How to Avoid 5 Fatal Mistakes New CEOs Make

Dave Osh
Dave Osh
Nov 2, 2018 · 8 min read

The statistic is frightening. According to some estimates, one-third to one-half of new CEOs fail within the first 18 months. Just recently, GE’s board removed chairman and CEO John Flannery after only 14 months on the job. What happened? Too little. Too late.

Astonishingly, research does not attribute most failures 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 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 five most 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. Engage a CEO Advisor Who Has “Been There”

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 genuine undistorted feedback they receive from their teams and other leaders in the company regarding their 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.

CEO advisor provides perspectives CEOs could not get within their organizations. They have been in their shoes for many years and help CEOs overcome challenges by giving them unbiased, candid advice.

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 an excellent 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 started 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 corporate politics. Identify the real influencers. You will be surprised they are not necessarily in the c-suite or at the board level.


Mistake #3 — 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 at the center of action and attention. However, 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 #4 — 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. 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.

2. 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.

3. 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 #5 — 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 Underperforming Executives

It’s common for new CEOs to avoid terminations or even fierce conversations with executives early in the role. They try to prevent the 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 making changes quickly. 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. Developing your leadership team is a high priority.

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.

SUMMARY

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.

If you would like to discover the behind the scenes strategies of leading CEOs, sign up to the CEO Game Plan weekly newsletter.

Dave Osh

Written by

Dave Osh

Transformative catalyst building organizational capacity and capability to create outcomes that matter most. www.varlinx.com