Given the wide-spread familiarity with the phrase “The first 90 days”, one might expect that executive changes are quite successful. They aren’t.
The failure rate for new executives, most especially when they are new to a company, is breathtaking. At the 18-month mark, even very smart, experienced leaders with successful track records, fail at a rate ranging up to just over 50%. By then, the costs of poor performance or a bad fit are undeniable. Even so, in some companies, a leader will be allowed to limp along until the situation becomes untenable.
Whether a company provides support to new leaders or not, the leader herself needs to exercise control over their transition. This is especially true if the support offered is limited to a few short months, is essentially an orientation, or comes with the support of an individual who is highly prescriptive. In addition to accepting any support offered by the company, a leader in a new role will benefit from asking a few critical questions.
What is really going on?
It isn’t enough to know what results have or have not been achieved. It matters greatly, why and how. A new leader needs to understand the causes of success and conversely, the causes of disappointing results.
Miguel Patricio is the relatively new CEO of Kraft Heinz. His reputation is as a brand-builder at companies such as Coca-Cola, Johnson & Johnson and, most recently, AB InBev. One can read the press and learn that his predecessor, Bernardo Hees, was known for cost-cutting. The company saw its share price drop 42% in a year. Patricio, and any new leader, needs to understand why and avoid the trap of thinking that doing things differently will be enough. Every organization has systemic forces within it and outside of it. Following a leader who delivered poor results can cause the new leader to over-index on their predecessor’s shortcomings and fail to notice the subtle, but important factors they faced.
What legacy did my predecessor leave?
Rather than compare oneself to the former leader, it is helpful to understand their approach because this allows the new leader to hypothesize about the company’s strengths and problem areas. For example, a mercurial, impulsive leader is likely to burn bridges with other people such as senior executives, the board, partners, etc. A leader who is weak on holding people accountable will leave an organization with too much drag to perform well.
During the tenure of Michael Polk, former CEO at Newell, results were lackluster. The acquisition of Jarden failed to deliver as expected and amidst all this, Polk moved the headquarters from its longtime home in Atlanta, to New Jersey. It was recently announced that the company will move back to Atlanta. As Ravi Saligram, former CEO of OfficeMax, takes the reins he might ask several key questions, in addition to those regarding direction and strategy.
In what condition will he find significant relationships, corporate reputation, and culture? A new CEO can certainly alter strategic direction but making it happen takes movement in the right direction and removing barriers to doing so.
When to act?
Most people are eager to show new colleagues that they were the right choice. This is an emotional need that, while understandable, cannot be allowed to overtake good judgment. Further, colleagues who are eager for particular changes can pressure a new leader to make decisions that he or she might not have made with more information. Conversely, some new leaders take so long to make changes that they lose the opportunity to do so.
Frank Blake, former CEO of The Home Depot, assumed his role with great skill and finesse. He had the advantage, and the disadvantage, of knowing the company well as an insider. He knew the criticisms of his predecessor but also had the wisdom and humility not to set himself up as the savior. What he did instead was immediately announce a change. The change wasn’t to policy but to philosophy. He put the associates at the top of what he called the inverted pyramid and made it clear to those in leadership that it was their job to support the associates to serve customers. Blake didn’t need to make comparisons to his predecessor, the differences were obvious and framed positively not as reactions. This worked beautifully.
How can I learn fast without looking foolish?
While the first 90 days aren’t everything, they are important because first impressions live large and long in memory. The very last thing a new leader should do is frighten people, but it is surprising how often that happens. When people are afraid, they shut down.
The easiest way to get around that is for new leaders need to demonstrate genuine curiosity. A leader who is open to learning, even when it means admitting what they don’t know, invites others to speak up. All too often, new leaders are afraid to let others know what they don’t know. Giving in to this fear means putting the brakes on learning. Learning how things are done, what is being done, of course but also about the people who can provide information and insight. It’s a major loss and shows up in lost momentum.
Whether a new leader is from outside the company or inside, the newness of their role is an opportunity to learn, build relationships and establish the tone they wish to set. They need to use the gas, the brakes and the clutch – all of them in the mental and emotional sense. Leaders who do, succeed far more often than those who do not.
Constance Dierickx – I work with boards and senior executives in high-stakes transitions, including mergers, acquisitions, CEO succession, strategic change, and crisis. I have advised over 500 executives, on five continents in 28 industries. My M&A clients enjoy a success rate 400% above the average. In a crisis, I’m known as “the secret weapon.” I have worked with companies including AAA, AT&T, Belk, Boys and Girls Clubs of America, Cox Enterprises, FritoLay, IBM, NextGear Capital, Olive Garden and others. Earlier, I was a broker at Merrill Lynch where I observed the power of emotion on thinking and decision-making. This led me to study psychology and business, and earn a Ph.D. I am the author of The Merger Mindset: How To Get It Right In The High-Stakes World of Mergers, Acquisitions, and Divestitures and High-Stakes Leadership: Leading Through Crisis with Courage, Judgment, and Fortitude.
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