Making of a CEO

7 Developing as a CEO

The role of a CEO definitely requires some distinct skills, or skills at a much higher level. The evolution of a professional into a CEO and his/her growth in that role are two aspects that have drawn a lot of interest. Established organizations put in place practices for identifying future leaders and provide multiple experiences to enable their growth to top management roles. For CEOs, who are currently handling the role, the development is mostly need-based and is not easily achievable. They might not take part in the development processes that identify the individual’s weaknesses. CEOs of organizations might also face the ‘emperor’s new clothes’ syndrome. They might not get the correct feedback because of their personality or positional power. Many CEOs find it difficult to ask for feedback on their dysfunctional behaviour.

In an article¹ published in Fortune magazine, Ram Charan, author and executive coach, and Geoffrey Colvin, author and editor-at-large with Fortune magazine, put together the major reasons for CEOs’ failure. The article states that CEOs don’t fail because of lack of a strategy, but because of poor execution of these strategies. The major reasons for failure to execute and provide results are their beliefs and attitudes, and their inability to get the key team members to perform. Often CEOs take too long to make critical decisions about people, tolerating non-performers in the process. Bias against people also leads to incorrect decisions; relying on individuals who are not contributing to the organization’s success adds to this. On the contrary, great CEOs always keep people in the loop. They use processes for decision-making and execution of plans. Hence, most CEOs fail because of lack of decisiveness, poor follow-through on commitments and execution, and finally not delivering results. Similarly, the failure of top executives/CEOs, as per author Sydney Finkelstein, is mostly rooted in their leadership style and personality dynamics. Many of these aspects include inability to see other points of view, excessive self-obsession, inflexibility to try out new methods, basking in past glory, a know-it-all attitude and an unbalanced view of the reality ahead.²

In the early 2000s, Michael Maccoby, an expert in the field of leadership research,³ wrote an article about narcissistic leaders. It talked about how narcissism at the level of a CEO can have negative consequences. Narcissistic leaders are skilful communicators, provide inspiring vision, motivate their followers and are great in generating publicity about the company, but mostly focus on themselves. However, they are overconfident, self-centred, poor listeners, lack empathy and often ignore others. They are averse to mentoring and also may not take feedback easily. Although narcissists provide an inspiring vision and motivate the team, in the long run, they might damage the morale of the organization and run into problems.

In contrast, Jim Collins, in his article published in the Harvard Business Review, looks at CEOs/leaders who lead their companies from ‘good to great’. Collins found that the CEOs of these companies were ‘level five leaders’: ‘The leaders who build enduring greatness through a paradoxical combination of personal humility and personal will’. Level five leaders, apart from being performance oriented, espoused a high level of humility, a deep sense of reflection and took support from mentors or coaches.⁴

Many CEOs who take up the role may not be fully aware of the skills required to be effective. The incumbent may find a totally new environment after taking up the position. The sphere of influence is much larger for a CEO—a bigger set of stakeholders to manage, and higher expectations from employees to show results in a short period of time can be quite overwhelming. Michael Porter, Jay Lorsch and Nitin Nohria in their article titled ‘Seven Surprises for New CEOs’⁵ in Harvard Business Review mention that even the most experienced CEOs find it hard when they take on the role. They realize that a CEO’s role is more complicated than they imagined. The article explains seven surprises that new CEOs encounter:

You can’t run the company: While this may sound ironic, a CEO has many responsibilities apart from overseeing the company’s operations. Day-to-day workings might have to be left to other managers. The CEO has to find time to deal with many other internal and external stakeholders that he might not have dealt with earlier with the same intensity.
Giving orders is very costly: While the CEO is definitely the most powerful person in the organizational hierarchy, it is important to learn that he/she is heavily dependent on others for the organization to operate smoothly. Giving orders can trigger resentment in employees.
It is hard to know what is really going on: Though you are the CEO, you might not know what is actually happening in the organization. You might no longer be privy to inside information and what’s happening at the ground level.
You are always sending a message: As a CEO, knowingly or unknowingly, your actions are being constantly scrutinized and interpreted. Your style, behaviour, or even likes or dislikes are under the radar. Your signals can be misinterpreted by different employees. You have to be careful about the kind of image you build in the organization.
You are not the boss: Board members, members of the owner family, or even external stakeholders might have a say in the organization.
Pleasing shareholders is not the goal: Keeping the shareholders happy is not the ultimate goal of a CEO. CEOs need to understand that it is the long-term profitability that matters. He/she should know what will work best for the organization and balance it with the demands of the shareholders.
You are still only human: CEOs are not superheroes, and taking on the role can affect their personal lives and their relationships with family and friends. It is important for CEOs to acknowledge this and learn to manage the changes.

These possible surprises raise the question of who can help the CEO.

With the new role comes a multitude of new responsibilities along with a diverse set of challenges, such as seeing the bigger picture of the organization, dealing with a new set of stakeholders, and moving away from a functional/divisional role to a full-fledged managerial one.

Ram Charan, author and noted CEO coach, in an interview with Eben Harrell, a senior editor with Harvard Business Review,⁶ says that it is important for a new CEO to seek help. There are many sources from where support and guidance can come. Board members who have a good view of how a CEO functions can help. A supportive board member can provide guidance as a mentor to the CEO without controlling his/her day-to-day responsibilities. CEOs can also seek help from an external coach who might provide a neutral opinion on how to navigate in a new organization. Another source could be the outgoing CEO. Usually, because of the dynamics in organizations, this resource is not leveraged much. The outgoing CEO has a wealth of knowledge and knows what will work and what won’t. The new CEO might not make a concerted effort to reach out to the outgoing person for many reasons, including ego, lack of rapport, wanting to set up his/her own legacy, and even narcissism.⁷ However, exchanging notes with the outgoing CEO can help the new CEO learn from his/her mistakes. The key aspect, according to Ram Charan, is for the CEO to understand and acknowledge the need for support. The CEO should be able to choose the kind of support required and it should not be imposed. However, not getting the alignment correct with the board or sometimes even with the predecessor can have repercussions. Ratan Tata’s successor Cyrus Mistry is an interesting example of non-alignment with the key stakeholders. Cyrus Mistry had to step down because of differences in the organization, including with Ratan Tata.⁸ Therefore, settling down as a new CEO and growing in the role can be quite a daunting task.

CEO Coaching and Mentoring

Executive coaching is a popular method for developing top leaders. A study by Stanford Graduate School of Business⁹ on executive coaching found that almost 100 per cent of CEOs like to have a mentor or some form of leadership advice. The area where the maximum number of CEOs have sought support is conflict management. With multiple challenges, learning how to resolve conflicts is important for a CEO. From the board’s perspective, the key area that needs improvement is talent development. The CEO should be able to mentor, identify talent and provide an opportunity to exhibit it.

Similarly, in the Indian context, People Business, a global human resources and leadership consulting firm,¹⁰ conducted a study with the Indian Institute of Management Kozhikode (IIMK) on executive coaching. The study found that CEOs benefited from coaching as it helped them improve their effectiveness in the role. CEOs found coaching useful in areas like conflict management and team building. However, for potential senior leaders, who were aspiring to be CEOs, strategic thinking was an area that required support from external coaches.

Mervyn Raphael, Managing Director, People Business

Mervyn Raphael has helped more than forty senior-level executives as a coach.

In your experience, what are the main reasons of CEOs taking up coaching?

I have mainly coached CEOs on behavioural aspects. Managing conflicts effectively has been one of the top priorities for CEOs, as they work with stakeholders with different interests. The challenge is dealing with complex situations on a regular basis and taking effective decisions. In today’s fast-changing business environment, CEOs are focused on harnessing the creativity of employees This is often a difficult task. Therefore, areas where CEOs require coaching are aligning leadership, conflict management, team building and mentoring. Also, managing talent and succession planning are in focus at this level.

How long does a coaching engagement last?

A typical coaching engagement lasts six months to a year. The period really depends on the objective of the engagement. When a CEO needs a ‘buddy’ to bounce off ideas, then the period tends to get extended. If a specific area of behavioural change is to be addressed, then the coaching period is normally six months. Some examples of behavioural change are willingness to listen to different viewpoints and reacting to situations rather than responding.

According to you, what are the skills of a successful CEO coach?

As a coach you should be able to appreciate the business context and the role of the CEO. Without knowing the nuances of the business, you may not be able to relate to the CEO. The second key aspect is to build a relationship based on trust. CEOs should be able to open up about their concerns. The third aspect is to have the courage to table an alternate viewpoint and discuss this logically.

A good coach is tuned to understand issues which are important and address the same diplomatically.

How has your experience of coaching aspiring CEOs been so far?

We can safely assume that most of the top executives are highly talented and smart professionals. However, they might have some blind spots that stop them from achieving greater potential. My observation is also that many more top management executives are now open to coaching as they see it as a great opportunity to develop themselves.

How does the process of coaching work?

The first step of coaching is to understand the behavioural gaps. This is typically done through discussions with key stakeholders. In the case of CEOs, it may be the board, the top management team and even some of the key external stakeholders. I also suggest a 360-degree assessment as it helps to get a good idea of the person’s character traits. Agreement on the areas of behavioural change is the starting point of coaching. I usually spend around two–three hours per session with the executive for a period of six months, with eight–ten sessions overall. Each coaching session has an agenda to discuss—typically the progress, reflections on change, and plans for the future. Midway, inputs are also taken from key stakeholders.

The model that I use for coaching is called ‘GROW’. It is a popular model proposed by Alexander Graham and Sir John Whitmore. The acronym stands for G: goals that one wants to achieve, R: current reality, O: options [the different means to achieve the goals], and W: will. The last aspect looks at the willingness of the executive to change and take action for the same to achieve the set goals.

Marshall Goldsmith, one of the top-rated executive coaches, in an interview with Des Dearlove for Business Strategy Review,¹¹ says that a professional has to be committed if he/she wants to see change. ‘The person who is receiving the coaching has to get confidential feedback on how everyone sees him. He is going to find out what he’s doing well and what he needs to improve. Then we sit down, with his boss, if possible, and talk. We have to reach an agreement. He’s going to have to get the feedback; talk to people; follow up on a regular, disciplined basis; apologize for previous sins.’ He also mentions some of the essential character traits that top executives work on. The No. 1 bad behaviour for top executives is being over competitive. The need to win every time and in all situations is one of the worst leadership qualities. Other top characteristics that executives work on are ‘passing judgement quickly, negativity, speaking when angry, making excuses, clinging to the past, passing the buck, not listening, and goal obsession, not a habit itself but something that leads to bad habits’.

Start-Up CEO Mentoring

For founders and CEOs of start-ups, mentoring is a very popular tool. Experienced CEOs and seasoned founders often lend a helping hand to others who are establishing themselves. Early-stage investors or VCs also act as mentors to the start-ups. Many not-for-profit organizations that give loans to start-ups, like Virgin StartUp¹² set up by Sir Richard Branson, provide a mentor as part of the support. Virgin StartUp provides loans to entrepreneurs with viable business ideas and mentoring for a year as a free incentive. Mentoring in start-ups is quite popular and is seen as a valuable tool for founder CEOs. In the case of Virgin StartUp, mentors are valuable friends who provide motivation, guide the founders with their experience and skills, and help the founders to develop their personality. For example, a lot of start-ups are technology led and are founded by entrepreneurs straight out of engineering colleges. They have very little experience, mostly of working in a large technology firm. Many of them are not exposed to business operations and management. An experienced CEO/entrepreneur can guide a novice founder CEO in his/her business. Rajesh Nair, who founded two start-ups—Ecologix and Happystry—says that start-up founders need mentoring on different levels depending on their experience. A fresh graduate with a technology start-up idea might require a different kind of mentor as opposed to a seasoned professional starting a business in his/her field. For some, a mentor might be just a sounding board while for others he/she could be the primary guide for decision-making. Start-ups and entrepreneurs are varied and diverse and it is important to find the right mentor.

Many respected management and technology institutions have incubation centres that support entrepreneurs, especially in the technology domain. For example, CIIE (Centre for Innovation, Incubation and Entrepreneurship) at IIM Ahmedabad provides support in terms of early funding, mentoring and functional expertise. CIIE brings together various partners like government agencies, large corporations, experts and different corporates that support early-stage entrepreneurs. The team of functional experts at CIIE also helps the entrepreneurs take operational and strategic decisions in the areas they are not adept at. Prof. Amit Karna, chairperson of CIIE, describes its role as follows, ‘CIIE primarily supports the start-up ecosystem in three ways. It incubates and invests in start-ups that use high-tech solutions to address pressing needs of the country. It provides grants and funds against equity. We act as fund managers to invest in these companies. Close to 120 start-ups have received funding through CIIE.

‘The second area we work on is promoting entrepreneurship. We create competitions and boot camps for aspiring entrepreneurs to refine and pitch their ideas. The ideas are then shortlisted by an expert panel. The entrepreneurs are also guided on how they can pitch their ideas to potential venture capitalists. CIIE leads these efforts through initiatives like Economic Times Power of Ideas [an entrepreneurship development programme]. We also have a panel of expert mentors who guide the entrepreneurs. The third area of focus is on training. CIIE runs courses at IIM Ahmedabad, conducts research and develops incubation centres in companies.’

The Indian Institute of Technology Bombay and many other colleges have their own incubation and entrepreneurship cells.

The Indus Entrepreneurs, commonly known as TiE, is a global not-for-profit organization which nurtures entrepreneurship and provides mentoring support at many levels to start-up founders. TiE conducts sessions by experienced founders about the different phases of establishing a start-up;¹³ it also conducts sessions on specific areas that benefit the founder. This includes finding the true purpose of the start-up and funding and legal aspects. The events and programmes are customized keeping in mind the different challenges an entrepreneur faces at different stages. For example, one of the events conducted regularly by TiE focuses on the first six months: the journey of incorporating, finding purpose, setting up the team and managing the initial chaos.

Vardan and Ankita Diwekar Kabra, on How to Lead a Successful School

Vardan and Ankita Kabra met at IIM Ahmedabad and they are now partners in life and also partners in successfully leading a school they set up from scratch. After passing out from IIM Ahmedabad in 2004, Vardan and Ankita started exploring options to set up a school that would be different from the usual schools that only focus on traditional learning models. ‘My experience of studying at various schools due to my father’s transferable job got me thinking of the state of learning in our schools. Most of the learning is focused on examinations and teachers only lecture in classrooms. It often leads to non-participative classrooms, which are far from reality. The only different experience I had was at IIM Ahmedabad where students experienced learning through real case studies. Prof. Sunil Handa, who taught at IIM Ahmedabad and also ran a non-conventional school, Eklavya, motivated me to think about starting a school that offered a different learning experience,’ says Vardan.

After graduating from IIM Ahmedabad, Vardan and Ankita set up their venture with a preschool in Surat, Gujarat. This was the first step in building a school that encouraged student-centric education. The venture was self-funded and both the founders were involved in all the operations. Within a short period of time, the school got widespread attention.

Parag K. Shah, who is a diamantaire by profession, wanted to contribute to society and add value to the education sector. Parag floated the idea of expanding the preschool to a full-fledged school with the same principles of education that Vardan and Ankita espoused. With funding from Parag’s family, the Fountainhead School was started in 2008; it was also affiliated to the IB. In ten years, the school has grown and has more than 2000 students and more than 500 employees.

The key learnings are:

a) Managing the organization: This includes administration, finance, human resources, facilities and other aspects. The support from Parag Shah and his well-established firm helped Vardan expand quickly.
b) Academic expertise and leadership: Another key learning for Vardan was understanding the methodologies of IB and developing academic excellence in the school. He got an understanding of academic leadership by attending professional programmes and visiting various well-managed schools in India and abroad. This helped Vardan and Ankita get a good perspective of the best practices in managing schools.
c) Managing people: Vardan believes that he has good skills when it comes to managing people. He believes that this is an important strength for leading an institution.

The two leverage their skills to run the school successfully. Vardan uses his ability to develop a broader vision while Ankita uses hers to improve the operations.

Executive Development Programmes

Many top business schools and consulting firms focus on executive education programmes, which are specifically designed for CEOs and top management teams. For example, Harvard Business School conducts a workshop for first-time CEOs called ‘The New CEO Workshop’. It helps CEOs of large, established enterprises set an agenda for their success, navigate easily in the new organization and work towards managing the many new challenges they might face. Some of the areas covered in the programme include building legitimacy as a CEO, developing appropriate strategies, communicating with internal and external stakeholders, building a relationship with the board, setting the values in the organization, and dealing with the predecessor. Programmes like this definitely identify the key challenges CEOs face and help them to be better prepared. Similarly, Wharton offers a global CEO programme,¹⁴ which is conducted over three non-consecutive weeks in China, Spain and the USA, and focuses on developing the skills needed to be a CEO of a global corporation. It covers aspects like working across boundaries, building strategies for global competitiveness, understanding global markets and expanding global footprint. All top business schools globally and in India offer programmes that help top management executives including CEOs develop key skills. Most of these programmes focus on areas like strategic thinking, leadership, marketing strategies, global mindset or other general managerial skills.

Events and Forums

CEOs stay abreast of current happenings through multiple events that they attend. From the World Economic Forum to regional industry briefings, CEOs are part of many events and conferences. The World Economic Forum brings together more than 1000 business leaders, most of them CEOs of influential companies, to deliberate over matters that have considerable current or future impact on economics, business and society. From India, more than 100 CEOs representing top business entities attended the annual meeting of the World Economic Forum at Davos, Switzerland, in 2017. This included names like Mukesh Ambani (Reliance), Vishal Sikka (ex-CEO, Infosys), Abidali Neemuchwala (Wipro) and Amitabh Kant (NITI Aayog).¹⁵ The CEOs got to network and understand the global dynamics on major issues. For some, it was a good opportunity to showcase their ideas and ideologies to the world.

There are many such events that are organized by industrial bodies, such as the Confederation of Indian Industry (CII). CII conducts industry-relevant conferences and round-table talks. These events and programmes help CEOs network and voice their opinion. There are also specialized forums for CEOs in different countries. For example, IMA, a research service, has an India CEO forum that conducts regular briefings for CEOs on various relevant issues followed by interactions. The CEOs also get to interact and network with their peers. The IMA forum also conducts annual meetings where more than 200 CEOs come together for a multi-day event of discussions and networking.

CEOs can network, learn from industry peers and also get updates on latest perspectives at these events, forums and conferences.

Rakesh Sridharan, CEO, TigerStop

Rakesh Sridharan is currently the CEO of TigerStop LLC, a Washington-based global leader in automation equipment under the TigerStop and SawGear brand names. Before TigerStop, Rakesh was the president and chairman of the board of directors at Ledlenser Corporation Ltd, a division of Leatherman Tool Group, US, a global player in LED flashlights. He was responsible for business operations in Germany, China, Japan, Italy, Switzerland and Poland. Prior to Ledlenser, he was the vice president of operations at the Leatherman Tool Group and director of operations at Toro Company.

Rakesh moved to the US after completing his bachelor’s degree in engineering from Bengaluru and a brief stint with HAL. He completed his master’s degree in manufacturing from the University of Texas and started working with Continental Sprayers. One of the first experiences of working in foreign operations came when Rakesh took up the responsibility of starting a manufacturing set-up in Mexico for Toro Company. Within three years, the Mexico business operations had more than 3000 employees and it helped the company achieve its cost-reduction objectives while continuing to deliver high-quality products. At Leatherman, Rakesh led the team that acquired Ledlenser, a German entity with operations in China. He later became the president at Ledlenser. Here, Rakesh led teams from different nationalities and cultures.

Personal Learning on Becoming a CEO

Rakesh says that it is important to quickly understand and define the vision of the company, develop strategies (both short- and long-term) and ensure that a process is in place to execute the strategies. It is then important to ensure that you have the right players with the right skill sets to execute them as well. It is also important to establish the function of the board, and the expectations from the CEO and the board, including their roles and responsibilities. As a global CEO you are also legally responsible for the operations across multiple countries. The CEO should be watchful of the metrics that drive performance; and get a grip of what are the key competencies/products of the organization. Functional leaders are mostly focused on internal issues. As a CEO, a lot of focus should be external—such as customers, end users, markets, trends, technology and competition. Understanding the customers and their real needs can help the CEO to be successful. You also need to build real connections with the local and global teams. For example, Rakesh spends time with teams who don’t even report to him to understand what drives them to work in the company, the challenges they face, and their suggestions for change. These conversations have helped him get a better picture of the organization and the talent. As a CEO of a global company, you should be able to understand the concerns and motivational factors that drive your employees. This understanding is beyond the cultural and national differences that we observe. A successful CEO should be able to get people with the right skills and experiences on board to achieve the goals set by the company. Once you have set a strategy, do not abandon it. Evaluate strategies constantly for changing conditions in both the external and internal environment. If required, make minor adjustments but still stay focused on the long-term plan.

Communicating with internal and external stakeholders is important. Waiting too long to communicate can lead to rumours. Honesty, integrity and openness in communication are critical. A CEO should walk the talk and get the team involved by giving them an accurate picture—good or bad.

A CEO should be in a constant learning mode. Rakesh mentions that a lot of his learning came through experience, peer groups and reading. His willingness to take risks and take up roles where he had minimal experience helped him to get out of the comfort zone. He learnt about organizations and what works with the support of senior leaders who were his mentors. Reading books and attending sessions on aspects like ‘strategy development and execution, leading organizational change, creating high-performing teams, responsibilities of a board’ helped him get an understanding of the different aspects of managing at the top. To be successful as a CEO, it is critical that you stay humble. It is important to learn from different stakeholders, especially if you are leading a global team.

Developing CEOs in Family Businesses

Family business owners have to be well prepared before taking on the role of CEO. The successors should have a clear understanding of the dynamics of the family business and the process of managing it. Ivan Lansberg and Kevin Gersick,¹⁶ in their article published in Academy of Management Learning and Education, on educating family business owners provide a holistic approach for aspiring leaders. The common strategies proposed for learning are books and reading materials, formal education through established institutions (e.g. executive programmes at institutions such as Kellogg, Harvard, the International Institute for Management Development [IMD], INSEAD, London Business School [LBS] or other top business schools) and conferences in which business owners and their families are exposed to experts on particular topics with a focus on family-led businesses. Other tools like e-learning: family websites, electronic newsletters (e.g. online learning courses offered by specialized institutions), executive development networks in which business owners are exposed to a myriad of speakers and professional advisers (e.g. Conference Board, Young Presidents’ Organization, Family Office Exchange, Council on Foundations), and customized in-house workshops (using external and internal resources) are also suggested. Family business owners need to have a comprehensive understanding of the intricacies and complexities of how the business functions and what roles members play. At a broad level this includes aspects like the family council, family assembly, employment policy for family members, dividend policy and aspects related to decision-making. They should also be willing to learn business operations through various mechanisms like special assignments, internships, shadowing and mentorship.

I had the chance to interview Ravi Menon, the chairman of Sobha Group, a major real estate player, while he was the vice chairman. Ravi was handling all project-execution-related functions (project management office including planning, costing, quality, safety and technology, technical resources, plant and machinery) at the group. He was also responsible for other functions like customer relationship and information technology. Handling project execution helped him understand the core of the business in depth. As the son of a first-generation entrepreneur, P.N.C. Menon who was the founder of Sobha Group, Ravi said that he learnt a lot from his father. ‘The advantage in my case is that I already have a strong platform from which I can build the business. The challenge initially was to understand the business from a bigger scale with our multiple verticals, and that required time and more experience. Building a business from scratch [my father is a first-generation businessman] is a totally different experience, and I won’t be able to comprehend those challenges fully as I have not done it myself. Of course key lessons from my father’s business life have been shared with me, but experiencing them would be something else. During the recession of 2008–09, we learnt new lessons, so it is also a continuous learning process. We are currently scaling to newer geographies which will be challenging. My task is to grow the business and ensure that it is sustainable,’ he said.

In the case of family businesses where many generations work together, the owner CEO should be astute enough to understand the various dynamics and steer the business to a common vision. A book titled Family Business on the Couch: A Psychological Perspective¹⁷ describes some of the deep-rooted psychological issues of being a family business successor. The leader has to understand the various dynamics in the family, his/her own psychological fears and suspicions, and reflect on the impact of the responsibility. It is also important to understand that unlike in a purely professional organization, when the mantle is passed on to the next generation, the older generation still has a hold over the business. Respecting the family values and culture, and at the same time taking the business to new heights, are the key competencies that a CEO should acquire.

Building a Talent Pipeline

Many established organizations have formalized practices to build a pipeline of senior executives who could take on the mantle of a CEO. Succession is a key mandate of the board and planning ahead goes a long way in ensuring the success of an organization. Companies invest in identifying key talent, and grooming them through multiple development programmes to take on critical positions. One of the pioneers in building the talent pipeline and succession planning process is GE,¹⁸ a well-known American conglomerate. The company has built an exhaustive process to review talent through ‘Session-C’, which looks at the performance and behaviour of key executives and their future career plans. The executives are also nominated for various leadership development programmes at Crotonville, the corporate university of GE. Crotonville has different sets of programmes for leaders at different levels: the management development course for senior professionals to move to the executive band, the business manager course for leaders in the executive band to move to the senior executive band, and the executive development course for leaders to move from the senior executive band to officer level (top management team below the CEO). The key talent are tracked closely on their performance and behaviour. The talent review helps the professionals to move to new positions and grow in the organization.

GE’s Recent Big Succession Move: John Flannery as CEO, Successor to Jeff Immelt

On 12 July 2017, GE announced John Flannery, president and CEO of GE Healthcare, as the CEO of GE. He took over from Jeff Immelt who led the company for more than seventeen years. Susan Peters, global HR head at GE, wrote an article about the process to identify the successors for the top job and how John Flannery was eventually selected. She mentioned three different aspects in the article.

The identified leaders went through multiple stints and varied experiences to groom them to take over higher roles.
GE drafted a job description for the future CEO. This also focused on the key competencies required to be successful in the role. Based on research and interviews with close to 100 external leaders, the key ‘enterprise leadership capabilities’ required to be successful as CEO in the present and in the future were defined.
In 2012, the board discussed in detail the key potential successors based on the available data. This included their hard performance and softer leadership aspects.
As the final step, the board met with the potential candidates and listened to their perspectives. The discussion was around the following interview questions.

Susan Peters writes, ‘The board challenged candidates with difficult questions and listened intently to their answers. Questions posed included the following points:

What would your current leadership team say they most appreciate about how you lead them?
How would you position GE to win in that environment?
What strategic changes would you drive, including capital allocation and portfolio management?
What do you see as the most beneficial aspect of GE’s culture that would be important for you to maintain? What would you change?
What is the toughest personal feedback you have received?
What professional or personal experiences have helped shape your global perspective?
How do you learn?

For John Flannery, who was finally selected for the role, she wrote ‘In John Flannery, our company’s next CEO, the GE Board has selected a life-long learner and a strong operator with global experience. He is someone who possesses the capabilities needed to lead, empower and inspire. Over 30 years with GE, John has shown that he thinks big, dives deep, and is both adaptive and resilient. One of John’s hallmarks is how he engages the people and teams he leads.’

Succession planning for senior leadership positions is the main priority for many established organizations. For example, RPG Group used development centres to assess high performers at various levels. The leadership competency model was used as the basis for assessment. Managers who showed a benchmark level of proficiency in different competencies were identified as high potentials and were given special developmental interventions and career development opportunities. Arvind Agrawal, who was the president, group HR, and a management board member at RPG, mentions two instances of developing CEOs. Talent reviews identified areas of development for potential CEO candidates. The first was that the candidate needed to have a more holistic view of all functions of the business with a special focus on managing people and finance. The candidate was appointed as the COO before taking on the CEO’s position. This role, along with his supervisor’s advice, who was the CEO, helped the individual reach the top position. Similarly, another professional who was slated for the top role was seen as an old-fashioned leader with a very hierarchical style of managing people. The executive was provided with an executive coach who mentored him through his journey of transformation. The coaching helped the professional become a more contemporary leader. Manipal University introduced a programme called ‘SMILE—Synergic Manipal Integrated Leadership Engagement’ in partnership with People Business, a leadership consulting firm. The objective of the programme is to develop leadership capability of faculty members. The university needed leaders who could manage high growth in terms of student intake, geographical spread and internationalization; higher focus on innovation, research and quality; new capabilities; and higher complexities due to changing government regulations. The programme included workshops on leadership competencies, special projects and executive coaching. It helped the faculty members develop new skills that are required as administrative leaders (like business acumen, strategic thinking and people management). The participants were groomed to take on larger roles.

Chief Operating Officer (COO) to Chief Executive Officer (CEO)

The COO is the second in command to the CEO. The position is often seen as a stepping stone to the CEO’s seat. The COO is often hired by the board as a natural successor to the CEO. The COO gets the opportunity to experience and run the operations of the company and move to the role of CEO through a smooth transition. For example, Varun Berry was hired as the COO of Britannia Industries when Vinita Bali was the managing director and CEO of the company. Hired in February 2013, he was given the responsibility to run the India operations of Britannia by May 2013. He was later promoted as the managing director and CEO within a period of a year. As the COO, Berry was able to make strategic tweaks and improve operational efficiency.¹⁹ In February 2016, Outlook Business ran a full article²⁰ on how Berry moved on from being a COO to become a very successful CEO. The article attributes his success to his ability to take tough calls, provide a strategic direction that helped in a highly competitive market, bring back focus on key brands and brand innovation. A COO’s role can be different in different organizations. Nathan Bennett and Stephen A. Miles, in their article titled ‘Second in Command: The Misunderstood Role of a Chief Operating Officer’ published in the Harvard Business Review,²¹ explain the roles that a COO may be entrusted with. These are: the executor, the mentor, the change agent, the other half, the partner, the heir apparent or the Most Valuable Person (MVP). As an executor, the COO takes on the role of executing the strategies and plans the top management and CEO devise. As a partner or the other half, the COO equally supports the CEO in most of the activities or in the areas where the CEO lacks expertise or experience. As an heir apparent, the COO shadows or gets familiar with the role of the CEO. In most of these cases, the COO has to handle critical roles in the organization after the CEO. However, the transition to CEO is not an easy one. The COO has to get exposed to areas beyond managing operations or supporting the CEO. In another article published by Nathan and Stephen in 2010 they mention three areas where the COO needs to focus. First, the COO needs to be comfortable with the idea of being the final decision maker. Earlier he/she had the liberty to consult the CEO but this doesn’t exist in the new role. The second aspect is to have a broader strategic outlook. While the COO is predominantly focused on efficient operations, suddenly the outlook shifts to the broader system of the organization. He/she needs to plan to ensure sustained growth. The third aspect is about stakeholders. The COO is required to deal with shareholders, external stakeholders like government or industry bodies, external communication and the board. A COO who is going to take over as CEO should focus on the above aspects.²² If the COO is already the CEO’s heir apparent and this has been accepted by the board and the CEO, the transition can be easier with their support. Vasanth Kumar, the executive director of Landmark Group and CEO of Max Fashion, says that without the right support and exposure there is a very high chance of failure once the COO becomes the CEO. The reason for this, he says, is the difference in expectations from a CEO and a COO. The latter is expected to manage different functions and bring in optimization, synergy and efficiency, while the CEO takes ownership of the business and makes sure that the profitability improves. A COO focuses on internal issues, while a CEO looks after external stakeholders. A CEO should prepare the organization to deal with disruptions in the marketplace. The CEO should be able to bring in vision for the business for the next five years. A COO should have the ability to take decisions and calculated risks, develop strategies and communicate, and influence the external world. In ideal conditions, a COO should handle a small business unit independently and shadow the CEO before taking on the role. In my own case, I focused on three aspects as a CEO.

Differentiating the business in the marketplace
Have a value system and culture, and encourage professionalism and candour in the workplace
Have a clear idea of what is happening in the organization.

A COO has high chances of becoming a CEO if he/she is able to communicate effectively with external stakeholders and take ownership for the overall success of the business.

Career Management Strategies

Managing one’s career is an important aspect of reaching the top. Even in the case of family businesses, where there is some certainty that the scion will take over the leadership at some point, formal education and career experiences are important to take on the big role. Robert Kaplan, in the article titled ‘Reaching Your Potential’²³ published in the Harvard Business Review, enumerates some of the critical aspects of career planning. The three key points that Kaplan described as important for reaching one’s potential are:

a) Having a clear sense of what defines a successful career and course the journey accordingly
b) Knowing one’s strengths and weaknesses and working on them, excelling in the critical aspects and showing character and leadership
c) Taking ownership for your career and not leaving it to the organization or manager

Top leaders who take up the role of CEOs are in control of their destinies. They take ownership to define their career aspirations and work towards achieving the same.

Heidrick and Struggles, an executive search and leadership development firm, analysed the careers of all current Fortune 500 CEOs. They found interesting facts about the career journeys of these CEOs. ‘About 30 per cent of Fortune 500 CEOs spent the first few years of their careers developing a strong foundation in finance. This is by far the most common early experience of today’s CEOs. As the second-largest constituent, CEOs who started out in sales and marketing roles account for only about 20 per cent of the current big company CEO population.’ The study found that most of the CEOs had experience in core operations. Most of them had been appointed internally and had spent an average of sixteen years with the firm. However, only one-third of the CEOs had spent their entire career with the same firm. Many of the CEOs were also non-executive board members of other firms. This study clearly shows the value of experience of running the core operations of the firm and also the ability to understand finance and financial performance.²⁴ For example, Paul Polman, the CEO of Unilever, spent his initial twenty-seven years with Procter and Gamble (P&G). He started his career as a cost analyst and went on to become the managing director of P&G, UK. He was also the group president of Europe for P&G. Later, he joined Nestle as the CFO and then became the global CEO of Unilever. As CEO of Unilever, Polman leads many corporate social responsibility efforts and is a United Nations Sustainable Development Goals (SDG) advocate. He is also on the boards of companies like Alcon and Dow.²⁵ Polman makes for an excellent example to validate the study of Heidrick and Struggles.

Vikram Shah, Chairperson, Governing Council, Stonehill School

Vikram Shah became a CEO very early in his career. He has held key positions in organizations like Systime, Tata Unisys, Mahindra British Telecom, Tata IBM, Novell and NetApp. Currently, he is the chairperson of the governing council at Stonehill School in Bengaluru. Vikram shares some interesting insights into his career journey.

What were the defining moments of your career?

I completed my bachelor’s degree in engineering from BITS-Pilani and completed my master’s degree in computer science from University of California, Berkeley. After working in the US for three years, I joined Tata Consultancy Services [TCS] in India. It was my aspiration to become a CEO. Hence, I knew I had to move to management early on. After spending six–seven years in technology at TCS, I moved to management. This was a defining moment of my career. After this, I got an opportunity to be the CEO of a forty-employee-strong office of a UK-based firm, Systime. This experience helped me get a good understanding of board-level governance. This was another defining moment of my career. From here, I moved to Tata Unisys as a senior-level executive. This move helped solidify my experience of managing a larger and more complex organization. The next big move was as the CEO of Mahindra British Telecom [MBT]. Here, I got exposure to segments like building teams, financial planning, starting offices in different geographies and sales. From here, I moved as second in command to Tata IBM. This role helped me to get a 360-degree view of managing operations.

My next move was as the CEO of Novell. Here I helped the organization grow to 800 employees. The role here helped me get a strong foundation of working with leaders from different geographies. It also helped to learn the process of managing growth in an Indian captive centre of a large global firm. After Novell, I became the co-founder of a technology firm called Andiamo, which we were able to grow and sell to Cisco. The venture helped develop entrepreneurial skills. After this, I had a short stint as the CEO of Talisma and then I joined NetApp. The company grew from 200 employees to 1700 during my tenure as the CEO.

When I look back, I realize that each role helped me better my skills as a CEO.

What are the positive aspects and what are the challenges?

A role gives you the power and resources to make an impact in the organization. However, the role comes with a lot of responsibilities and this can cause a lot of stress. A CEO should be able to manage his/her time well. There should be a good sense of work-life balance. As a CEO, you should find time to relax—for me it was about spending time with my family. It is important that you hire competent people and manage them well. Good CEOs understand that the changes they bring in an organization are not solely because of them. They bring the team together and acknowledge their support.

As a CEO, how did you build a rich network that helped in your career growth?

There are two factors that led me to take active efforts to build a network. The first was that I was a non-MBA in the management field. I had to actively build a network of leaders as I was not an alumnus of a premier business school. Secondly, my personality profile [Myers-Briggs Type Indicator–MBTI] showed that I had introversion as a personality trait. This meant that I had to make extra efforts to build a network. I used to attend business networking forums and engage in conversations with people who were new to me. I also tried to have discussions on topics that I was not comfortable with. The networks I built over a period of time have helped me at different stages of my career.

How do you see your role as chairperson of the governing council at Stonehill International School?

The chairperson’s role at Stonehill involves mentoring school management teams, defining effective governance standards and strategizing for the growth of the school. Unlike a CEO in a corporate, the role of a chairperson of an international school does not involve managing operations. It is about providing guidance on the overall academic excellence and growth of the school. The role exposed me to nuances of managing an international school and working with faculty and students from across the globe.

Vikram Shah is an interesting example of how professionals can develop key skills and leverage them for career success. In the case of Vikram, it was his ability to build networks and technical skills with the practical knowledge of business that helped him become a CEO so early in his career.

It is often not easy to establish and grow professionally or establish new ventures in foreign countries. An interesting example of this would be Raju Menon, who trained with leading chartered accounting firms in India and in the UAE before starting his own professional practice in 1996. He has over twenty-five years of professional experience in the UAE. He is currently the chairman and managing partner at the Morison Menon Group. He built the company in 1994 as a three-member CA practice and today it is a well-respected audit and consulting firm in the UAE. Menon was ranked as one of the top Indian leaders in the Arab world by Forbes Middle East. It is his ability to build strong professional networks in foreign countries and establish credibility by delivering the best to his customers that has helped him grow.

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In the case of the public sector and government as well, professionals who are able to prove their contribution move ahead and are able to take up influential positions. Amitabh Kant,²⁶ currently the CEO of NITI Aayog had an illustrious career in the IAS. A Kerala cadre IAS officer of the 1980 batch, Amitabh has worked as CMD, India Tourism Development Corporation; joint secretary, Ministry of Tourism, Government of India; secretary, tourism, Government of Kerala; managing director, Kerala State Industrial Development Corporation; district collector, Kozhikode; and managing director, Kerala State Co-operative Federation for Fisheries Development Ltd. He was a very popular district collector at Kozhikode and is respected for the transformational work he did there, including building the Mananchira Square in the traditional Malabar architecture and creating a public-private partnership model at Calicut (Kozhikode) airport. Amitabh Kant was behind popular campaigns such as Make in India, Startup India, Incredible India and God’s Own Country which positioned India and the state of Kerala as tourism destinations. Amitabh also conceptualized and executed the Atithi Devo Bhavah—Guest is God campaign to train taxi drivers, guides and immigration officials, and make them stakeholders in the tourism development process. In government services, like the IAS, we see high-calibre professionals taking up critical roles after they prove their capability in their formative years. There are a number of specialized learning programmes that senior government officials are encouraged to take part in within their departments or institutes. In the government, although seniority plays a key role, talented officers often get big assignments to influence government policy formulation and deployment.

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A lot has been written about the difficulties women face to reach the top of the organizational hierarchy. There is a glass ceiling on opportunities for women due to multiple factors including discrimination and biases; the general notion is that women can’t have distinguished careers due to family commitments. Sarah Dillard and Vanessa Lipschitz, two management consultants, published a study in Harvard Business Review where they²⁷ analysed the career paths of twenty-four women who are CEOs of Fortune 500 companies. They found that most of the women CEOs had spent considerable time in the same company to reach the top. The study states: ‘Just as important, there is something inspiring for young women in the stories of these female CEOs: the notion that regardless of background, you can commit to a company, work hard, prove yourself in multiple roles, and ultimately ascend to top leadership. These female CEOs didn’t have to go to the best schools or get the most prestigious jobs. But they did have to find a good place to climb.’ The 2017 Fortune 500 list of CEOs shows that the number of female CEOs is at an all-time high at thirty-two. Women run seven of the largest companies under the Fortune 100, including Mary Barra of General Motors, Ginni Rometty of IBM, Indra Nooyi of PepsiCo and Marillyn Hewson of Lockheed Martin.²⁸ Denise Morrison, CEO of Campbell Soup Company, provides interesting career advice to women.²⁹ She actively planned her career to get maximum exposure within the company, moving across multiple functions and roles. She also sought challenging roles to improve her leadership capabilities. She talks about the importance of building relationships and networking. Serving on boards of other companies also helps in building leadership skills and learning about corporate governance. It is also important to have a personal mission for growth and build one’s career to reach the top. In the Indian context as well, we have women leaders like Arundhati Bhattacharya (SBI), Chanda Kochhar (ICICI), Shikha Sharma (Axis Bank), Naina Lal Kidwai (HSBC), Usha Sangwan (LIC) heading some of the largest financial institutions in the country and even globally. They have spent considerable time in the industry and are known for their ability to add value to their businesses. An interesting example is Chanda Kochhar of ICICI. She joined the bank after graduation and spent close to twenty-five years with the organization before she became the managing director. She was part of the teams that started the corporate banking business segment and later retail banking. She was instrumental in the growth of these businesses.³⁰ Chanda Kochhar is one of the most influential women leaders, not only in the country but also globally. Kiran Mazumdar-Shaw, chairman and managing director of Biocon Limited, is another notable businesswoman, who started a company from scratch and made a respectable name in the pharmaceutical industry.

Growing to the top of the corporate hierarchy and remaining there is a matter of qualifications, talent, experience and careful career planning. The professionals who make it to the top consistently deliver on performance and have a learning curve that puts them ahead of others. The role of the CEO gives them an opportunity to craft the future of the organization and leave behind a legacy.