transition creates a similar opportunity—albeit without the crisis—to reset an organization’s aspirations and ways of working.

The best CEOs don’t miss the opportunity to make their first six to 12 months (not just the vaunted 100 days) both a personal transition of great import and a profound moment of institutional renewal. While each leader will act in ways befitting their unique situation, there are at least four common ingredients for success:

·        not making it about you

·        listening, then acting

·        nailing your firsts

·        playing “big ball”

Don’t make it about you

In his 1979 book Transitions: Making Sense of Life’s Changes, the late author and consultant William Bridges wrote about the difference between transition and change. According to Bridges, change is something that happens to people. Transition, on the other hand, is internal: it’s what happens in people’s minds as they go through change. Change can happen very quickly, while transition usually occurs more slowly. The distinction is subtle but vital to understand for a new CEO who is pursuing both personal and institutional renewal.

As a newly appointed CEO, all this attention and power can quickly create a celebrity CEO phenomenon where the transition becomes all about you. Successful CEOs don’t let this happen—they keep their minds focused on the institution. Taking this approach starts with asking different questions, which then lead to different answers. For example:

Listen, then act

When a new CEO takes over, anxiety levels can run high within the organization. Everyone wants to hear what the new person thinks, what will change, and what the change will mean for them. With people overanalyzing every word and move the new CEO says and makes, the urge to decide, declare, promise, and explain is strong. The best leaders in transition know that it is better to listen and find out what is really going on before making broad declarations or premature moves. Practically speaking, this ethos translates to the following practices:

·        Start with a broad-based listening tour.

·        Create a fact-based “one version of the truth.”

·        Lock in a short list of bold moves.

·        Communicate those moves in an elegantly simple, engaging manner.

During the listening tour, examples of other powerful questions you might consider asking are: What do you hope will change? What should not change? What aren’t people telling me that I need to know? What am I not hearing that I should be hearing? Lockheed Martin’s former CEO Marillyn Hewson explains why such questions are uniquely powerful during the transition period: “People tell you things because you’re the newbie that they’re not going to tell you two or three years from now.”

The perceptions you pick up during your listening tour should be validated with facts where possible and augmented by analytics that can help answer tough questions about the state of the business. The goal is to create one version of the truth that you can use as a baseline for the organization’s aspirations and against which to judge its future performance.

Once you have a strong, fact-based understanding about what is needed to propel the business forward, it’s time to identify the biggest needle-moving actions that you will lead. McKinsey research shows that making even two big moves across these arenas more than doubles the likelihood of rising from mid- to top-tier performance, while executing three or more makes such a rise six times more likely. Furthermore, CEOs who make these moves earlier in their tenure outperform those who move later, so there is a premium on mobilizing the organization quickly. Listening is a key part that needs high time investment, as social science suggests that people are up to five times more motivated to execute initiatives that they have had a hand in creating versus ones that have been handed down from on high.

Nail your firsts

Getting your first impressions right doesn’t guarantee success, but it does increase the odds. Early in your tenure, everyone, even those you have worked with for years, is forming their first impression of you as the CEO. Getting your first impressions right will send strong messages about how you intend to lead differently and the renewal opportunity you see for the organization. Applying the following four principles will help ensure that your first impressions are positive:

• Understand people’s “why?”. If you know what motivates a person and can connect at that level, the chances are greater that you will make a positive and lasting impression.

• Keep to a single narrative. When something happens, internally or externally, continue to adopt a single narrative and communicate in the same way.

• Err toward complete candor. Do not overpromise, be frank about the problems the same way as you are about the opportunities. Such sincerity lays the foundation for real trust and credibility.

• Prepare intensely for moments of truth. Successful CEOS prepare intensely for important moments of truth, such as the first time meeting their team, first board meeting, first investor presentation and first quarterly earnings report. “It’s not the will to win that matters—everyone has that. It’s the will to prepare to win that matters.””, said a US football coach Paul “Bear” Bryant.

Play ‘big ball’

“Play big ball, not small ball,” advises Sandy Cutler, the former CEO of the power management company Eaton. “By that I mean spending time on things that no one else can in ways that magnify your effectiveness without getting mired in things that don’t make a difference.” Many new CEOs suddenly find themselves accountable for everything and to everyone. When they enter the role, they often think that they will go hard for the first 90 days and then back off a bit. However, it is very difficult to manage. As a new CEO, you should be disciplined about playing “big ball” from day one.

To play big ball throughout their tenure, new CEOs can put three foundational elements in place early:

• Time management: Set clear boundaries and stay extremely disciplined. Find an approach that suits you in time management, such as color coding on calendar, etc. Use your time wisely based on your priorities and learn how to say no politely to effectively utilize your time.

• Talent: Put “A” players in critical roles, move on “C” players, and help “B” players succeed. The best CEOs create a short list of roles (30 to 50) that will have the most impact on driving their company’s strategy. Then they make sure those roles are filled with A players. They also make tough calls on C players, even those who have been loyal to the organization for decades. Further, is creating the conditions for B players to up their game: role modeling, setting expectations, and providing incentives and capability-building opportunities.

• Operating rhythm: Combine accountability with urgency and targeted coaching. Establishing a robust operating rhythm for the company will enable you as CEO to play big ball. The key is to have a regular rhythm of reviews covering organizational, operational, and strategic issues. The ratio given to each issue is determined by the substance of those sessions – if the performance is good, you don’t need to spend too much time on it and on the contrary, if the performance is a concern, it will be a long review. Your operating rhythm doesn’t just reinforce your priorities; it also sets the metabolism of the organization.

By not making it about you, listening then acting, nailing your firsts, and playing big ball, you’ll soon hit your stride.

To read the full article, please visit https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/starting-strong-making-your-ceo-transition-a-catalyst-for-renewal

About the author(s)

Carolyn Dewar is a senior partner in Bay Area, Scott Keller is a senior partner in Southern California, Vikram Malhotra and Kurt Strovink are senior partners in New York.