10 TOP PE CEO ARTICLES OF 2024

Every year we take the top articles for CFOs and CEOs and put them in one place. Thanks for a great 2024, here's the CEO version (CFO version was last week):

1. ?THE TEN ESSENTIALS OF PE CEO ALPHA - McKinsey
2. CRITICAL CHALLENGES FACING CEOS - Egon Zehnder
3. 15 SIGNS OF A FAILING CEO - RRA
4. HOW CEOS AND BOARDS LEAD THROUGH DIVISION - H&S
5. HOW TO BE A GREAT CEO AND... DO YOU REALLY WANT TO BE A CEO? - McKinsey
6. THE CEO SOPHOMORE SLUMP AND 6 FOCUS AREAS FOR BOARDS - SSA
7. 7-RULES TO GUIDE NEW CEOS IN BUILDING HIGH PERFORMING TEAMS - SSA
8. 6 KEYS TO CEO EXCELLENCE - McKinsey
9. 6 KEYS TO HELP PE CEO's NAVIGATE YEAR ONE - SSA
10. CEOs ARE RETHINKING GO-TO-MARKET - SBI

10 ESSENTIALS OF PE CEO ALPHA

CRITICAL CHALLENGES FACING CEOS - Egon Zehnder

The overwhelming majority of CEOs foresee significant, far-reaching changes across all sectors. These CEOs believe organizations should prioritize strategies addressing talent acquisition and development, AI adoption, market disruption and geopolitical instability.

Notably, DEI fell into the less critical category.

Who do CEOs turn to for advice? Their senior leaders, peer CEOs and then independent board directors in that order.

To solve for these issues, CEOs emphasize the importance of adaptive and relational skills, such as fostering curiosity, active listening, and inspiring collective ambition, to navigate today's challenges effectively. Central to their role is cultivating a sense of purpose that creates emotional attachment, aligning and motivating teams for change and adaptation.

15 SIGNS OF A FAILING CEO - RRA

The Top 5

• Consistent poor financial performance
• Market share erosion
• Ethical breaches, legal violations, or conduct inconsistent with the organization's values and standards.
• Failure to achieve strategic goals
• Inability to adapt to market changes

The Next 10

• Demonstrated lack of accountability for mistakes or poor performance, or a refusal to take responsibility for the organization's challenges.
• Inability to navigate and manage crises effectively, leading to further harm to the company's reputation and stability.
• Erosion of organizational culture, declining employee morale, or a toxic work environment.
• Loss of confidence from key stakeholder.
• Ongoing problems with transparency or the CEO's inability to effectively convey the company's vision and strategy internally or externally.
• Strained board-CEO relationship.
• Significant loss or risk of losing key executives or talent (regrettable attrition).
• Continued decline despite intervention.
• Repeated failure to address feedback.
• Mismatch with current organizational stage.

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HOW CEOS AND BOARDS LEAD THROUGH DIVISION - H&S

Leaders must embrace the diversity of perspectives within their organizations and use it as a source of strength. While approaches to divisive issues will vary, leaders who foster a culture of trust, collaboration, and strategic alignment are better positioned to navigate these challenges and drive long-term success. Key Insights for CEOs and Boards on Leading Through Division

1. Context Is Key: Leadership approaches must be tailored to the specific industry, role, geography, and organizational needs. For example, financial services leaders prioritize leading across boundaries, while tech leaders emphasize strategic and operational capabilities.
2. Self-Awareness Is Crucial: Effective leadership in divisive environments requires heightened self-awareness to identify and address blind spots, enabling better engagement and decision-making.
3. Engagement Matters: Leaders should actively engage across their organizations to ensure diverse viewpoints are considered, fostering trust and buy-in from employees and stakeholders.
4. Strategic Decision-Making on Divisive Issues: Policy decisions must be tied to their strategic relevance, using engagement and debate to reinforce the company’s direction and culture.
5. CEO and Board Collaboration: A strong, collaborative relationship between the CEO and board is essential for navigating divisive issues, with clear roles defined for cultural and decision-making leadership.
6. Cultural Health as a Priority: Maintaining a healthy organizational culture is seen as the primary benefit of leading across boundaries, which also correlates with better financial performance for those who prioritize it.

HOW TO BE A GREAT CEO AND... DO YOU REALLY WANT TO BE A CEO?

McKinsey (again) has a insightful view on both the motivation to be a CEO and what makes for a great CEO.

And finally, what CEOs need to be great at:

1. Setting the Direction: Establishing a clear and inspiring vision for the future of the organization.
2. Aligning the Organization: Ensuring that the company's structure, culture, and resources are organized to effectively pursue strategic goals.
3. Mobilizing through Leaders: Empowering and leveraging the talents of leaders within the organization to execute the strategy.
4. Engaging the Board: Building a productive and supportive relationship with the board of directors to guide and support the organization's direction.
5. Connecting with Stakeholders: Effectively managing relationships with all key stakeholders to garner support and alignment with the company's objectives.
6. Managing Personal Effectiveness: Prioritizing self-management to maintain resilience, focus, and a balance between professional and personal life.

THE CEO SOPHOMORE SLUMP AND 6 FOCUS AREAS FOR BOARDS

Spencer Stuart highlighted 6 areas of board focus including the CEO sophomore slump.

1. Board Composition: Balancing the act of refreshing boards with diverse and broad skill sets to navigate future challenges.
2. Diversity as a Priority: Emphasizing the importance of integrating varied perspectives through diversity in board recruitment.
3. Technological Imperatives: Prioritizing directors with technological expertise, including AI and cybersecurity, to guide companies in an evolving digital landscape.
4. Workforce and Talent Oversight: Increasing board involvement in assessing and strategizing around talent gaps and strengths.
5. Navigating the CEO’s Sophomore Slump: Focusing on strategies for a successful second year for CEOs to mitigate downturn risks.
6. The Importance of Effective Onboarding: Recognizing the board's role in ensuring new directors are quickly and effectively integrated.

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7-RULES TO GUIDE NEW CEOS IN BUILDING HIGH PERFORMING TEAMS

New CEOs must balance speed and prudence in building their teams. Spencer Stuart highlights 7-rules in building clarity and taking action on the top team.

1. Set the North Star: New CEOs can establish a purpose-driven vision beyond financial goals.
2. Fill Information Gaps: Actively seek information about team members' capabilities and commitment.
3. Assess Executive Leadership Agility: Assess team members' agility and ability to adapt to changes.
4. Lead by Cultivating Culture: Define and articulate the desired organizational culture, aligning behaviors and norms with the leadership team.
5. Check Blind Spots and Exercise Caution: Balance the need for speed with prudence avoiding hasty actions such as packing the team with loyalists or making personnel changes without understanding their contributions and impact on the organization.
6. Address Emotional Barriers: Recognize and address emotional factors influencing decisions about team members, such as loyalty or personal relationships.
7. Communicate Authentically: Effectively communicate tough decisions with empathy and clarity, connecting them to the organization's collective purpose and future journey to inspire and engage team members.

6 KEYS TO CEO EXCELLENCE

McKinsey cited six core activities that drive CEO Effectiveness: set the direction, align your organization on that direction, mobilize your leaders to deliver on that direction, work with your board, connect with a group of stakeholders and manage your personal effectiveness.

And along with those, 6 key mindsets to enable those activities:

1. Boldness: Emphasizes the importance of having a vision and taking decisive action, even in the face of uncertainty or risk.
2. Resource Allocation: Focuses on being tough-minded and strategic in allocating resources to drive organizational priorities effectively.
3. Culture Shaping: Highlights the role of leaders in shaping organizational culture by identifying and reinforcing behaviors that align with the overall vision and values.
4. Talent Development: Stresses the significance of investing in and developing talent across the organization to ensure its long-term success.
5. Personal Energy: Underlines the importance of personal commitment and energy from leaders in driving organizational success, including aspects such as meeting cadence, coaching, and team composition.
6. Personal Operating Model: Encourages leaders to delegate operational tasks and focus on higher-level strategic priorities, leveraging their team's strengths effectively.

6 KEYS TO HELP PE CEO's NAVIGATE YEAR ONE - Spencer Stuart

PE is a different job. PE CEOs are under a ticking clock, often on a five-year sprint toward a lucrative exit. And PE firms are hands-on and deeply invested in both strategy and operations, making the role more intense than a typical CEO gig. But it's not just the ticking clock and working tightly with investors, the new PE CEO often finds that the investment thesis was a little to heavy on hypotheses smoke and mirrors and light on solid assumptions. The reality on the ground rarely matches what they expected.

Spencer suggests 6 keys to a successful first year for a PE CEO:

• Prepare for the Unexpected: New CEOs should expect unforeseen challenges and work to gain as much organizational visibility as possible early on by reviewing investment theses, financials, and leveraging internal and external networks.
• Decisive Action: Effective CEOs make timely decisions even with incomplete information, prioritizing forward momentum and adapting as needed rather than waiting for ideal conditions.
• Build Strong Fund Relationships: Fostering alignment and overcommunication with private equity sponsors and other portfolio CEOs builds trust and ensures everyone is working toward shared value-creation goals.
• Focus on Strategic Oversight: By entrusting day-to-day operations to the CFO and COO, CEOs can concentrate on setting a clear mission, maintaining strategic clarity, and identifying new opportunities.
• Cultivate a Learning Culture: M&A and rapid scaling demand a strong, unified culture. New CEOs should define a future vision to instill energy, excitement, and accountability throughout the organization.
• Engage CEO Peers: Private equity CEOs should seek mentorship, join peer networks, and build relationships with board members and other CEOs for support and idea-sharing in facing unique challenges.

WHAT NEW TO ROLE CEOS FOCUS ON AND REGRET - RRA

“I spent too much time being an operator in my first year. I should have spent more time building relationships externally—as the organization will need those relationships to succeed and grow through acquisition.” - CEO of PE-backed manufacturing business

CEOs in a RRA survey said that they should focus on what they uniquely can do as the CEO:

1. Culture (79%): CEOs must set the organizational culture.
2. Strategy (61%): CEOs need to drive the strategic direction.
3. Talent Accountability (43%): CEOs ensure the right people are in the right roles.
4. Board Management (35%): CEOs manage relationships with the board.
5. Stakeholder Management (31%): CEOs engage key stakeholders, especially important shareholders.

CEOS ARE RETHINKING GTM

SBI Growth found that "Buying friction" is a significant obstacle to commercial productivity. Buying friction was identified as the top barrier by CEOs and a major pain point for customers navigating purchase journeys within organizations.

• Their research indicates and increasing complexity in decision-making, with an average of 12+ stakeholders involved, many lacking a comprehensive understanding of the situation. Decision timeframes are lengthening, with the average purchase cycle time at 9.6 months.
• GTM team sizes and unclear role definitions contribute to buyer overwhelm, along with the abundance of options, products, and pricing models available. Empathetic customer interaction is crucial for companies navigating these challenges effectively.

They see four areas GTM must change: 1. Evolve with buyer demands 2. Anticipate buyer change to move the deal process forward 3. Pull forward executive involvement with dedicated c-suite propositions and 4. driving in-person engagements.

CEOS QUESTION GTM

While 87% of CEOs agree that having the right people with key GTM skills is crucial to their success, only 46% of CEOs think they currently have their GTM talent right and there's a big uptick in the percentage of CEOs losing confidence in their GTM leaders.

SBI advises CEOs to take two courses of action:

1. First, clarify needs and expectations for GTM roles to keep pace with evolving buyers, markets, and products. This involves not just setting engagement rules and territories, but also adapting competencies and role expectations according to the organization's growth plan.
2. Second, prioritize upskilling sales managers. They should shift their focus from merely tracking deals to coaching their teams on how to tailor messaging to the buyer's specific data and journey. This approach will help sellers adapt to new buying behaviors and increase their success rates.

SBI found that confidence in executing key strategies like optimizing go-to-market models and boosting market penetration is dwindling, reflecting both a lack of investment and trust in the underlying data driving decisions.

Here are the factors impacting GTM models:

1. Shifting Focus to EBITDA: With demand volatility and uneven recovery, CEOs and investors are placing greater weight on profitability (EBITDA) over growth, pushing back expectations for a rebound until late 2024.
2. Struggles with Go-to-Market Optimization: Despite identifying go-to-market model optimization as a critical value lever, CEOs lack confidence in their ability to execute, leading to limited investments in refining sales and marketing strategies.
3. Data and Technology Gaps: A lack of trust in data quality and supporting technologies is stalling investment in analytical rigor, leaving many CEOs making critical decisions on a flawed fact base.
4. Market Penetration Challenges: Although market penetration is a top growth lever, CEOs remain uncertain about their ability to boost pipelines and deal volume, with many seeing declines in these metrics in Q2.

There's a huge gap between criticality and confidence in optimizing the go-to-market strategy and in their need to and ability to execute on increasing retention and decreasing churn.

Give the disconnects in the markets, they believe CEOs and their go-to-market (GTM) leadership teams need to double down on execution, prioritizing efficiency and clarity in both commercial strategies and internal processes.

Success will require CEOs and CROs to:

1. Tighten Execution and Focus on Sales Velocity: CEOs must ensure clear objectives and regular reviews with their teams, concentrating on driving faster funnel progression and understanding customer buying processes to combat conservative decision-making.
2. Optimize Targeting and Coverage: Leadership teams should narrow their focus to high-propensity, high-value accounts, aligning territories and resources to maximize ROI from the most promising opportunities, rather than spreading efforts too thin.
3. Leverage Data and Streamline Revenue Technologies: Streamlining revenue technology stacks and empowering revenue operations can improve data quality, allowing leaders to focus more on execution rather than data reconciliation.
4. Balance New Logo Acquisition with Existing Customer Growth: While expanding new business is crucial, CEOs should not overlook existing customers, which offer low-cost, high-return opportunities for growth. Improving whitespace targeting and onboarding processes for new hires can optimize both acquisition and expansion efforts.