Seven Surprizes for New Ceos Summary (m.Porter)

Seven Surprises for New CEOs by M.E. Porter, J.W. Lorsch, N.Nohria (October 2004)

Some of the surprises for new CEOs arise from time and knowledge limitations – imperfect information and never enough time. Others stem from unexpected and unfamiliar new roles and altered professional relationships. Still others crop up because of the paradox that more power you have, the harder it is to use. Authors of the article have discovered that nothing in a leader's background, even running a large business within his company, fully prepares him to be CEO therefore they have found seven surprises to be most common. How well and how quickly new CEOs understand, accept and confront them will have a lot to do with executive's eventual success or failure.

Surprise Nr.1 – You can't run the company

Most new CEOs struggle to manage the time drain of attending to shareholders, analysts, board members, industry groups, politicians and other external constituencies. On the other hand - new CEOs feel a sense of loss (incl. loss of control) since they are no longer as close to the business as they were. Solution: The CEO has to understand that he cannot monitor everything. The CEO's greatest influence shifts from direct to indirect means – setting and communicating clear strategy, establishing guiding structures and processes and setting values and tone, as well as select the right senior management team to help CEO to run the company.

Surprise Nr.2 – Giving orders is very costly

Giving orders can cause resentment and defensiveness in colleagues and subordinates. Doubting senior manager's decisions can demoralize and demotivate not only that person but also others around him. If senior manager loses his authority and self-confidence, he might terminate his relations with an organization. Moreover by giving orders CEO actually reduces his real power wastes his energy and slows down progress. Solution: CEO should define and fully communicate clear strategy and operational principles (incl. decision-making criteria) to managers so they know what CEO is expecting. CEO should share power and trust others to make key decisions.

Surprise Nr.3 – It is hard to know what is really going on

All information coming to the top is filtered, sometimes with good intentions, sometimes not. Even those the CEO was the closest to avoid of delivering bad news – concerning that the CEO would "shoot the messenger". Solution: As delicate challenge it might be, CEO has to find reliable sources of information inside and outside the organization. CEO should hold informal events to speak with all levels employees and/ or hire independent adviser who can tell the unabashed truth and has rights to criticize CEO's thinking.

Surprise Nr.4 – You are always sending a message

The CEOs microphone is always on, and his message can become distorted. Even an innocent question may be interpreted as a loss of confidence. Solution: New CEOs should to learn what signals they are sending. Once they understand the multiplier effect of their words and actions they can minimize inadvertent messages and maximize the impact of the messages they want to send, bearing in mind how the messages will be interpreted by different audiences. Reaction to same things