The statistic is frightening. According to some estimates, one-third to one-half of new CEOs fail within the first 18 months. Astonishingly, most failures are not attributed to hard skills, strategies, market positioning or even sales growth. It all comes down to fatal mistakes that set new CEOs on the wrong track without realizing the reality of their situation.
New CEOs are surprised to discover that previous experiences didn’t adequately prepare them for this position. They wish they knew before stepping into the role what they know 18 months into the role…if they are still CEOs.
By starting off on the right track, the CEO role can be both rewarding and fulfilling. A new CEO client said something that deeply resonated with me: “The CEO role is a gift. It enables me to make a positive impact on people’s lives”.
To improve the odds of new CEOs and help them thrive, I have summarized the seven common mistakes new CEOs make and how to avoid them. These are lessons shared with me by the CEOs I hosted on the CEOpeek show, those whom I served as an advisor and my personal experience as a new CEO a decade ago.
Mistake #1 – Think that You are Ready
EXCHANGES 2016 CEO study about new CEOs by The River Group revealed that six months into the role, new CEOs usually feels higher stress and isolation than in the first three months. The study showed that CEOs rated their preparedness to be CEOs at 7.2 (on the scale of 1 to 10) on their first day, versus 3.5 six months later.
I was promoted from COO to CEO within the same company. Although groomed to become a CEO, the transition was not as smooth as I expected. Even presidents of large organizations who were sitting on boards are surprised to realize how unprepared they were.
Yet, employees assume that their new CEO is ready for the job and equipped with all the knowledge, skills and experiences. That is why he or she was appointed. Right?
In reality, new CEOs do not possess all the necessary leadership philosophy, skills, and experience they need. It is on the job training, while board members, employees, customers and business partners judge every step along the way.
New CEOs are students without teachers. There is no CEO University. They simultaneously lead and learn because they understand that what got them here won’t keep them here. It is like being the master and the apprentice at the same time.
New CEOs shared on Harvard Business Review three insights that helped them succeed quickly:
1. Create a Fast Learning Curve Humility plays on your side.
Self-awareness tops of the list of high performing CEOs regardless of experiences, strengths, and skills. Acknowledging you are an apprentice CEO sets you on the right track to success. You are the CEO while learning to be the CEO.
2. Work with CEOs Who Have “Been There”
CEOs shorten the learning period and avoid fatal mistakes with the support of a CEO peer group. They gain perspectives they could not get within the organization. Peer groups help CEOs overcome challenges by giving them unbiased, candid advice from CEOs who have been in their shoes for many years. Peer groups are not networking groups. They deploy facilitated and systematic processes that lead to commitment and accountability for results.
3. Seek Constant Feedback within the Organization
Navigating politics is critical to get support within the organization. Getting politics right and identifying the source of informal power makes a big difference in reaching buy-in from the organization for your vision and values. Three months into the role is a good milestone to receive anonymous feedback through a 360 review. Act on it as soon as you get the results.
Mistake #2 – Believing the Title Earns Organizational Loyalty
As a new CEO, you might have already felt the paradox which the more power you have, the harder it is to use. New CEOs are stunned to discover the overwhelming challenge of converting their vision, intentions, and strategy into execution plans and outcomes. Squeezed between c-suite executives and the board, the most powerful, fulfilling and rewarding role in the company starts to feel powerless and daunting.
The closest colleagues of internally promoted CEOs start to behave more distant and guarded towards them. Newly appointed CEOs do not change overnight, but everyone else starts to see them as someone who should have all the answers to all of the challenges.
1. Get Rid of the Fences
It is important to be approachable and engage in as many conversations as you can at all levels so that you know what’s going on in the organization.
2. Communicate Often
Communicate Clearly. CEOs should be careful in having spontaneous discussions with employees because the employees distort their messages. A half-baked idea might be considered as the final CEO guidance. The impact of your words is greater than you imagine. You have to be more calculated about the words you choose. Be intentional and communicate with purpose.
3. Replace Control with Influence
Politics and organizational dynamics “killed” many talented CEOs. Influence, not control, sets you on the right course. Manage the realities of organizational politics. Identify the real influencers. You will be surprised they are not necessarily in the c-suite or at the board level.
Mistake #3 – Underestimate the Board
Many new CEOs initially believe that they have the ultimate authority in the company. They soon learn that they have to continue to manage upward, but instead of reporting to one boss they have a dozen bosses. Serving many bosses consumes a lot of time. Too many CEOs take their boards lightly and eventually pay the price.
1. Engage Board Members Individually
The board is not one entity. It’s a group of individuals which successful CEOs learn to engage one-on-one. It is time-consuming but it is worth engaging board members individually before board meetings and get their buy-in for your vision and strategic direction.
There is no better way to lose control of the outcome of a board meeting than trying to pass resolutions before discussing them early with individual board members. Boards have their own group dynamics. Individual influencers can drive support or impose rejection that might be difficult to reverse.
Even if you were promoted from within and had you been exposed to the board previously, don’t assume board members “know” you. They may know you as a COO or CFO but not as a CEO. You need these private conversations to build trust and instill confidence in your judgment and ability so at the right moment you can get commitments.
2. Contract Board Individually and Collectively
No matter what your employment agreement states, your real contract is with board members individually and collectively. Spend time with individual board members. Take them to dinner. Meet them for lunch.
Aligned with those influencers, you get strong support in board meetings and will set off with a good start.
3. Educate the Board Members
Your responsibility is to educate the board about what’s happing in the company and consistently feed them with information so that members won’t be surprised. Surprises get very ugly at board meetings.
Send updates. Inform about significant changes to plans to be presented. Ensure board members hear from you the bad news before they hear it anywhere else. Bad outcomes on your first quarter are probably the results of your predecessor. Everybody knows this, so do not point fingers or even mention your predecessor. It ultimately reflects poorly on you.
Between ‘show and tell’ and conversational board meetings, many CEOs find that collaborative engagement leads to stronger support.
4. Refrain from Exposing Your Team to the Board
Until you build your standing with the board, be careful of exposing your team, even if they have sat on board meetings. Exposure to the board gives your team members recognition and develops them as leaders, but at the same time, direct demands load them with time-consuming inquiries that distract them. Consider ad-hoc participation only when required – CFO for financial reports, COO for a product launch, etc. Once you have proven yourself with the board, you may start inviting the executive team to board meetings.
Mistake #4 – Give Orders in the Day-to-Day
You have the power to give orders, override decisions, or break deals. If you find yourself giving orders, you have failed to deliver clarity. Every time you do it, you reduce your power. Use your decision power wisely. Use it indirectly. The more directly you are involved, the more you become a bottleneck in the organization.
Your calendar will quickly be filled with meetings you wouldn’t attend otherwise. You feel important. You are in the center of action and attention. But six months down the road, you will pay a heavy price. Your team will lose confidence in their ability to understand your directions and to meet your expectations. They will involve you in…everything.
1. Create Clarity
Step out of the way and let your team make decisions while you focus on creating the environment, processes, and values that help them make the right choices. Deliver a clear message about what you are up to, what your belief system is. Don’t let them guess your intentions and make assumptions.
2. Give Orders Sparingly
Your professional expertise in your former functional area (engineering, finance, etc.) might get in your way. You feel very confident in directing issues in your core expertise, but this involvement diminishes your leadership.
Work through your organization. Lead before you manage. Accomplish through influence rather than control. You are the organizational enabler. You empower people to succeed. You inspire and influence them. Once you start micro-managing, you lose your ability to influence.
Micro-management increases the stress level in the organization, triggers resentment, demoralizes managers and demotivates employees. Carefully, weigh the pros and cons before you put on hold what is already in progress.
3. Articulate Strategy. Form Structures. Design Processes.
CEOs’ overall responsibility for the success of the business might drive them to get personally involved in the decisions. You will achieve better outcomes by articulating a clear strategy, forming effective structures and designing efficient processes.
Mistake #5 – Trust Biased Feedback
CEOs are flooded with information, but reliable information is surprisingly scarce. Information flowing to the top is filtered, sometimes with good intentions and sometimes without. People don’t like to deliver bad news to CEOs. There is always a fear the messenger will be shot first. Everybody colors information.
1. Engage a CEO Advisor
According to an HBR survey, 40% of the participating new CEOs engaged an advisor. The advisor challenged them and kept them accountable. While board members and employees have all kind of agendas, the advisor’s only agenda is helping CEOs become successful. Advisors have a “license to criticize” the CEO, and they are fearless in telling the naked truth.
In the River Group study mentioned earlier, new CEOs rated the quality of sincere undistorted feedback they receive from their teams and other leaders in the company regarding their personal performance at 4.2 on the scale of 1 to 10. CEOs who engaged an advisor/coach (40% of the CEOs) rated the combined internal and external quality of their performance feedback at 8.6 on the same scale. 100% higher than CEOs who do not engage an advisor/coach.
2. Walk the Floor
“Walking the floor” helps CEOs to gather information deep within the organization directly from frontline employees. It removes the filters from information that flows up. People tell you when you casually walk the floor what they won’t dare say in your office or meeting room. Your executives won’t like it and even fire back. Reassure them that you are gathering information but will not bypass them.
3. Listen Carefully
While personally interacting deep within the organization, you might be tempted to do the talking most of the time delivering your message. It feels good but misses an opportunity to receive unfiltered information. Listen carefully to what people say so you will know what really is going on.
4. Meet External Channels Almost every new CEO who got off on the right foot allocated time for external conversations with customers, business partners, vendors, and competitors. You might be surprised how much they know about what’s going on in your organization that you may never hear from your team.
Mistake #6 – Decide Too Slowly
According to the Genome Project study done by ghSMART and SAS over 12 years with more than 17,000 CEOs and C-Suite executives (1995-2017), the highest performing CEOs stood out because of the speed of their decisions rather than quality.
Findings published in the Harvard Business Review revealed that decisive CEOs are 12 times more likely to be high performers.
1. Replace Undeforming Executives
It’s common for new CEOs to avoid terminations or even fierce conversations with executives early in the role. They try to prevent head-cutting atmosphere that leads to more resignations or undesired reactions from team members, board members, customers, etc.
Dysfunctional executives have a negative impact on the organization and you. They are easy to spot. Remove them decisively, unless they commit to quickly make changes. Most CEOs regret acting too slowly on making tough people decisions.
2. Build a High Performing Team
Even if the executive team is highly functional, every new player who joins the team changes the team dynamics, especially the captain. Team building is a high priority.
I highly recommend the model Patrick Lencioni outlined in his book The Five Dysfunctions of a Team. It’s a great kick-off for a new CEO.
3. Set Your Sail Early
On your first day, your organization is expecting a message from you. Don’t wait for clarity to deliver a strong message. Nobody is expecting you to announce a new direction immediately. They want to know your vision. Inspire them and do it fast.
Mistake #7 – Forgetting to Live Outside of Work
The CEO role is rewarding and fulfilling but also emotionally draining and mentally taxing. CEOs on the River Group study considered their mental, emotional and physical wellbeing at 8.2 on the scale of 1 to 10 before they became CEOs, and at 5.7 during their tenor.
Stress takes the biggest toll followed by family and friends: No time to think. No time to reflect. Always on. No downtime. The spotlight is always on the CEO.
1. Take Care of Your Well-Being
CEOs usually deny the emotional impact of the job. Sooner or later they pay the price if they do not take care of their emotional, physical and social wellbeing. Exercise. Eat well. Sleep well. Speak with people you trust (family, friends). It will make a big difference.
2. Take Control of Your Time
Identify and eliminate time vampires early. The day you lose control of your calendar is the day you set yourself toward failure. You might want to change some routines you inherited from your predecessor, such as media or speaking engagements that are not your highest priority in the first year.
3. Slow Down to Speed Up
Once you eliminate the time vampires, you will be able to switch off the power once in a while to recharge before your battery runs down.
Take time out to think, reflect and introspect. The way you manage your time determines how you direct your focus, manage your priorities, and dedicate time to strategy, market, customers, partners, and leading indicators
After crossing the minefield awaiting new CEOs, you have the best job in the world. Not because of power, authority or being in charge but because you can express yourself like “an artist, with the organization as the canvas”.
CEOs love their role because of the freedom to create and transform ideas into processes that make an impact on people. Because of this vast influence, new CEOs should carefully craft their purpose, vision, values, and make them visible from day one.
The CEO appointment does not make you the leader. You earn the leader recognition yourself. Listen to others’ point of view, explore your vision with them, and allow them to know you, connect with you, align with you, before you rush to move and shake the organization.
The more you create connection, purpose and meaning for people, the more they will follow you not because you are the CEO, but because they believe in you.
About the Author: Dave Osh is the CEO of Varlinx, a management consulting firm that empowers personal and organizational peak performance. He helps CEOs (and potential CEOs) unlock their natural talents so that they can accomplish extraordinary results and have a ripple effect on the world.
Dave is also the producer and host of the CEOpeek show, a video podcast platform devoted to spreading the personal growth strategies of CEOs in the form of short, powerful interviews.
Prior to consulting, Dave had a 25-year corporate career serving as VP, CFO, COO and CEO of listed and private companies in Israel, Hong Kong, Malaysia, and Singapore.
Dave's leadership foundation was developed in extreme conditions as a fighter pilot and air-force commander. He has taken his cockpit experience from the briefing room to the boardroom.
If you would like to discover how you can leverage your natural talents to become a high performing CEO, take the CEO Strengths Profile. For a limited time, we offer it at no charge ($1,000 on our website) to new CEOs.