We all fail. Most of the time, the long-term benefits of the learning outweigh the near-term costs of the failure. This is especially true if you can get others to pay the costs while you get all the benefits. One way to do that is to avoid hiring “first-timers.”
Stop hiring first-time CEOs, first-time C-Suite executives, first-time dog-catchers. Stop hiring people into their first job out of an “academy” company, their first private equity portfolio company, or their first job in a new industry, geography or function. Every one of those people is going to have a steeper learning curve than people doing something they’ve done before.
In other words, apply the Nike approach to market expansion. As Nike expanded into adjacent opportunities they would change only one variable at a time across brands, sports, products, and geographies, holding the others steady. For example, their initial entry into a new geography was almost always Nike running shoes.
Anyone you hire from outside your company will be switching companies. That’s a big risky change on its own. Minimize their other risks by finding people that do not have to change functions, industries or geographies, and certainly not level, type of organization or ownership model.
Imagine you’re driving across the border from Ethiopia to Kenya. You see a sign that says “Welcome to Kenya.” What must you do? Think about it before you read on.
You must change sides of the road. In Ethiopia they drive on the right. In Kenya they drive on the left. If you don’t switch sides, you’ll have a head-on collision. While that is most definitely a bad thing, don’t worry if you didn’t know that. You’ve probably never driven across that border before.
On the other hand, if you’re a passenger in a car crossing that border you most definitely want to go in a car driven by someone who has done it and not a first-timer who doesn’t know the rules of the road.
Each organization, level, industry, ownership model, and geography has its own rules of the road. And some, like start-ups, don’t even have any roads.
40% of new leaders fail on their first 18 months, either getting fired, forced out or quitting. Most of the time it’s because of poor fit, poor delivery or poor ability to adjust to changes down the road. Those risks are materially greater for first-timers than for people that have some framework for how to fit in, how to deliver and how to recognize and deal with important changes.
The stories abound.
Consider the people in their first roles out of Procter & Gamble who were so used to everyone else actually doing what they said they were going to do and numbers actually being accurate that they got completely thrown off their game when things did not happen according to plan.
Consider all the people who went to their private equity sponsors with proposals for initiatives that more than paid back in five years only to be told there would be no investments with anything more than a two-year payback.
The leader of one early-stage company told me that some of his new executives seemed to think they could stand on the bridge and get the boat to accelerate simply by saying “all ahead.” They did not understand that they had to go down to the engine room and shovel the coal into the fire themselves.
First-time CEOs have it especially tough. Most likely, they will have gotten used to leading leaders in their previous roles and have proven themselves by managing down. But, if they are the senior most executive in the company reporting to the owners or board, they are going to have to spend at least 25% of their time managing up (board and shareholders) and at least 25% of their time managing external stakeholders like community leaders, collaborators and the press. That means they will be able to spend less than 50% of their time managing down – a dramatically different proposition.
I am, of course, exaggerating to make the point. Of course, you’re going to hire some first-timers. Just understand the risk. And avoid compounding the risks. Give them the extra onboarding support they are going to need to learn the rules of the road as they converge into the organization before trying to evolve it.
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