Advice for the New CEO: Make the First 100 Days Count
By John Essick
Welcome to Spencer Trask Perspectives, a monthly interview series with our CEO Bill Clifford and writer John Essick. Mr. Clifford has generously agreed to share his unique insights and expert opinions on topics such as business development, deal flow, C-suite management, startup culture, entrepreneurialism, and more. We welcome your feedback, and encourage you to submit questions to askST@spencertraskco.com for Mr. Clifford to potentially answer in future articles.
Experts say that the first 100 days of a new CEO’s assuming office is the most important period in determining whether the CEO will make an impact or fail at the job. In fact, according to Hendrick & Struggles, 40% of executives hired at the CEO level are pushed out, fail, or quit within 18 months. Let’s discuss how a new CEO can prepare and perform throughout those first 100 days.
John Essick: How important is it for a new CEO to have a plan to put in place starting on Day One?
Bill Clifford: The early days of a new CEO’s transition are akin to a honeymoon period — from the point of view of the Board of Directors (BOD), the shareholders and the employees, everything is still owned by the prior CEO — especially the management team — but this honeymoon period is short-lived. After one earnings cycle or one reporting period, the new CEO now owns everything. The King is dead; Long live the King!
Therefore, every new CEO must come to the position with a set of ‘straw man’ scenarios that they are ready to implement. They must use those precious first days as an in-depth ‘deep dive’ into all of the critical variables that directly affect those scenarios.
JE: Should the first 90–100 days be used to manage or lead? For instance, is it more important to set goals and processes, or to establish a culture within the organization that will lead to desired results?
BC: New CEOs cannot ignore those aspects of management such as goal setting, management processes, and operational discipline, while showing the organization a new face and leading from the front.
The cadence of management meetings, the timing and agenda of those meetings, the frequency of CEO-to-employee forums, and other facets of internal management procedures are all aspects of a CEO’s style of management. Therefore, setting goals and establishing processes for operational and financial reporting, and the discipline with which these processes are adhered to will, in fact, become integral parts of the culture of the company.
JE: You often hear how important it is for a new CEO to communicate a vision. One mistake new CEOs repeatedly make is not realizing communication is a two-way street. How important is it that a new CEO makes an effort to listen to the people they will be leading?
BC: New CEOs should spend their time on execution of strategy, not visionary statements. If every time a CEO change were made a company had to listen to a new vision, employees’ heads would be spinning — as would investors and BOD members! CEOs should try to get as far down into the organization as is practicable to listen to what employees say about the company — the morale of the employees and their ideas for improvements in productivity and product innovation, as well as their perceptions of the competition.
JE: Naturally, every new CEO faces unique challenges; however, in your experience, are there three key areas you believe a new CEO should focus on when stepping into a leadership role?
BC: Survival at the CEO level will ultimately become a numbers game in the end. A new CEO must quickly get a handle on the financial picture of the company by understanding forecasts of future results, the key drivers of revenue and expense, and explanations of variances. A working model of the company’s finances should become a fixture in the mind of the CEO, and every decision made must be based on that financial model.
Second, senior management personnel are the backbone around which any decisions made will be executed. The CEO must have confidence and trust that the people to whom he delegates these responsibilities are skilled and competent to carry out these tasks.
Third, providing an open channel of communication between the CEO and employees is extremely important. This can be accomplished by having ‘meet the CEO forums’ around the company, teleconference and SKYPE meetings, or any process by which employees can communicate directly with the new CEO.
JE: Someone becoming a CEO for the first time is no doubt extremely confident in his or her abilities. However, there are bound to be areas of weakness. How does someone honestly assess his or her strengths and weaknesses for the position?
BC: In order to be appointed to the CEO position, the individual must have demonstrated certain of the key CEO attributes — strategic thinking, decisiveness, management ability, presentation/public speaking skills, etc. That said, many of the new CEOs I’ve observed do lack self-awareness of their own shortcomings.
Many weaknesses lie in the broad area of social interaction/awareness, and include poor personnel skills, arrogance, overconfidence, or rudeness. This alienates employees, leading to poor subordinate productivity and increased turnover. Often the CEO isn’t even aware of the nature of the issue, so this cycle continues to repeat itself over and over.
One remedy to this situation is to administer a psychological self-evaluation test to all incoming senior executives. It helps the BOD get a clearer picture of the psychological temperament of the incoming CEO. Steps can then be taken to surround the new CEO with other executives, such as a VP of Human Resources, to intervene should there be friction at the senior ranks. Another approach is to use a 360 degree review approach where all subordinates of the CEO are asked to anonymously rate the CEO in various categories. Either the VP of Human Resources or the Chairman of the BOD then shares the results of the review with the CEO.
JE: How heavily should a new CEO lean on the experiences and opinions of the departing CEO?
BC: My advice to incoming CEOs is to seek and listen to guidance from anyone who is willing to give it. Meeting an outgoing CEO can be a rich learning experience for an incoming CEO, provided that their comments are properly filtered through the backdrop of the emotions and motivations of the outgoing CEO. For instance, they may ‘sugarcoat’ their experiences so as not to burn any bridges, so all of their comments have to be taken in that context.
Opinions and advice coming from departing CEOs who are leaving voluntarily can be of immense value, particularly if they are based on years of tenure and success. Comments about the competition and the company’s relative position in the marketplace would be current and relevant, as would any assessment of management personnel.
Comments from departing CEOs who have been removed can often be of more value. A disgruntled former CEO is more likely to reveal where all the ‘dead bodies are buried,’ both organizationally and financially. Of course, they may have hours of rationale for why their removal was unjustified and unfair, but once focused back on the company, many valuable insights can be gained. One important benefit may be candidness about the BOD members and what agenda each member brings to the company. They can also provide a frank assessment of the competitive position of the products and services of the company, and the degree to which each meets or fails to meet customer expectations in the marketplace.
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About Bill Clifford
Bill Clifford is Chief Executive Officer of Spencer Trask & Co., a privately owned advanced technology incubation firm. Prior to joining Spencer Trask & Co., Mr. Clifford served as Chairman of the Board and Chief Executive Officer at Aperture Technologies Inc., General Partner of The Fields Group, and General Partner of New Vista Capital. He is also the former President and Chief Executive Officer of Gartner Group, the world’s leading authority on the information technology industry, user and vendor technology strategies and market research. During his tenure at Gartner, annual revenues increased from $175 million in fiscal 1993 to $780 million in fiscal 1999.
Mr. Clifford currently serves on the board of directors of Cybersettle Inc. and SWK Holdings (SWKH.OB). He has been featured in CEO Magazine, Leaders Magazine and Forbes, and is a keynote speaker and panelist at numerous Technology Industry conferences.
