Fulfilling Your Leadership Potential

Jeff Immelt, who since his appointment in 2001 seems to be successfully following the legendary Jack Welch as Chairman and Chief Executive Officer of General Electric, may be a corporate rarity these days. According to Jay Conger and Robert Fulmer, writing in last December's Harvard Business Review, "... an alarming number of newly minted leaders fail spectacularly, ill prepared to do the jobs for which they supposedly have been groomed."

Coca-Cola, for example, has struggled to find someone to adequately replace its legend, Robert Goizueta. Since his untimely death in 1997, the company has had two CEOs—Doug Ivester, who abruptly resigned in 2000, and Doug Daft, who is retiring this year. The search has been on since February for his replacement.

Leadership Development Process

Of course, there is no standard test for CEO. It is always a risk the first time someone takes over the top spot. Immelt, for example, could just as well have failed, at GE, and Ivester succeeded, at Coke.

However, experience shows that companies do best when they develop their executive leadership in a planned, measured process. And candidates for executive leadership succeed when they take care in their careers to avoid missing a key professional step. To assure a consistent stream of well-rounded, highly qualified leaders, we advise clients to assiduously develop their own management talent, promoting only the highest internal performers into key "leadership-rung" positions, and to recruit rising stars away from their competitors or from other industries.

Key Leadership Steps

Based on our collective executive search experience over more than twenty years of working with companies and candidates and our personal experience as senior executives in food, agribusiness and life sciences companies, we believe the following positions are worthwhile steps to take for any executive serious about rising to CEO and that companies should consider integrating them into their leadership planning, development and succession process.

A sales role - Everything starts with the customer in terms of acquiring the experience, savvy and knack for convincing customers how your product or service is good for their business. Senior executives lacking direct sales and sales management experience—for example, those who have come up through the financial side of the business—are at a real disadvantage. Thus, for a talented member of the financial or operations staff, an assignment to a sales territory early in his or her career, or later to a sales management post, even if only briefly, are "musts." There is no substitute for having significant direct customer contact and experiencing the pressure of meeting top-line objectives.

A staff role - This could be in marketing, communications, finance, engineering, product development, or any of several other areas. Since line personnel often underestimate and discount the value of staff service, and vice versa, actually serving in a staff position promotes appreciation in the would-be CEO. An unusual variation on this is to insist that all senior executives spend a significant period in a senior human resources position, focused exclusively on the complexities of the company's human capital needs, problems and solutions.

P&L responsibility - Explanation is hardly necessary here. No career ladder is complete without this leadership rung. In some businesses, the CEO is the only person with true P&L responsibility, although there may be many matrix positions that "kind of" have it. In many large firms, true stand-alone profit centers—with their own R&D, manufacturing, sales and marketing functions—are few and far between.

Building something from scratch - This challenge separates the true champion from the contender, permitting an executive to demonstrate the vision, planning, organizational and implementation skills necessary to create something that adds value in a new or different way.

Take something broken and fix it - Can you solve a problem, implement an effective solution and create a new "can-do" attitude of success within the enterprise? Can you turn around a failing business or floundering department? This type of exercise typically gives an executive in-depth understanding of the cost side of the business and how to re-engineer business systems.

Take success to the next level - Stepping in and managing an ongoing, thriving entity successfully is a very different challenge from turning around something that's broken. Running an already thriving entity in which there is a lot to lose if you mess it up is very different from leading a turnaround, where the worst that can happen is that what was already broken stays that way—and perhaps could not have been resuscitated anyway. Executives earn bonus points if they make something terrific even bigger and better!

An international assignment - Nothing changes and stretches like living and working in another country, culture and language. In the global economy of the 21^st Century, the ability to move seamlessly back and forth is a prerequisite for success for the CEO of a multi-national company.

Leveraging Leadership Potential

Successful companies and best-in-class executives share a characteristic ability to anticipate and prepare methodically to meet the future. Companies with transparent, dynamic leadership development systems, for instance, usually seem to find just the right person when it counts. Thus, a few weeks ago it was apparently no surprise to Wall Street when Charlie Bell stepped in to replace the suddenly fallen Jim Cantalupo as McDonald's CEO. Because Bell was known and trusted as a fit successor, McDonald's stock didn't slide. Still the long-term verdict won't be known for a year or more.

Whether elevating someone from within, as did McDonald's, or choosing from an external slate of candidates, the goal is to assure the highest quality top management. By working with a retained executive search firm, with its in-depth industry knowledge, worldwide contacts and professional objectivity, companies can leverage their potential for identifying, recruiting and developing the best prepared senior executives. Until next time.

Kincannon & Reed
May 2004