Taking on the mantle of the CEO role is exciting, challenging and hyper important if it goes wrong! How the new CEO performs in the critical first days and weeks of their tenure will set the tone for much of what follows. This applies to every new CEO. Being a successful internal candidate who has made it to the top job does not make the delivery of a strong start less daunting.
In a well-regarded study from twenty years ago CEOs were asked by BCG to talk about their first few months in the job—what they had intended to do, what they actually did, what they regretted, and what they now regretted not doing. A good deal of practical advice stemming from their experience emerged. It included:
“ Diagnose first, decide second.”
“ Follow your instincts.”
“ Take notes, then prioritise and act.”
“Understand…you have only three topics; people, strategy, & values.
“ Pick a kitchen cabinet of people you trust and use them for problem solving.”
The CEOs were asked to come up with an agenda to follow if they were starting afresh in their own jobs. Ten actions were mentioned consistently, and these are set out below in the form of challenges for the new appointee to high office.
- Assess the leadership team—and complete your initial round of changes within 30 days.
No one’s going to have a greater impact on the business than the CEO’s direct reports. They are the top team. It often makes sense (when thinking about changes to that team) to consider adding a few trustworthy outsiders to change the culture or create a sense of urgency. That’s fine, so long as all of the long-established people are not automatically discounted—they have years of experience and are the company’s memory banks. At its crudest, they ‘know where the bodies are buried’!
Choosing the right people is crucial, so some research is needed. That is axiomatic, though one should not rely solely on research. What one feels about things is also important. The best leaders are those willing to act quickly on their intuition, as well as on painstaking analysis. Bear in mind the old adage that ‘The people who got you into the mess are not usually the best ones to get you out of it!”
A good start point for a review of the top team below the CEO is to examine each team member’s track record with the head of human resources. Do they have the basics of business strategy—are they able to take the ‘helicopter view’ of things? Look at the data on their recent performance and interview the most promising players to develop a sense about who is reliable, and (regardless of how they have done in the past) consider whether they have the relevant skills for the future you now envisage.
Any such assessment should also take into account the overall performance of the team, viewed as objectively as possible. In other words, do not rely just on the performance management data for each individual—they are a team, so has the team delivered, collectively, or not? Are the lateral relationships among team members sound?
Bear in mind, always, that the countdown to the end of your honeymoon period in the new job begins with the announcement of your appointment, so it is impossible to overstate the importance of getting the first changes to the top team made quickly. Failure looms if the new leader persists for too long with a team that he/she, deep down, knows is inadequate. Don’t give much benefit of the doubt.
Naturally, changing people in a small team always involves pain, but at all costs do not allow that consideration to cause prevarication and delay. Don’t let sentiment (or squeamishness) stand in your way. Once you are clear what needs to be done, then, in the words of Macbeth “…’twere well it were done quickly”. A recent episode in our The Leadership Diet podcast, a guest lamented his slow start as a first time CEO.
- Acknowledge the past and then communicate your vision of a better company and make sure employees understand how you will get there.
It may be too early for specific details about plans, but a new leader must communicate the basic values that will serve as the framework for future decision making. People need to understand that he/she is sincere and competent. This is also the time to be clear about your management style—how you will treat people and how they should treat you. Doing this will show you as the leader and will stop everyone wasting valuable energy trying to figure out how to please you. Answer questions honestly and don’t promise miracles.
- Meet plenty of ‘front line’ employees to ask them what the company should be doing.
Opening up the chain of command will introduce new sources of intelligence. People ‘at the coal face’ usually know the business intimately. They hear all of the customers’ complaints at first hand; know where all of the quality problems are; and are often able to predict a downward trend long before the finance function. Ask them what you can do to make their working lives better, what parts of their work give them most satisfaction, what needs to be preserved. Answer questions honestly and don’t promise miracles. Honest engagement now sets up a channel through which you may receive valuable information for years to come.
- Meet with ten major customers for an outside-in view of the business.
Customer meetings are an invaluable means of gathering anecdotal information about current performance, business trajectories, and whatever indirect competition there may be in the market-place. There is also no doubt that bringing your senior people together with their counterparts in your customers can help forge strong linkages. When meeting customers, listen carefully (and listen more than you talk!). Seek real feedback and receive it all in a statesmanlike fashion. Be sure to act fast on any valuable ideas.
- Pay attention to personal habits.
As the leader you will have no more privacy! Every move you make will be subject to discussion and interpretation. That includes small things as well as big ones. How early you arrive for work, how you relate to people you meet in the corridors, how well you allocate your time, and how thoroughly you prepare for meetings—these all matter and matter a lot. This is a good time to signal the strength of your commitment by identifying one or two aspects of the company culture that you want to change, but if you do that, be prepared to change them quickly. Announcing and not acting forcefully is ‘the kiss of death’—though be careful. Setting precedents while resolving today’s issues may fatally limit your range of options for finding the solutions you will need tomorrow.
- In a turnaround situation, stop all discretionary spending until you have determined your business priorities.
Cash is always king, and you will need all the resources you can get for your major initiatives. When considering further actions in a turnaround, rethink the whole shebang—all of it, including advertising, development of new products and the need for major operational change. Too often, the most important projects lack sufficient resources because money is being spent on less worthy causes. Every organisation’s budget supports some items that can be reduced or eliminated without risk, so create a short list of priorities and make sure they are carefully tracked and well funded. Revise (raid, even!) the current budgets to pull out the extra funds required.
- Learn how the business creates profitability: understand leverage points and develop simple reporting metrics.
Working out exactly where the money comes from—and where it goes to—can be difficult, but if you don’t know in your first few days, you will be ‘flying blind.’ Apart from the dangers in that, you will inevitably be meeting people—analysts, shareholders, bankers and advisers, for instance—who will expect you to know. Finally, given the close scrutiny to which all CEOs are now subjected, it will be necessary to know how all of the company’s revenues are generated. CEOs not uncommonly delegate this task to the CFO, or (when new into the business) park it with the CFO ‘for the moment’. Either may prove a big mistake. A firsthand understanding of how the revenue side works will often point the way to the generation of short-term upsides or point you to reserves that have been ‘tucked away’ for someone else’s pet project. It will also help identify the key indicators that you will need from the outset. There are profit engines inside every organisation, so find yours and accelerate them.
- Understand each and every problem resident on the balance sheet—communicate them early.
You are likely to get only one ‘free shot’ at erasing the mistakes of your predecessors, so identify these and move to deal with them at once. You cannot start too soon on this. Unpleasant surprises such as defunct inventory, insufficient warranty reserves, excessive goodwill, unresolved customer disputes, lingering litigation and a many other issues have a way of getting hidden in the numbers.
Critical ‘off balance sheet’ commitments also need to be identified and understood. There may be promises made by the previous management team to be dug out and re-examined, too. A good rule of thumb is to expose everything, devise conservative principles as the basis for future strategy, and act on them.
- Generate a multitude of opportunities for ‘quick hits.’
Work at honing your ability to detect hidden opportunities. Take note of all threats—these are often the key to the discovery of opportunities for ‘quick hits.’ Keep a running list of quick hits. Be ready to apply sticking plaster as and where necessary. Putting in a timely patch may be a ‘quick hit’ in itself!
‘Quick hits’ might include such things as running more profitable product promotions, negotiating an expanded agreement with a key customer, curtailing new-product development in weak categories, and launching a comprehensive productivity initiative to match a competitor’s lower costs. But don’t fall into the trap of trying to fix every problem in an attempt to show you are in charge. You must pick and choose your quick hits and be selective. Failure to do so means that you will become so bogged down in operational detail that you lose sight of the big picture.
- Manage the expectations of your ‘up the line stakeholders, be it a Board of directors or Regional/ Global level leadership.
‘Managing upward’ can be the most important part of the job. Create a master plan for all of your ‘upward’ communications and making sure the leadership team follows it consistently. Learn to set expectations that you can exceed when the time comes. Keep everyone informed about emerging risks, and about what is being done to avoid them or lessen their impact.
Make absolutely sure that all of your own team is ‘on message’—the management team in the business must speak with one voice, from one set of facts and conclusions only. ‘Cabinet rules’ become important in this. People in your team should feel free to be able to argue the toss amongst themselves—and with you—in team meetings, etc. but once a decision is made they should support it. You may need to set some explicit ground rules for all this.
Fair or not, leaders are subject to close scrutiny during their first 100 days. A successful first quarter not only promises more to come; it can also help further your goals. Everyone wants to back a winner, and there is no doubt that a strong report card for the first 100 days sets the tone for the next 1,000.