The Seven Surprises for New CEOs were described for the first time in the
HBR of October 2004 in an article regarding CEO Leadership by Michael Porter,
Jay Lorsch and Nitin Nohria.
As a newly appointed CEO, one may think to finally have the power to set
strategy. The authority to make things happen, and full access to the finer
points of your business. But if you expect that this job is so simple, you'd
better wake up now. You bear full responsibility for your company's well-being.
But you are a few steps away from many important business factors. You have
more power than anybody in the corporation, but you need to use it with extreme
Porter, Lorsch and Nohria have discovered that nothing - not even leading
a large business within the company - fully prepares a person to be the chief
The seven most common SURPRISES for new CEOs:
- You can't run the company. The sheer volume and intensity of
external demands take many by surprise. Almost every new chief executive
struggles to manage the time drain of attending to shareholders, analysts,
board members, industry groups, politicians, and other constituencies.
- Giving orders is very costly. No proposal should reach the CEO
for final approval, unless he can ratify it with enthusiasm. Before then,
everyone working on the matter should have raised and resolved any potential
deal breakers. The CEO should be brought into the discussion only at strategically
significant moments to give feedback and support.
- It is hard to know what is really going on. Certainly, CEOs are
flooded with information, but reliable information is surprisingly scarce.
All information coming to the top of the enterprise is filtered, sometimes
with good intentions, sometimes with not such good intentions.
- You are always sending a message. The words and actions of a
CEO, however small or said casually, are instantly spread and amplified,
scrutinized, interpreted and sometimes drastically misinterpreted. Compare:
- You are not the boss. Although the CEO may sit on the top of
the management hierarchy, he still reports to the board of directors. Ultimately,
the board is in charge. Not the CEO.
- Pleasing shareholders is not the goal. CEOs must recognize that,
ultimately, it is only long-term value creation that is important. Today's
growth expectations or even the stock price are not so relevant. Compare:
- You are still only human. CEO should recognize that he needs
connections to the world outside his organization, at home and in the community.
In order to avoid that he is completely consumed by his corporate life.
These Seven Surprises for new CEOs carry some important lessons:
- First, as a new CEO you must learn to manage organizational context
rather than focus on daily operations.
- Second, you must recognize that your position does not confer the right
to lead, nor your position guarantees the loyalty of the organization.
- Finally, you must remember that you are subject to a range of limitations,
even though others might treat you as if you were omnipotent.
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