July 10, 2012
I spent two back-to-back days last week interviewing a string of CEO candidates – one slate for one of our portfolio companies, a second slate for an organization I work with outside of my day job.
It was an exhausting couple of days. Across the two searches, my fellow board members and I met a total of 9 incredibly qualified candidates. I walked away totally spent, but also as excited as ever about the future potential of each organization.
As I reflected on the experience, I couldn’t help but have one dominant thought: “companies should do CEO searches every year!”
Of course I don’t actually mean that – no board would actually want that kind of turnover. There’s no substitute for great leadership, and obviously having consistent vision at the helm of any organization is invaluable.
But that said, a well-run CEO search process is an incredibly powerful experience for a board, and I’m now thinking hard about how to bring some of the best elements of the process into the normal work of all my boards.
What is so great about a CEO search? I see four key things:
- It forces a board to step back and consider the forest. Much as we don’t want to admit it, most boards lose themselves in the detail, and rarely do the important work of stepping back and considering the bigger picture of how the company is positioned and where it’s trying to go. A CEO search serves as a natural forcing function for stepping back.
- The process of writing and building consensus around the spec for a new CEO inspires a range of conversations that happen otherwise far too infrequently. These discussions generally lead to unparalleled honesty and candor about a company’s strengths and weaknesses, challenges and opportunities.
- There is no better bonding experience for a board. A CEO search is the most urgent and important task of any board. It gets everyone’s attention, forces critical issues to the surface, and leads to hard conversations that build consensus. Reacting to candidates post-interview, debriefing, debating their relative merits – more fodder for rich debate. I consistently find these debates bringing boards closer together.
- It’s a powerful networking experience for the company. By definition, the process results in the board, and likely some members of senior management, reaching out and getting to know a number of talented, well-positioned individuals from around their industry. Every good candidate represents opportunities that go beyond their mere candidacy for the CEO chair. I’ve seen a number of fruitful business partnerships and other relationships emerge as a result of CEO interviews.
Hiring a CEO is a unique experience. Done right, it involves opening the kimono pretty wide and making yourself thoroughly vulnerable. After you’ve shown some skin, the best interviews – and the best candidates – are the ones that make you feel a little uncomfortable. They come in with an understanding of your company and your market and hold a harsh light and a mirror up to you. They don’t gloss over the tough stuff and they ask great questions. If you’ve got warts, they’ll see them in high resolution and want to talk about them. If they’re truly exceptional candidates, they come armed with good ideas and incisive questions that lead to your own new ideas.
It’s not always easy or comfortable, but if you’re open-minded about it you’ll learn a ton.
Unfortunately, this is an experience that is only afforded to companies that are dealing with a circumstance that is by definition suboptimal. You need a new CEO because you have a good one who’s moving on, or you had a bad one whom you’ve asked to move on. You think IBM’s board was excited that it had to start thinking about who would replace Sam Palmisano? Is Yahoo’s board glad to be CEO hunting again right now? It’s an obvious no to both. But those searches almost certainly will be/were powerful experiences for the boards. (Let’s at least hope it is for Yahoo this time!).
So absent a CEO search, how can we create these sorts of experiences for boards more often? To all the CEOs in our portfolio, don’t worry, I’m not going to suggest that we make our CEO jobs one year, non-renewable terms.
But I am powerfully reminded that some real, step back, big picture thinking should be an essential part of every board’s work at least once per year.
And these recent CEO searches make me think that having boards write a CEO spec once/year, whether they need a CEO or not, is a terrific exercise.
I’m going to try the “if we had to find a new CEO today we’d look for X” exercise with a couple of companies and see where it leads. And if you’ve got ideas on other ways to reliably bring these same sorts of conversations into the board rooms, I’d love to hear them.