The CEO's second act

The CEO’s second act

Nadler D.A. Harvard Business Review, January 2007, Vol. 85 No. 1, Start page: 66, No of pages: 6

Purpose – To discuss CEO turnover and the way that the challenges facing chief executives change over time. Design/methodology/approach –Observes that the rate of CEO turnover is accelerating, noting that in a recent survey, one third of the departures occurred before the scheduled succession date. Points out that in a rapidly changing business environment, the skills and competences that chief executive first brought to the role are likely to become progressively mismatched to the needs of the company. Identifies four possible choices for a chief executive entering the “second act of the drama”,including refusing to change; acknowledging the need to learn new skills;reducing their role to compensate for their deficiencies; or finding a successor who is qualified to fill a role that no longer matches their skills and interests. Presents real-life illustrations of each of these approaches involving well-known leaders and companies. Highlights the personal and professional limitations that affect executives’ ability to adapt to the situation, including human psychology, learned behaviour and experience and limitations in executives’ cognitive abilities. Discusses steps that individuals can take in this situation, recognizing that their leadership style and approach no longer working and undertaking personal or structural change or accelerated succession. Practical implications – Includes some practical advice for boards of directors to ensure that there is an appropriate match between the chief executive’s leadership approach and the needs of the company. Originality/value – Explains why chief executives need to reset their goals and review their agenda on a regular basis.

Keywords: Alignment, Business environment, Change management, Chief executives, Corporate strategy, Self-development