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The CEO's second act.

David A Nadler1

  • 1Mercer Delta Consulting, New York, USA. david.nadler@mercerdelta.com

Harvard Business Review
|February 9, 2007
PubMed
Summary
This summary is machine-generated.

CEOs often fail when facing new challenges because their past successes don't apply. Adapting to new demands requires introspection and humility, with four choices for navigating career transitions.

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Area of Science:

  • Business Strategy
  • Organizational Behavior
  • Leadership Studies

Background:

  • Companies often replace underperforming Chief Executive Officers (CEOs) with individuals perceived to possess superior skills for addressing specific challenges.
  • This selection is frequently based on a candidate's past successes in similar situations, overlooking the potential for future challenges to differ significantly.

Purpose of the Study:

  • To analyze the common pitfalls CEOs face when transitioning from initial successes to subsequent, unfamiliar challenges.
  • To explore the adaptive strategies available to CEOs and the rare qualities required for successful navigation of these career "second acts".

Main Methods:

  • Conceptual analysis of CEO career trajectories and performance.
  • Case study examples (Carly Fiorina, Stanley O'Neal, Sergey Brin/Larry Page, Ken Freeman) illustrating different CEO responses to evolving challenges.

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Main Results:

  • CEO success in an initial phase (Act I) does not guarantee success in subsequent phases (Act II) due to changing problem landscapes.
  • The skills and temperament effective in Act I may be detrimental in Act II.
  • Four CEO choices exist: resist change (leading to replacement), adapt and learn new skills, downsize/circumscribe role, or plan for succession.
  • Adaptation, role adjustment, and succession planning are viable strategies, unlike outright resistance.

Conclusions:

  • Successful navigation of a CEO's "second act" necessitates recognizing evolving challenges, accepting feedback, understanding the shift, and taking decisive action.
  • The most effective strategies (adaptation, role adjustment, succession) require rare qualities like self-awareness, introspection, and humility.
  • Resistance to change is a failing strategy, highlighting the need for continuous leadership development and adaptability.