Based on true events, the tale of two first-time CEOs…
CEO #1 was appointed by a PE Firm to a new acquisition. His biggest challenge would be to grow revenues while increasing EBITDA. Revenue growth averaged 8% per year for the last seven years, and EBITDA held steady around 18%. The goals were to sell the company in five to seven years at a healthy return.
He had to scale the business and build in efficiency to increase EBITDA to over 20%. When asked, “What’s your vision for the company?” his response was, “I don’t have one yet…”
Over time, the more that people asked that question of him, the more surly he became in his response. He gained a reputation as “not being a people-person” and for lacking communication skills.
He was offered a coach but didn’t, “believe in coaching.” He was offered to join a CEO peer advisory group but rejected that, as well. His direct reports told others that, “he believes he is the smartest guy in the room…”
Nine months into his time as CEO, still no vision, still no plan. Experts were brought in from top management consulting firms, but their ideas were rejected. Instead, he went with a plan designed by the existing C-suite.
After nine months of uncertainty, the C-suite had fractured, trust had eroded, and they had developed individual agendas.
18 months into his reign as CEO, revenue growth had dropped to 1.5% and EBITDA shrank to 11%. He was fired and the PE firm off-loaded the company for a loss only three years after they bought it.
Meanwhile across the country…
CEO #2 had earned a reputation by working his way up across different organizations within his industry but had never been a CEO before. He knew someone on the board, which got him the initial interview. He beat out the competition and got the job.
Four weeks before his start date, he interviewed several executive coaches. As part of his contract, he negotiated for a coach, which the board supported and saw as proactive. He said, “I’m smart enough to know that I’m not smart enough to do this alone…”
He was tasked with restructuring the company and rebuilding bridges burned by his predecessor. The board needed him to bring the company into the 21st century and set them up to be bought by a competitor within three to five years.
Similarly, he was tasked with increasing revenues while also increasing profits. The company had skated by with razor thin margins for years, and the only way to attract a suitable buyer would be to report substantial growth by doubling the profit margins while increasing revenues.
The previous CEO had entrenched herself and created discord among senior leadership so that nobody trusted anyone but her. This burrowing mentality created a “we’ve never done that before” reaction to any mention of progress or change.
CEO #2 had to gain the trust of his senior leadership team while restructuring the organization, which included some layoffs, as well as introduce new systems and procedures. He worked with his coach on creating transparency while communicating with groups and individuals to rebuild trust. He created avenues for inclusion with feedback channels to ensure his staff felt heard.
New software, workforce analytics, cloud services, and training were all implemented and paid for by newfound profits within the first year. He expanded the offering of coaching to all of his direct reports. And strategic new hires with an emphasis on “fit” injected new life across the organization.
The company sold within three years, and he received an offer to stay on as CEO and join the acquiring company’s board. His bonuses for exceeding his goals were enough for him to retire, but he was having “too much fun” to quit now…
So I ask you, who would you rather work for/with…?