Top 5 Reasons - Why New Executives fail in their positions within 18 months. How to fix it?

Background - A long-time personal branding client who recently was undergoing the process of taking over as CEO of a globally funded startup was excited about his new role. I cautioned him and shared the Corporate Executive Board (now part of Gartner) findings. Exclaimed, he asked how is it possible that almost 50% of newly appointed executives fail to deliver within 18 months.

The gist of that conversation will help you re-think strategies for professional growth.

Aspiring CEOs, take note once again that the incidence of failure for newly promoted CEOs is shockingly high, with between 50% to 70% of executives failing within the first 18 months of taking on a role, regardless of whether they were promoted from within or hired outside. Inadequate preparation and processes, such as insufficient formal development methods and coaching, contribute to this high failure rate.

Reason #1: Lack of Proper Training

Real-Life Case Study: Mark Parker, the former CEO of Nike, retired after 13 years in the position. However, his successor, John Donahoe, faced criticism from employees and stakeholders after only six months in the role. Many believed that he was not adequately trained to hold the position, leading to negative impacts on the company's culture and growth. To fix this, Nike has since established a CEO incubator program to better prepare potential successors.

Effective Solution: To address the need for grooming potential CEOs and retaining top executives, organizations may consider creating Deputy CEO positions or establishing CEO incubators where potential workers can receive guidance and training.

Reason #2: Inability to Think in Large-Scale Contexts

Real-Life Case Study: Adam Neumann, the former CEO of WeWork, was forced to step down after the company's failed IPO. Neumann was known for his grandiose plans and lack of focus on the fundamentals of the business, leading to a lack of profitability and the company's eventual downfall.

Effective Solution: New executives often struggle to adapt to the strategic aspect of their roles and may have difficulty separating themselves from their work, appraising it, delegating it, and managing others. This requires a 360-degree mindset, which can come from education and experience.

Reason #3: Difficulty Adjusting to Politics and Pressures

Real-Life Case Study: Laurent Potdevin, the former CEO of Lululemon, was forced to resign after engaging in a romantic relationship with an employee, violating the company's code of conduct. Potdevin faced pressure from various departments within the organization, including the board of directors and shareholders, to step down.

Effective Solution: New CEOs may struggle to handle the strain of being constantly monitored and assessed and may find it challenging to deal with the expectations and pressures placed on them from various departments within the organization. It's important for CEOs to seek support from mentors and peers who have faced similar challenges and to establish an open and transparent culture within the organization.

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Reason #4: Failure to Listen, Learn, Unlearn, and Relearn

Real-Life Case Study: Kevin Johnson, the CEO of Starbucks, faced backlash after two black men were arrested in a Philadelphia store for sitting without ordering. Johnson initially responded defensively, but later listened to customer feedback and announced a plan to close all stores for racial bias training.

Effective Solution: New executives are often under pressure to produce results quickly, leading to decisions made without fully comprehending their potential impact. Before implementing significant changes, well-trained executives should listen to others and gain new knowledge.

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Reason #5: Lack of Awareness of Other Cultures

Real-Life Case Study: Tobi Lütke, the CEO of Shopify, faced criticism after comments he made on social media that were perceived as insensitive towards indigenous communities in Canada. Lütke apologized and committed to learning more about the experiences and cultures of others.

Effective Solution: Newly hired executives may lack an understanding of the organization's culture and the experiences and talents of their colleagues, which can make it difficult to gather support for critical projects effectively. It's important for CEOs to take the time to understand the culture of the organization and the unique needs of its stakeholders.???

Conclusion: The high incidence of failure for newly appointed CEOs is a significant concern for organizations worldwide. By understanding the reasons behind the failure of new executives and taking steps to fix them, organizations can ensure the success of their newly appointed CEOs. The top five reasons for CEO failure include lack of proper training, inability to think in large-scale contexts, difficulty adjusting to politics and pressures, failure to listen, learn, unlearn, and relearn, and lack of awareness of other cultures. By learning from real-life case studies and implementing effective solutions, new executives can better prepare themselves to avoid these common pitfalls and succeed in their roles. It's essential for aspiring CEOs to seek support from mentors and peers who have faced similar challenges and to establish an open and transparent culture within the organization. By investing in the development and training of potential CEOs, organizations can ensure a steady pipeline of skilled executives, while individuals can gain the experience and expertise required to take on a leadership role.