JEFF SONNENFELD: Back to the Future: How 40 Years has Changed the CEO Post

Every aspect of the CEO role—including titles and duties—has endured wrenching redefinition since 1977.

Forty years ago, many enterprises didn’t use the term. The president of the company was considered the most senior executive. Seismic shifts in involvement in strategic oversight, board governance, leadership development and societal engagement also have taken place since a time when accounting records lived in file boxes, delivery truck drivers carried clipboards and corporate records were kept on magnetic tape disks.

In 1977, Apple Computer was incorporated, the first fiber optics for phone transmission were installed and a crawling Dow Jones Industrial Average closed the year at 831. That same year, banks across the nation were caught by surprise when federal legislation created “negotiable order withdrawals” or NOW accounts, the now-standard checking and savings
account hybrid.

Corporations relied on trade associations for legislative matters, whereas today’s CEOs must invest time, in person, in capitals and with customers around the world. Gradually, the textbook five-year planning horizon fell by the wayside.

“THE CEOS OF TODAY ARE BETTER INFORMED, BUSIER AND MORE ACCOUNTABLE THAN THEIR PREDECESSORS OF 40 YEARS AGO.”

Soon, quarterly reporting was being challenged by a day-trading mindset. The demands of investors weaned on Silicon Valley-style time-to-market have led to the dismantling of R&D industrial titans like DuPont. Even Verizon’s visionary CEO Ivan Seidenberg was almost blocked by investors too impatient to wait for a payoff from the rollout of highspeed broadband.

Boards are no longer packed with insider executives, CEO peers, college classmates and interlocking directors. The result is more independence, objective expertise, diversity and transparency. However, efforts to address cronyism also impede CEO-board trust and elevate adversarial interactions.

Forty years ago, the succession processes favored protégés groomed in the image of their predecessors, a practice that often created a coattail effect, but also substantial firm
loyalty. Now boards benchmark internal stars against outside candidates, often preferring external presumed saviors despite superior performance data on insiders.

Once known as pillars of their local communities, now CEOs charged with massive global companies created by M&A rollups are rarely as active in local civic associations—nor do they hold the same heroic aura.

The CEOs of today are better informed, busier and more accountable than their predecessors of 40 years ago. They also endure far more grueling travel schedules, cope with more
demanding constituencies on shorter time frames, face tougher scrutiny and feel more lonely than their predecessors. They don’t have time for the social clubs that were once common, and few are eager to serve on the boards of other firms.

Hearing hoofbeats of eager aspirants behind them and recognizing that any external supplier or customer could become a competitor tomorrow, this is the first generation of CEOs that often lacks genuine friends.

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Jeffrey Sonnenfeld
Jeffrey Sonnenfeld is senior associate dean, leadership studies, Lester Crown professor of leadership practice, Yale School of Management, as well as president of the Yale Chief Executive Leadership Institute and author of The Hero’s Farewell and Firing Back.

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