A new CEO or business owner’s first days on the job often prove to be the most critical part of his or her tenure with the company. A wrong move here, a miscommunication there can cause damage long before the new leader has a chance to make a positive impact on the business.
To help newly promoted executives or others assuming control of a business, Roger Martin, author of Playing to Win: How Strategy Really Works, offers some great advice in this article for HBR Blog Network.
Five Rules the New CEO Should Follow
Keep the Existing Resources
“The most fractious and difficult thing to do in an organization is to take resources away from someone who is used to receiving them,” Martin notes. When a new leader seeks to reallocate existing resources, “endless fights and a firestorm of protests will ensue.”
Instead, by focusing on increasing revenues, “investment capacity will increase and new resources can be funneled to growth priorities” - without having to eliminate resources to non-priority areas. As time passes and revenues grow, “the non-priority areas will become an ever-smaller piece of the puzzle.” At that point, the CEO can shut down non-priority areas “without much hassle or fuss.”
Follow Due Process
As Martin points out, “CEOs really don’t have to follow due process.” They can, for example, fire anyone they want.
The reason why this is not a good move is that it alarms your team, since “everybody watches with a keen eye and wonders whether they will be objects of arbitrary decisions as well.” If there’s an under-performing manager you’d like to get rid of, try giving him feedback “and a fair chance to improve” instead. This is preferable to sending the message that you act capriciously and “make up your own rules.”
Consult With Others
You may have some excellent ideas for creating new revenue streams, upgrading technology and/or redesigning the company website. But before rushing ahead on your own, Martin says, “consult wherever and whenever possible with your team.” This will undoubtedly extend the decision-making process, but “your team needs to feel and function genuinely like a team.”
If and when the time comes that you have to make a decision the team doesn’t support, you can do so “without destroying the team dynamics, but only if you save it for very rare occasions.”
Set High Standards For Strategy
From the outset, Martin says, the new CEO should make it clear that “direct reports have the responsibility for making logically consistent and unique strategy choices in their areas of responsibility.” This alerts the team that, while you won’t make strategy for them, you’re available to help - “because nothing is more important than having a high bar for strategy.”
Cultivate a Thriving Culture
What’s one of the biggest fears triggered by the arrival of a new leader? It’s that he or she will soon usher in a legion of “yes-men.” A CEO intent on cultivating (or sustaining) a thriving culture should instead “signal from inception that the organization will be a big tent that welcomes diversity, not a monoculture with only people who resemble the CEO.”
When a new CEO starts “acting unilaterally, accepting mediocre strategy and closing ranks to only the comfortable colleagues, the die gets cast pretty quickly.” Far better, Martin says, to get off on the right foot and inspire others to follow your lead.
What’s your advice for a new leader or top executive?
