In a much-read article in Forbes.com –“How To Become A CEO”— fellow contributor Christian Stadler presented a sensible, research-based summary of career steps to the top job: pursuing specific education, choosing particular functional paths, and developing personal qualities like “drive and ambition.”
Suppose we look through the other end of the telescope: When a corporate board actually hires a new CEO, what specific qualities are they looking for? Lots of people have (e.g.) top-school MBAs and elite consulting experience — but they don’t all become CEOs. And those who do, don’t all get there the same way.
So what really matters to the people who give you the job? At the moment of truth—when a board votes to hand over the keys to the castle, what’s the list of “must-haves” that guides the decision? And what can aspiring leaders learn from the list, to prepare for the hoped-for day?
A Short List To Get Short-Listed
Surprise: Boards are pretty much always looking for the same five qualities in their CEO candidates.
And so I learned in my recent conversation with Cathy Anterasian, Spencer Stuart’s Senior Partner and Practice Leader of CEO Succession in North America. Having guided over fifty chief exec transitions over the past several years, she’s got the street cred to point out the pattern. “Trust me,” she said with quiet assurance, “it’s a fundamental and enduring list.”
Always a sucker for someone who can simplify wisely, I asked her to walk me through it—and why boards scrutinize whether CEO candidates check these five boxes.
She began by qualifying my question. “It’s not quite ‘checking the boxes’ per se. The qualities a board looks for are really capabilities—and they can manifest themselves differently in different people. Inevitably the capabilities reflect a cluster of skills, knowledge and behaviors. Also, board decisions always involve trade-offs. No candidate is brilliant in everything, and committees will also consider how a candidate’s strengths complement the team he or she will work with. But the core five capabilities are still the basis of what they probe.”
Cathy framed the list as director-style questions, and explained the implications of each.
1. Is This Leader A Good Strategist?
“Strategic capability includes several competencies—more than just being able to ‘see around corners’ and make choices about markets, customers, assets and all that. Those are of course important. But it also requires engaging others; and then articulating both an evolving future and what it means for the company. Great strategists invite dialogue, challenge assumptions, and build an environment to explore future opportunity. They’re skilled at developing and communicating strategic issues and implications.”
“No single model defines a great strategist—but you know the capability when you see it. And titles can be misleading. I worked recently with a healthcare board to evaluate a candidate who for years had ‘strategy’ in his job description. When we assessed his actual work, we discovered he was brilliant in ‘keeping the trains running on time’ but less prepared to deal with the ambiguity and complex market dynamics created by ObamaCare.”
2. Is This Leader A Good Operator?
“That said, ‘keeping the trains running’ is also a crucial CEO skill. Savvy strategists might be gifted at seeing the future, but if they lack a track record of mobilizing an organization to get consistent results, they won’t be successful. Operational excellence requires analytical skills—but also a bias towards action. I recall a succession situation where a favored candidate missed out because he was actually too analytical: He paralyzed the organization by asking for more and more information, and then missed critical decisions.”
“Strong operators deliver performance. They cascade vision down to specific goals, objectives and metrics. And then build, motivate,and manage teams to deliver in a timely fashion.”
I asked: “Does operational capability include people development too?” She answered quickly.
“Talent skills are always part of operational execution. They can be mapped elsewhere on the list of five—but I put them here to emphasize long term performance. No good operator delivers year-after-year results without also regularly developing talent.”
3. Can This Leader Have Impact In The Culture?
“Sometimes this is called ‘fit’: Does the candidate mesh with the company’s values and ways of working? Does he or she display values of someone you want representing the business? Almost 70% of failed hires – across roles – result from poor cultural fit.”
“But ‘fit’ is actually too limited a concept. Boards today have to think both about the current culture, and the future culture needed to perform.”
“I recently worked with a board who passed over an internal candidate in a family-controlled agribusiness. He was strong in many areas, including fit for the existing culture. But the culture itself didn’t fit where the business needed to go. Leaders had to become less ‘family-oriented’ and more performance-driven. The board ultimately opted for a new CEO more reflective of those values.”
“Today we talk more about ‘impact in the culture. Can the candidate lead with a cultural style that makes a performance difference long term? It’s a delicate balance: change the culture too much and you break the company; fail to challenge it, and you won’t get results you were hired to deliver.”
4. Can This Leader Build Followership?
“The CEO has to inspire and motivate large groups of people inside the company—often from a distance. That means communicating clearly; setting out a clear vision; giving people a sense of purpose, why they want to come to work, and pursue a mission. Great leaders also use symbolic moments to make those ideas come alive.”
“Motivational skill is usually a complement to connecting with people individually. In big companies, CEOs have to do that quickly; they may only have a few minutes with the followers they meet.” In general, great CEOs demonstrate concern for others, that they have good judgment, that they can be trusted. People follow leaders whom they believe in. This is where the much-touted ‘authenticity’ fits in.”
Cathy extended her explanation.
“Followership is also external. Today’s CEOs must cultivate trust, confidence and respect of key stakeholders outside: customers, analysts, investors and the like. They too have to ‘sign up’ for the leader.”
“Followership can be a huge deal-breaker. In a recent insurance succession, one candidate seemed superb overall—but then we heard from some employees, ‘When the envelope is opened, if the winner is him, we’ll gulp, and march forward—but with no passion.’ The board passed over him for another executive, somewhat less experienced, but with wider respect and support.”
5. Does This Leader Show Stretch Potential?
“This fifth element is just as timeless—but it’s becoming more important. The world is speeding up. No one survives as CEO who doesn’t have the aptitude and potential to adapt to suddenly changing circumstances. Boards look for that, especially with internal candidates who, by definition, are unproven at the CEO level.”
She invoked a metaphor.
“Stretch potential is a set of ‘leadership muscles.’ It calls for critical thinking; tolerance for ambiguity; social and emotional intelligence; flexibility. And perhaps most important, humility and capacity to learn. You’ve got to remain open-minded, positing hypotheses and then revising them when experience shows the mistakes.”
“In the search for ‘stretch potential,’ a board might occasionally ‘skip a generation’—bet on an emerging leader, with less experience, but more orientation to learn and change. In a consumer technology company recently, I saw a stronger resume candidate lose out to an earlier career entrepreneur—who had demonstrated more agility with transformational opportunities.”
Same List, Different Organizational Translations
The discussion with this Spencer Stuart partner made me wonder: Is this list just for big and mature companies? Does it also apply to the growing world of networks, platform businesses and more open organizations?
She clarified helpfully.
“Of course—but how each of the five get interpreted will differ by context. Every organization needs some strategy, and a leader who can also deliver results. But in a small startup, the key strategic and operational capabilities might be about shorter cycle times and new market intuition; a bigger company might emphasize leadership that can steadily grow earnings.”
“Some qualities on the list are more universal. Followership is a fundamental human skill. Leaders everywhere need to build connections with other people.”
So How Do I Work On The Five?
I finished with two evergreen questions: What’s the right way to build the CEO qualities of this list? And nature vs nurture: What if you’re just not born with the right talents for a “key CEO capability”?
Ms. Anterasian smiled, hearing the all-too-familiar queries.
“Of course aptitude always plays a role, especially for strategic thinking and followership or stretch. But wherever you have a gap, you have to try to make it better. Build on strengths, sure, but don’t neglect improvement across the whole portfolio just because you weren’t born with some natural ability.”
“There are different approaches to building leadership capability, but in my experience, three axioms stand out. First, be purposeful about your own development. It sounds obvious, but so many people—simply caught up with just getting their jobs done every day—don’t plan or work intentionally on their knowledge and skills. This list of five is a good roadmap to use.”
Learning From Stars
“Second, look for opportunities to work side-by-side—and learn from—people with real talent in the five areas. You can absorb critical techniques and insights on a team with a great strategist, or reporting to someone who’s a star in managing performance. Or watching carefully the style of leaders who are publicly very likeable.”
“Last, whatever you do, stay focused on your own game. You’re going to be in competitive situations along the way, vying with others for promotions. Be candid, transparent, and respectful, while still doing your best. But avoid getting drawn into intramural politics. I’ve watched a lot of would-be CEOs go down in flames there.”
And If Someday Becoming A CEO Seems Remote…
After we finished talking, I had my own minor epiphany. Anyone can benefit from this list of five. Even if overall leadership of a company is nowhere on your radar screen.
Whatever your work, whatever your role today, you won’t lose by getting better at strategy, operational execution, and building a more impactful culture around you. Or cultivating followership. And who doesn’t need to get better at stretching and adapting to change—in any organization?
Make the challenge even simpler. Why not start developing yourself to become “CEO” of your current job right now?
Originally published on Forbes.com