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ARTICLE: What makes a CEO ‘exceptional’?

Updated: May 1, 2020 image

New CEOs face enormous challenges in setting a strategic direction in today’s volatile environment. To provide some guidance for transitioning CEOs, McKinsey & Company looked at the experiences of roughly 600 exceptional CEOs, (from S&P 500 companies over a recent 10-year period), and found that on average, externally-hired CEOs tend to pull more strategic levers than those who come from within, and outperform their internal counterparts over tenure.

Exceptional CEOs were:

  • more likely to conduct a strategic review in their first two years on the job.

  • bolder than other top-quintile CEOs in the average number of strategic moves they made in their first year.

  • more likely to launch cost-reduction programs, thereby building strategic momentum.

  • sure to make organization redesign a priority.

  • likely to reshuffle management (after the first two years), especially in low-performing companies.

For any CEO starting a transition, adopting an outsider’s view yields the unbiased insights needed for breakthrough moves. Insiders can move aggressively and achieve more outstanding results by challenging the company’s culture with greater objectivity to overcome organizational limitations. Also, investing in a robust strategic review will provide a surer perspective for setting a strategic direction, and a grounding in the organization’s context will help calibrate the speed and scope of change. Exceptional CEOs set a benchmark for every CEO aspiring to a successful debut.

Find more details from McKinsey's research in the full article.

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