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The 6 Factors To Be A Successful CEO

Photo by John Angelillo/UPI
  • CEO turnover in the S&P 500 was at a record high last year, with 175 CEOs leaving their posts
  • Research from BI Norwegian Business School indicates there are six main factors that might impact your success as a CEO
  • The values of a leader determine whether they will innovate or fear change

Decisiveness, adaptability, engaging with stakeholders, and reliability. There is no shortage of commentary from the Harvard Business Review and elsewhere about the essential behaviours that help CEOs to win the top job and thrive once they get in.

Not all of those that make it will enjoy the corner office as long as Jensen Huang at Nvidia, Stephen Schwarzmann at Blackstone or the longest reigning CEO in the S&P 500, Warren Buffett at Berkshire Hathaway. CEO turnover was at a record high last year, with 175 CEOs leaving their posts, up 13% compared with the next highest year, 2018.

But everything from age to political views to hobbies can impact how successful you are as a corporate leader.

Koen Pauwels, Distinguished Professor of Marketing at Northeastern’s D’Amore-McKin School of Business and an Adjunct Professor at BI Norwegian Business School, reviewed research with colleagues on senior executives and revealed how personality, experiences and other key characteristics can affect company performance and innovation.

They found there are six main factors that might impact your success as a CEO: 

1. Your confidence 

Indra Nooyi, the former CEO of PepsiCo, is known for her ‘5 Cs of Leadership’: Competency, Confidence, Communication, Consistency and Compass. 

During her time at PepsiCo, Nooyi oversaw numerous important mergers and acquisitions and strategic shifts, taking on multiple roles in the company, from chief financial officer to VP of corporate strategy and development. She was an avid advocate for sustainability, helping the company become more socially and environmentally responsible. 

Studies suggest that CEOs, like Nooyi, who have high levels of confidence are usually more innovative at work because they are creative and prefer change over routine. 

However, new research from the University of Mannheim Business School discovered that CEOs with exaggerated self-confidence are actually less likely to create major change within their organisations. 

“Higher levels of hubris in CEOs might lead them to see little reason for scrutinising and adapting existing organisational trajectories under their leadership. They consider themselves capable and bound in mastering the established ways of doing things,” says Professor Marc Kowalzick, Post-Doctoral researcher at the University of Mannheim Business School.

The study, which analysed 1,197 CEOs, found that while arrogant CEOs might go for risky strategy approaches which result in large payoffs, such as acquisitions, new product introductions or risky investments, these CEOs might not be willing to make large-scale organisational shifts. 

High self-esteem can also become problematic if the CEO overestimates their own ability to make good decisions. For example, under Elon Musk’s self-confident – and somewhat narcissistic – leadership style, Twitter’s value plunged 66 percent, and led to mass resignations and layoffs.

So perhaps the key to being a good CEO is having enough confidence, but not to a level of over-confidence that it impedes your ability to make good decisions.  

2. The quality of your education 

Senior managers with MBA degrees from well-respected business schools are more likely to pursue innovative or risky business models, leading to improved stock returns, the BI Norwegian Business School research revealed.

Since Sundar Pichai became Google’s CEO, Google has invested in new opportunities such as Google Cloud and YouTube and continues to research advanced technologies, including machine learning and quantum computing. Pichai holds both a master’s degree in engineering from Stanford and an MBA from Wharton. Since joining Google in 2004, he has been directly involved with some of Google’s most innovative inventions, including Search, Maps, Play, Android, Chrome and Google Workspace. 

Despite the accomplishments of individuals like Pichai who have multiple impressive degrees and use these to their advantage, there are plenty of entrepreneurial CEOs who dropped out of school to pursue their businesses. 

A well-cited example of a successful CEO who quit school to pursue his business is Mark Zuckerberg, who dropped out of Harvard University after launching Facebook in his dorm room. He then moved to Silicon Valley so that he could devote himself to Facebook full time. 

On Reid Hoffman’s Masters of Scale podcast, Zuckerberg said his approach to business is “Okay, is this going to destroy the company? Because if not, then let them test it”.  

3. Whether you come from a military background 

When it comes to success as a CEO, a military background might hold you back. BI Norwegian Business School’s research found that individuals with a military background are less likely to innovate and invest in research and development. 

“This may be because military training emphasises subordination to authority, duty and self-sacrifice which may translate to low risk-taking in a company,” suggests Professor Pauwels.

While this risk aversion and discipline may limit company growth, it could be an asset in certain crisis situations. For example, Robert S Morrison’s time as a Marine Corps officer prepared him for tough situations in business. 

During his time in the military, Morrison led men in the jungles of Vietnam and then, in 1997, as the CEO of Quaker Oats, he led the struggling company out of debt. By the time he left the company, Quaker Oats was a profitable purchase for PepsiCo. His former military mindset helped him focus on the situation. 

4. Your hobbies

Having a work-life balance is important, but what you do outside of work may also impact your potential success as a CEO, the research suggests. Hobbies can help you hone the skills that make you a good CEO.

Interestingly, research by Karoline Strauss at ESSEC Business School with Ciara Kelly and Chris Stride at Sheffield University Management School and John Arnold at Loughborough University found that hobbies that are serious but dissimilar to work were likely to bring benefits at work. 

For example, former Microsoft CEO Bill Gates loves to play bridge in his spare time, even sharing a coach with Berkshire Hathaway CEO Warren Buffett. The coach has said that Gates uses the game to focus his mine and plan ahead, tactics he also uses in business.

However, the research also suggested that less serious hobbies that had similarities to work were also likely to benefit individuals at work. For example, Zuckerberg hunts boar with a bow and arrow and Google co-founder Sergey Brin enjoys skydiving, roller-hockey and circus stunts.

Perhaps there are more similarities between hunting boar and running Meta than we thought. 

5. Your age

Sorry older CEOs! According to the research, it’s better to be younger as a business leader. Firms managed by older CEOs tend to underperform compared to those led by younger CEOs, revealed Professor Pauwels at BI Norwegian.

This is largely because younger CEOs tend to spend more on research and development, while older CEOs are more concerned about their own financial and professional safety and invest less in research and development. Older CEOs are also on average slower to learn new technologies and identified to be less likely to seek growth through innovation. 

The average age of a CEO of a Fortune 500 company is around 57 years old. However, many innovative Fortune 500 companies are run by individuals under 50. Sarah London, the new CEO of leading healthcare firm Centene, is just 41 years old. She has a background in both healthcare and technology and has been the chief product officer for Optum Analytics, as well as Centene’s SVP of technology innovation and modernisation. Since her appointment to CEO, London has reshuffled Centene’s senior management team and has been named on Fortune’s 2022 Most Powerful Women in Business list.

Of course there are also plenty of examples of older CEOs of Fortune 500 companies. At 92 years old, Warren Buffett is a notable example. Since Buffett acquired Berkshire Hathaway in 1965, it has grown into one of the biggest companies in the world. 

The main business is insurance from which it has developed a broad portfolio of subsidiaries, often buying troubled companies and turning them around. The company is also a major investor in equity positions and other securities, but Buffett admits that his preference to invest in companies that he knows well means that he has missed out on multiple tech stocks over the years, including Microsoft, Amazon and Google.

With a market cap of over $800 billion, Berkshire Hathaway is nevertheless among the ten biggest firms in the world. And the legendary Columbia Business School finance graduate is called the Sage of Omaha for the foresight he has shown over decades of investing.

 Buffett reportedly drinks five cans of Coke each day. Perhaps this too plays a part in his success…

6. Your political views

Leaders with liberal values are more likely to innovate while leaders with conservative values fear change, revealed Professor Pauwels’ research. 

Companies led by Republican-leaning executives in the US also experience more internal conflict, weaker results, and show lower emphasis on corporate social responsibility.

In 2022, the founder of Patagonia, Yvon Chouinard, decided to give the company away to help fight the climate crisis.

“As of now, Earth is our only shareholder,” the company announced. “ALL profits, in perpetuity, will go to our mission to ‘save our home planet’.”

Today, the business continues to be run by the CEO, Ryan Gellert, whose political views reflect those of the Patagonia brand, Gellert overtly advocates for climate change action, saying in interviews that taking a political stance isn’t necessarily about backing a party or decision, but about choosing candidates who promote policies you care about. 

 “Those responsible for the selection of CEOs need to recognise that personality, demographics and experience are key factors in firm performance, including innovation and stock returns” says Prof. Pauwels.

“They need to be aware that characteristics such as overconfidence, military background and political ideology may affect decision-making, innovation output and shareholder returns.”

No one is born a CEO, and the role is ultimately about you. As Evan Spiegel, co-founder and CEO of Snap Inc. explains, “I’m not a great manager; I try to be a great leader. And for me, that’s been going through a process of not how to be a great CEO but how to be a great Evan, and that’s really been the challenge.”

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