On Track for an Early Exit? Three Ways to Defy the Statistic
A decade ago, the average tenure of a Fortune 500 CEO was 9.5 years. Today? 3.5 years. Looking at recent stumbles at Best Buy, Yahoo, HP and elsewhere a pattern of sorts emerges that may be instructive for leaders looking to beat the odds.
November 29 2012 by Paul Heagen and Bob Parsanko
These findings from Dr. Noel Tichy at the University of Michigan make it clear that occupational hazards at the top are on the rise. Some hazards have been there all along: investor group take overs; merger and acquisition shakeups; pressure from the board for new blood. However, as the pace of business activity accelerates, talented and capable business leaders are falling victim to three new hazards: speed, fight and force.
In our observation of changes in leadership, particularly over the last five years, speed, fight and force come into play most significantly when executives feel “stuck.” Perhaps a new product isn’t performing as well as expected or a competitor is rapidly gaining market share. Executives feel pressured to act immediately to remedy the situation—often to the detriment of the organization and their career. You need only look to the recent stumbles of executives at Apple, Netflix, Best Buy, and HP to realize the dangers of these behaviors.
How can executives avoid these behaviors and the pattern of decline they bring about?
Slow down. It may seem illogical to make the case that business leaders in today’s fast-paced world would be better served by slowing down, but the evidence for doing just that is growing. Speed is critical in certain situations, but when it pervades other dimensions of leadership, the damage is significant.
One way we see speed erode organizations and executive careers is in creating tunnel vision, resulting in poor decisions and quick fixes. Consider HP: in seeking to bolster sagging investor confidence, HP CEO Meg Whitman offered a corporate mea culpafor relying on “short-term, unsustainable fixes,” which have put the company’s survival at serious risk.
The antidote? First, stop reacting. Executives must slow down, and increase their awareness by sensing more than thinking. Rather than relying solely on thinking – that is processing and relying on what is already known or experienced, begin sensing – considering what is unknown and allowing for new information and perspectives. This prevents tunnel vision, hasty and ill-informed decisions, and further, averts a short-circuited career.
Accept current realities. When executives under mounting pressure are met with a challenge, they often fight the reality of their situation, clinging to what has worked in the past. Best Buy CEO Hubert Joly has an enviable track record in turnarounds, but industry analysts are all but pounding on the windows of the big electronic retailer to get his attention. The reality is that there has been a tectonic shift in the way customers buy. Whether Joly’s loyalty to large showcase retailing will prove visionary or quixotic, too often executives feeling stuck refuse to accept the obvious.
Executives able and willing to speak the truth first to themselves and then to their stakeholders show far greater promise of success. Approaching a challenge with an honest understanding of the current reality allows everyone to focus their energies on what can and should be done to move the organization forward, not what they wish could have happened – but didn’t.
Don’t force decisions. We were all taught value of patience, but too often, executives forget this noble virtue when it matters most. Products are rushed to market to beat the competitor, marketing efforts are squashed when results are slow moving out of the gate, and decisions are made in the heat of the moment and with an either/or mindset.
Case in point is Netflix CEO Reed Hastings and his storied decisions to over-rule the reported objections of his leadership team, splitting off his company’s DVD rental division while jamming through a massive price increase to an unsuspecting core market. Driven by the fear of becoming obsolete (see Blockbuster), Hastings’ rushed decision sent stock prices tumbling and enraged customers.
What executives often fail to recognize is that decisions almost always contain more and even better options than initially presented. Forcing a decision may feel courageous and decisive at the time, but it ignores the long-term health of the organization.
Executives wishing to defy the sobering tenure statistic must recognize that slowing down is often the best way to move faster; that accepting current realities – unfortunate though they may be – is more effective than fighting them; and that having the patience and commitment to develop options is the best way to make decisions that will endure the test of time.
Bob Parsanko, president and founder of Executive Insights, and Paul Heagen, president and founder of Defining Moments Consulting, are co-authors of The Leader’s Climb (Bibliomotion; September 2012).