From mismatch to success: how to hire a CEO who fixes your real issues.
The exciting new hire:
The Board of Directors of an industrial group was thrilled. They had finally found the perfect candidate for the CEO role, a seasoned executive with a sterling reputation and a portfolio of successful turnarounds. After the debacle with the previous CEO, the Board knew they couldn’t afford to make another mistake. They stretched the budget to accommodate the new CEO’s salary, confident that this was a smart investment.
With credentials like his, how could it fail?
The energized start:
The new CEO wasted no time. Determined to make an impact, he dove into a strategy exercise, eager to build a new vision for the company. He hired a top tier consulting firm to conduct a market study and quickly began shaping his strategy.
On paper, it all looked perfect. The strategy included most likely a SWOT analysis and a thorough review of the competitive landscape, even though he lacked deep knowledge of the company and had mostly relied on information from the Board and the management, not to forget his experience. But the growth strategy was polished, ambitious, and professionally presented to the Board. Since the CEO attended a reputable business school, it was bound to be of high quality.
The Board approved it without hesitation. Mission accomplished, or so it seemed.
The turning point: two possible outcomes
But this is not where the story ends. In fact, this is where many CEOs stumble into one of two traps:
Path 1: The Strategic push
The CEO, a true strategist at heart, sticks to the plan. He pushes his vision - backed by the Board - relentlessly, convinced that his strategic approach will fix the company's woes. However, he overlooks one crucial element, buy-in from the teams on the ground.
Employees start to feel alienated:"Who is this guy? He doesn’t understand us. He doesn’t know what’s really happening here."
Before long, the CEO’s strategy begins to falter. Without real engagement or feedback from the front lines, execution stalls. The Board, frustrated, watches as the company fails to meet targets, and eventually, the CEO faces the same fate as his predecessor. Exit CEO, round two.
Path 2: The Operational reality
Alternatively, the CEO, realizing that theory doesn’t always align with reality, engages directly with his employees. He walks the floor, talks to managers, and soon uncovers a deeper problem: the company is firefighting every day. New issues crop up constantly, and the operational chaos is overwhelming.
The CEO realizes his strategy, while solid on paper, is simply unworkable in the current environment. He reports back to the Board, but each meeting brings more problems than solutions. The strategy isn't getting implemented because the core operational issues are unresolved. Once again, the Board starts to question the CEO's competence, and the frustration mounts.
The Learning: avoiding the common pitfall with a smart approach:
Many CEO's fall into these traps, but there’s a simple solution:
Start with a Value Gap Assessment
Before diving into any strategic planning, the new CEO should have conducted a Value Gap Assessment. This evaluation reveals the actual problems existing in important areas of the business. It’s rarely a single problem rather, it's often a chain of interconnected challenges. The CEO would have learned early on if the company had the right data for decision-making, if the value enablers and retainers were in place, and whether the company was ready for a long-term strategy. Fixing the core issues would have been the first priority.
Communicate the Value Gaps and Battle Plan
Instead of presenting an overly ambitious strategy, the CEO could have communicated the key value gaps to the Board and explained how he planned to address them. This would set realistic expectations and build trust in the early stages.
Engage in Long-Term Value Creation when the time is right
After solving the most pressing issues, the CEO could have introduced a long-term strategy. By then, the groundwork would have been laid, and the company would be in a better position to dream big and think about sustainable growth.
The successful outcome:
In an alternative ending to this story, the new CEO follows these steps.
He starts with a Value Gap Assessment, then clearly communicates the results to the Board. He acknowledges that rapid improvements may not happen overnight but shows tangible progress in fixing the core operational problems. In subsequent meetings, the CEO builds trust as he systematically addresses the company’s key issues.
With the core stabilized, the CEO gradually introduces a long-term strategy, this time, based on a deep understanding of the business, its people, and the market. And because he took the time to engage his employees and build from the ground up, the strategy is not only approved—it succeeds.
Afterthought: what if it still had gone wrong?
In this story, the CEO eventually succeeded because he had the right blend of experience, insight, and knowledge to fix the blend of core issues. But that’s not always how it goes. Often, recruiters try to mitigate this risk by hiring someone from the same industry, though this alone doesn't guarantee success. In fact, I’ve often been approached for roles where the recruiter lacked a clear understanding of the true challenges the position entailed.
Many CEOs fail because they aren't equipped to handle nor are they informed about the specific challenges of the business they are stepping into. They might be exceptional leaders in some situations but mismatched for the company's real needs at the time.
So, what could the Board have done differently to avoid that risk? What if the Board had conducted a Value Gap Assessment before hiring the CEO? The Board could have shared these findings with the recruiter. By discussing these insights, the recruiter would have been better equipped to identify a CEO with the right expertise to address these specific challenges and the company’s current needs.
If the core problem was operational chaos, they could have prioritized a CEO with a track record of stabilizing operations before focusing on growth.
If financial misalignment was the key issue, they could have looked for someone with deep financial restructuring experience.
A Value Gap Assessment would have served as a roadmap, ensuring that the new CEO was not just a great leader in general, but the right leader with the right expertise for this company at this moment.
The Lesson:
Before hiring a new CEO, Boards should first focus on a holistic understanding of the specific challenges their company faces. A Value Gap Assessment provides that clarity, helping them find the CEO who is not only skilled but uniquely positioned to solve the company’s most urgent problems. By aligning the CEO search with the company's real needs, the chances of success grow significantly (more on this in a next article).
Would you like to know more about the Value Gap Assessment? Happy to discuss during a free consultation: andi@theEquityBuilder.com
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