The Danger Zone Nobody Warns New CEOs About
McKinsey's research finds the most dangerous stretch for a CEO isn't year one — it's years three to five, once early wins start breeding the complacency that stops leaders from asking hard questions about a plan that's finally working.
Prompted by “The Danger Zone Nobody Warns New CEOs About”, McKinsey Quarterly (Dewar, Keller, Malhotra & Strovink).
Everyone worries about surviving year one as CEO. McKinsey's research says that's not actually the dangerous stretch — it's years three to five, right after you start winning. Success breeds complacency, and complacency is what turned Jamie Dimon from a 2008 crisis hero into the guy explaining a $6 billion trading loss four years later. More than half the Fortune 500 from the year 2000 didn't survive the next 15 years.
I don't see many Fortune 500 problems in my work, but I see this exact pattern constantly. You get a couple of good years, the business finally feels like it's working, and the temptation is to stop asking hard questions about the plan — because it's your plan, and it's working.
Here's the gap that's worse for small companies, not better: big companies get forced out of complacency whether they like it or not. An activist investor shows up. A board member pushes back. An analyst asks the uncomfortable question live on an earnings call. Nobody is doing that for you. There's no outside voice built into a company automatically challenging the owner's thinking. If you want that check, you have to go build it yourself.
What does that check actually look like?
One line from the article stuck with me. DuPont CEO Ed Breen says his best habit is meeting off the record with a small group of other CEOs to talk through what they're actually seeing. "I always walk away with six or seven new ideas," he said.
Here's a challenge, whether you're in a group like that already or not: ask yourself the one question a real outsider would ask about your business right now — the one you haven't had to answer out loud in the last twelve months because everything's been working. If nobody's in the room to ask you that, that's the real risk. Not the market.
A standing group of peers with no stake in your business is one of the more reliable ways to catch complacency before it costs you — see OCTET.
Originally posted on LinkedIn ↗