One CEO steered his company through the Great Recession by boldly moving away from some of its most profitable legacy businesses and toward new offerings with better prospects. Another CEO bet his legacy on a massive new plant in Saudi Arabia and a $70 billion merger with its largest competitor. Both men are 63 years old and have been at the helm of their organizations for more than a decade, longer than the typical CEO tenure. And now, both men are stepping down.
The two CEOs are Lloyd Blankfein of Goldman Sachs and Andrew Liveris of Dow Chemical, and their announcements come amid a wave of CEO changes in the last year. Yet these changes are far different than some of the more high-profile changes of legacy CEOs last year—both are still up to a year away. That gives their respective boards a far greater ability to do the kind of succession planning most businesses need—but haven’t done lately.
“Historically, a successful business might look for a CEO profile the same as its previous CEO. Today, however, boards are thinking long-term about what business conditions will look like in the next five years, and hiring a CEO for those dynamics,” says Nels Olson, vice chairman and co-leader of Korn Ferry’s Board and CEO Services practice. "Think about what the financial world will be like in the next decade with digital currency potentially remapping a significant part of the world," adds Alan Guarino, also a vice chairman and co-leader of Korn Ferry’s Board and CEO Services practice. Experts say all this increases the importance of having a robust CEO succession process so that organizations are planning for a number of possible futures, rather than reacting to a CEO's departure.
The combination of constant transformation and the rise of activist investing means that the traits today’s CEOs need have evolved considerably from when Blankfein and Liveris were appointed to the position in 2006 and 2004, respectively. According to Tierney Remick, vice chairman for Board and CEO Services at Korn Ferry, CEOs must be able to create followership among a larger swath of stakeholder constituencies and possess a high degree of learning agility to proactively adapt to evolving business dynamics.
“Organizations are more fluid now, and facilitating collaboration across the enterprise requires a new skill set,” says Remick. “The stereotypical, larger-than-life CEO has given way to a leader who is best able to optimize the team around them to drive strategy and execution.” Or, as Reuters wrote in a profile of Goldman’s CEO-to-be, David Solomon, “The unassuming banker… works mostly behind the scenes, making sure that investment banking clients get what they need, that employees are happy, and that Goldman’s deal-making machinery operates smoothly.” Not exactly the traditional superhero CEO characteristics.
Indeed, CEOs who can engender followership and encourage collaboration have a significant advantage over their peers in the most important area of all: attracting talent. No longer do most executives make career decisions based on an institution’s prestige or reputation. The characteristics of leaders, from one’s immediate supervisor to the division head to the CEO, factor more than ever in where talent chooses to work. “Employee populations are making decisions about where to work based on whom they want to work for and with, whom they can trust, and the perceived integrity of their potential leaders,” Remick says. “Strategic talent management is a more important part of the CEO’s role than ever before.”