Washington - But a new 10-year study from a leadership advisory firm and
economists from two business schools, published in this month's Harvard
Business Review, finds that the most successful chief executives often don't
fit that mold.
The researchers behind the study, called the CEO Genome
Project, used a database of assessments comprehensive performance appraisals
and extensive biographical information of 17 000 C-suite executives, including
2 000 CEO's. The database, created by the consultancy ghSmart, includes
everything from career history to behavioral patterns to how the executives
performed in past jobs, decisions they've made and demographic information.
Their analysis, which included help from statisticians, data
scientists and financial analysts, examined a sample of 930 of those CEO's to
come up with the traits and patterns that most predicted which ones became a
CEO. They also gathered information on the performance of 212 of them to
compare how top-performers' behaviors lined up with the traits that tend to
get CEO's hired.
What they found surprised them. A little more than half of
the CEO's who did better than expected in the minds of investors and directors
were actually introverts, not the usual gregarious CEO known for glad-handing
customers.
"The biggest aha, overall, is that some of the things
that make CEO's attractive to the board have no bearing on their
performance," said Elena Lytkina Botelho, a partner at ghSmart and a
co-founder of the project. "Like most human beings, they get seduced by
charismatic, polished presenters. They simply do better in interviews."
Botelho, says she doesn't necessarily think introverts are
always better performers, but that they may be more prevalent, and do better in
her sample, because boards are so attracted to them.
"I've been in the room and had directors express the
concern “this person is such a strong introvert, how will they really lead?'
" she said. Similarly, candidates who displayed a lot of confidence had
more than double the chance of being chosen as CEO, the study found, even
though particularly confident CEO'swere no more likely to show better
performance once they got the job.
Meanwhile, only 7 percent of the best performing CEO's who
ran companies from Fortune 10 behemoths to those with just $10 million in
annual sales had an Ivy League degree, despite the conventional wisdom that
pedigree matters.
"There was zero correlation between pedigree and
ultimate performance," she said, acknowledging that number could be higher
if they were just looking at large Fortune 500 firms.
Another misconception boards make when picking their next
CEO is to choose candidates who have an impeccable career trajectory, with
nothing but a resume full of achievements lining their path from MBA to the
boardroom.
But nearly all of the executives in their sample who were
candidates for a CEO job had some kind of major mistake, the project found,
such as overpaying for an acquisition or making a wrong hire, in their
assessment. Nearly half of them also had what the researchers called a career
"blowup" that pushed them out of a job or cost the business a large
amount of money and three-quarters of that group went on to actually become a
CEO.
So what did make CEO's successful? After analyzing all of
their data, the researchers found that roughly half of the candidates earning
an overall 'A' rating in their database, when evaluated for a CEO job, had
distinguished themselves in more than one of four management traits. (Only five
percent of the weakest performers, meanwhile, had done the same.)
The four were: reaching out to stakeholders; being highly
adaptable to change; being reliable and predictable rather than showing
exceptional, and perhaps not repeatable, performance; and making fast decisions
with conviction, if not necessarily perfect ones.
Indeed, that last trait a willingness to make a call
quickly, even without all the needed information was one of the four
"essentials" Amazon CEO, Jeff Bezos, who also owns The Washington
Post, detailed in his own letter to shareholders last week.
Calling it "high-velocity decision-making," Bezos
wrote that "most decisions should probably be made with somewhere around
70 percent of the information you wish you had. If you wait for 90 percent, in
most cases, you're probably being slow."
Being wrong isn't always so bad, he wrote. "If you're
good at course correcting, being wrong may be less costly than you think,
whereas being slow is going to be expensive for sure."
Botelho, agreed that first trait was the most surprising.
"We frankly expected to find that strong CEO's stood out for the quality of
their decisions that they turn out to be right more frequently," she said.
"But what very clearly stood out was the speed. Quality was likely
something they developed earlier, but then they're willing to step up and make
the decision faster, even with more uncertainty."