How to Become a Successful CEO

Each year, Inc. lists the 5000 fastest growing companies in the United States. Curious about the entrepreneurial people who run these organizations, I gathered data on the backgrounds of the CEOs of the top 500 companies in 2016 by revenue. I looked by revenue instead of by growth rate since the latter would bias the sample toward smaller companies that may be riding more random, short-term waves. Here is what I found…

They go to college

Among CEOs for whom I could determine educational background, 98% went to college. If I were to assume (in the extreme) that none of the remaining CEOs (those for whom I was not able to determine educational background) went to college, then 91% earned degrees. By comparison, the US Census Bureau reports 32.5% of the 25 or older population holds a Bachelor’s degree. This squarely busts the myth that you should drop out of school to if you want to become the next great CEO.

Where you go is not who you’ll be

CEOs who earned degrees from United States institutions attended schools ranked 1 to 656 on the Forbes Top Colleges list; there were also plenty who went to unranked schools. The average rank was 202. This squarely busts the myth that you need to go to an Ivy League (or similar) school to have a successful career. Studies of job performance show that most of the explainable performance differences between employees come down to two factors – general mental ability (aka IQ) and conscientiousness. [For more on this, read Frank Bruni’s excellent book “Where you go is not who you’ll be.”]

They earn degrees in more rigorous disciplines

When I looked at undergraduate degrees earned I found the following: (percentages for the US population in parentheses - source)

·       Business = 41% (21%)

·       Science, Technology, Engineering, or Math (STEM) = 25% (29%)

·       Social Sciences = 17% (9%)

·       Arts = 14% (35%)

·       Psychology = 3% (6%)

Hence, the CEOs are far more likely than the general college educated population to hold Business or Social Sciences degrees; they are about as likely as the college educated population to hold a STEM or a Psychology degree; and, they are far less likely to hold Arts degrees. At the very least, the CEOs hold more rigorous degrees; moreover, there is reasonable evidence that their field of study aligns with the specific work they will do when they graduate.

They earn advanced degrees

38% of the CEO hold advanced degrees compared to 12% of the 25 or older population in the United States. Of those holding advanced degrees, 44% have MBAs, 17% have Law Degrees, and the remaining 39% have other degrees (MS, MD, or PhD).

Most are founders

63% of the CEOs founded or co-founded their companies. Another 2% run companies started by family members, usually parents or grandparents. By comparison, 10% to 15% of American workers own their own businesses.

Most are male and most are white (see commentary)

93% of the CEOs are male. This finding is consistent with the Fortune 500 which was 95% male as of the end of the first quarter of 2017. By comparison, 49% of the United States population aged 25 to 64 are male.

89% of the CEOs are white non-Hispanic, 4% are South Asian, 2% are East Asia, 2% are Hispanic, 1% are Middle Eastern, <1% (only 1) is black. [Total may be slightly different than 100% due to rounding.] In the general population, 69% are white non-Hispanic, 3.6% are Asian, 12.5% are Hispanic, and 12.3% are black [Sums to less than 100% since numbers exclude individuals who identify as multi-race]. Again, this finding mimics many other studies of executive demographics in America.

Relative to the working population at large, CEOs of the largest Inc. 5000 companies are disproportionately white non-Hispanic and male. This is consistent with other demographic studies of CEOs and corporate directors. Though a critically important issue to be addressed, the reasons for this rampant inequality are out of the scope of this article.

Bottom line

Staying away from the “third rail” of race and gender, the best advice based on this data I have for people, particularly younger people, who want to become successful CEOs of private companies is:

1. Go to college, but don’t worry too much about where you go.
2. When you are in college, choose a major that (a) is rigorous, (b) is aligned with what you think you want to do, and (c) you are interested in.
3. Work hard in school to develop knowledge and conscientiousness + perseverance (sometimes called ‘grit’).
4. Earn an advanced degree (after a couple years for an MBA or right away for other degrees)
5. Start your own company